SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of November
__, 2019 among Banner Midstream Corp., a corporation whose principal place of
business is located at 5899 Preston Rd., Unit 505, Frisco, TX 75034 (the
“Company”), MTB Corp., a Nevada corporation (“Mount Tam”), and the Purchasers
identified on the signature pages hereto (including their successors and
assigns, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”) and Rule 506 promulgated thereunder, the Company, the Company
desires to issue and sell to the Purchasers, and the Purchasers, desires to
purchase from such party, securities of the Company as more fully described in
this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchasers,
severally and not jointly, agrees as follows:

 

ARTICLE I

 

1.1The following terms have the meanings indicated in this Section 1.1:

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affidavits of Confession of Judgment” means the affidavits of Confession of
Judgment dated the date hereof, executed by the Company and its Subsidiaries,
Mount Tam and the Guarantors.

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act.

 

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

 

“Change of Control” means the occurrence of any of (i) an acquisition after the
date hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) other than a group including Jay
Puchir of effective control (whether through legal or beneficial ownership of
capital stock of the Company or Mount Tam, by contract or otherwise) of in
excess of 33% of the voting securities of the Company or Mount Tam, or (ii) a
replacement at one time or within a three year period of more than one-half of
the members of the Company’s ro Mount Tam’s board of directors which is not
approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), or (iii) Jay Puchir shall no longer be employed by
the Company as Chief Executive Officer on a full time basis, or (iv) the
execution by the Company or Mount Tam of an agreement to which the Company or
Mount Tam is a party or by which it is bound, providing for any of the events
set forth above in (i) , (ii) or (iii).

 

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“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

 

“Closing Date” means the Business Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s and Mount Tam’s obligations to deliver the
Securities have been satisfied or waived.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.0001 per
share, or Mount Tam, par value $0.0001 per share, as the case may be, and any
securities into which such common stock shall hereinafter have been
reclassified.

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries or Mount Tam which would entitle the holder thereof to acquire at
any time Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.

 

“Company Counsel” means Carmel, Milazzo & DiChiara LLP.

 

“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1 hereof.

 

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

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h) hereof.

 

“Guarantees” shall mean the Principals’ Guarantee, the Subsidiary and Mount Tam
Guarantee.

 

“Guarantors” shall mean the parties issuing the Guarantees to the Purchasers.

 

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

 

“Lock-up Agreements” means the lock-up agreements executed by management and
certain shareholders of the Company and Mount Tam.

 

“Majority Purchasers” shall mean holders of 50% of the then outstanding
principal amount of the Notes, so long as such 50% includes Puritan Partners LLC
as lead investor.

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b) hereof.

 

“Material Permits” shall have the meaning ascribed to such term in Section
3.1(m).

 

“Notes” means the 10% Senior Secured Convertible Notes due November 15, 2020 in
aggregate principal amount of $ 1,666,666.67, convertible into shares of common
stock of Mount Tam, par value $0.0001 per share, and issued by the Company and
Mount Tam to the Purchasers hereunder.

 

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“OFAC” shall mean the United States Department of the Treasury’s Office of
Foreign Assets Control.

 

“OFAC Regulations” shall mean the regulations promulgated by OFAC, as amended
from time to time.

 

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

 

“Pledge Agreement” means that certain pledge agreement between the Principals
and the Purchasers pursuant to which the Principals pledged shares of common
stock or the Company and Ecoark, Inc. to the Purchasers.

 

“Principal Guarantees” means the guarantees, dated the date hereof, of the
Principals under the Note and the other Transaction Documents in favor of the
Purchasers

 

“Principals” means Jay Puchir, Randy May, Pete Dichiara, and Greg Mckinney.

 

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

 

“Qualified Financing” means an equity financing for the account of the Company
or Mount Tam in which shares of common stock, or securities, directly or
indirectly, convertible into or exchangeable or exercisable for shares of common
stock are issued, which financing results in cumulative aggregate proceeds to
the Company of at least $3,000,000.

 

“Reverse Merger” means the reverse merger pursuant to an Agreement and Plan of
Merger, made and entered into as of the 26th day of September, 2019, by and
among Mount Tam Biotechnologies, Inc., MTB Merger Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of Mount Tam Biotechnologies, Inc, and
the Company,

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated
the date hereof between the Company, Mount Tam and the Purchasers.

 

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

 

“Securities” means the Notes, the Shares and the shares of common stock
underlying the Notes.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Security Agreement” means the Security Agreement, dated the date hereof, among
the Company, its Subsidiaries, Mount Tam and the Purchasers.

 

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“Security Documents” means the Security Agreement and any other documents and
filings required thereunder in order to grant the Purchasers a perfected first
priority security interest (other than certain equipment which is currently
pledged to secure certain indebtedness of the Company and with respect to which
Purchasers shall have a second priority security lien) in all of the assets of
the Company and its Subsidiaries and Mount Tam including all UCC-1 filing
receipts.

 

“Shares” 300,000 shares of common stock, par value $0.0001 per share, of Mount
Tam purchased by the Purchasers for $0. 0001 per share.

 

“Subordination Agreement” means the Subordination Agreement by and among the
Purchasers, the Company and the holders of certain indebtedness of the Company
and its Subsidiaries (not including the holders of the equipment loans or
certain agreed upon merchant cash advances).

 

“Subscription Amount” means, as to the Purchasers, the aggregate amount to be
paid for Note and Shares purchased hereunder as specified below such Purchasers’
name on the signature page of this Agreement and next to the heading
“Subscription Amount”, in United States Dollars and in immediately available
funds.

 

“Subsidiary” means any direct or indirect subsidiary of the Company as set forth
on Schedule 3.1(a).

 

“Subsidiary and Mount Tam Guarantee” means the guarantee, dated the date hereof,
of the Subsidiaries and Mount Tam guaranteeing obligations under the Note and
the other Transaction Documents in favor of the Purchasers.

 

“Transfer Agent Instructions” means the irrevocable transfer agent instructions
by Mount Tam to the Transfer Agent.

 

“Transaction Documents” means this Agreement, the Notes, the Security Documents,
the Affidavits of Confession of Judgment, the Guarantees, the Subordination
Agreement, the Pledge Agreement, the Lock-up Agreements the Registration Rights
Agreement, the Transfer Agent Instructions, the Shares and any other documents
or agreements executed in connection with the transactions contemplated
hereunder.

 

PURCHASE AND SALE

 

2.1       Closing. Subject to the terms and conditions set forth herein, the
Purchasers agrees to purchase from the Company and Mount Tam the Company and
Mount Tam agree to sell to the Purchasers the aggregate principal amount of
Notes and shall cause an affiliate to sell to the Purchasers the Shares, in each
case set forth opposite the name of such Purchasers on the signature page hereto
for a purchase price in the aggregate amount of $1,500,000, which, in the case
of the Notes, shall be payable to the Company and, in the case of the Shares to
the holder of such Shares, at the Closing by wire transfer of immediately
available funds.

 

The Note shall be secured by a first priority lien (other than on certain
equipment debt which is currently pledged to secure certain indebtedness of the
Company and with respect to which Purchasers shall have a second lien), more
fully described in the Security Agreement, on all current and future assets of
the Company and the Subsidiaries and Mount Tam, including the stock of the
Company and its Subsidiaries, a is guaranteed by various parties pursuant to the
Guarantees and is subject to the rights set forth in the Pledge Agreement.

 

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At the Closing, the Purchasers shall deliver to the Company via wire transfer
immediately available funds equal to its Subscription Amount and the Company
shall deliver to the Purchasers its Note and shall cause to be delivered the
Shares, and the other items set forth in Section 2.2 issuable at the Closing.
Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall
occur at the offices of the Company, or such other location as the parties shall
mutually agree.

 

  2.2 Deliveries.

 

  a) On the Closing Date, the Company or Mount Tam shall deliver to the
Purchasers the following and shall have satisfied the following conditions, as
the case may be:

 

  (i) this Agreement, substantially in the form of Exhibit A hereto, duly
executed by the Company;         (ii) a duly executed Note with a principal
amount equal to the amount such Purchasers’ Subscription Amount, registered in
the name of such Purchasers, substantially in the form of Exhibit B hereto;    
    (iii) the Shares, registered in the name of such Purchaser, substantially in
the form of Exhibit C hereto, or registered in book entry by the Company’s
transfer agent;         (iv) the Security Agreement, duly executed by the
Company, and the Subsidiaries and Mount Tam, substantially in the form of
Exhibit D hereto, along with all the security documents;         (v) the
Subsidiary and Mount Tam Guarantee, substantially in the form of Exhibits E, and
the Principals’ Guarantee, substantially in the form of Exhibit F;         (vi)
the Affidavits of Confession of Judgment, substantially in the form of Exhibit G
hereto, duly executed by the Company, Mount Tam and the Guarantors;        
(vii) the Subordination Agreement, substantially in the Form of Exhibit H
hereto, duly executed by certain other agreed upon debtholders;         (viii) a
legal opinion of Company Counsel satisfactory in form and substance to the
Purchasers, substantially in the form of Exhibit I hereto;         (ix) the
Registration Rights Agreement, substantially in the form of Exhibit J hereto;  
      (x) the Lock-up Agreements, substantially in the form of Exhibit K hereto;
        (xi) the Transfer Agent Instructions, in the form of Exhibit L hereto;  
      (xii) the Pledge Agreement in the form of Exhibit M hereto:

 

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  (xiii) Certificates of the CEO and Secretary of the Company, its Subsidiaries
and Mount Tam, in the form of Exhibit N, certifying as to (a) copies of the
Certificate of and bylaws of such party, as amended and restated as of the date
hereof, (b) all actions taken and consents made by such party and its Board of
Directors and shareholders, as applicable to authorize the transactions provided
by the Transaction Documents, (c) the names of the directors and officers of
such party authorized to sign the Transaction Documents , together with a sample
of the true signature of such Person, (d) all conditions set forth in this
Section 2.2 have been met by such party, and (e) no event has occurred or such
party anticipates occurring that has resulted in an Event of Default or with the
passage of time would result in an Event of Default;         (xiv) Certificates
of good standing for the Company and its Subsidiaries and Mount Tam in the
jurisdictions of their respective incorporation, in the principal places in
which they conduct business and in the places where they owns real estate;      
  (xv) The final audit for the Company for 2018 and the Company’s 2018 income
tax return.;         (xvi) Intentionally omitted;         (xvii) The reverse
merger by and between a subsidiary of the Company and Mount Tam shall have been
consummated. Upon consummation of such reverse merger, shareholders of the
Company prior to the reverse merger shall own approximately 90% of the shares of
common stock of Mount Tam, which shall be free and clear of indebtedness and
other liabilities other that the Company’s liabilities;         (xviii) The
Membership Interest Purchase Agreement with Brian Steven regarding BDS
Enterprises, LLC II shall have been entered into, and Purchaser shall be
satisfied that the conditions precedent to closing and the financing therefor
shall be attainable; and         (xix) No other securities of the Company, Mount
Tam or the Subsidiaries outstanding after the use of proceeds hereof (i) shall
be in default or (ii) shall reset as a result of the issuance of the Securities.

 

  b) On the Closing Date, each Purchasers shall deliver or cause to be delivered
to the Company the following:

 

  (i) this Agreement duly executed by the Purchasers;         (ii) the
Purchasers’ Subscription Amount by wire transfer to the account of the Company;
        (iii) the Security Agreement, duly executed by the Purchasers; and      
  (iv) the Registration Rights Agreement, duly executed by the Purchasers.

 

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  2.3 Closing Conditions.

 

  a) The obligations of the Company and Mount Tam hereunder in connection with
the Closing are subject to the following conditions being met:

 

  (i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Purchasers contained herein;        
(ii) all obligations, covenants and agreements of Purchasers required to be
performed at or prior to the Closing Date shall have been performed; and        
(iii) the delivery by the Purchasers of the items set forth in Section 2.2(b) of
this Agreement.

 

  b) The obligations of the Purchasers hereunder in connection with the Closing
are subject to the following conditions being met:

 

  (i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Company and Mount Tam contained
herein;         (ii) all obligations, covenants and agreements of the Company
and its Subsidiaries and Mount Tam required to be performed at or prior to the
Closing Date shall have been performed;         (iii) such Purchasers shall be
satisfied with the results of its due diligence investigation of the Company and
Mount Tam;         (iv) such Purchasers shall be satisfied with the Company’s
current and projected uses of cash;         (v) such Purchasers shall be
satisfied with the quality and amount of the collateral;         (vi) no
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction Documents;         (vii) the
delivery by the Company and Mount Tam of the items set forth in Section 2.2(a)
of this Agreement;         (viii) Since the date of execution of this Agreement,
no event or series of events shall have occurred that reasonably could be
expected to have or result in a Material Adverse Effect with respect to the
Company and its Subsidiaries or Mount Tam;

 

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  (ix) no banking moratorium have been declared either by the United States or
New York State authorities, no suspension of trading shall have been declared on
the New York Stock Exchange or the NASDAQ Stock Market, 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 markets which, in each case, in the reasonable
judgment of such Purchasers, makes it impracticable or inadvisable to purchase
the Note and Shares at the Closing;         (x) neither the Company nor any of
its Subsidiaries or Mount Tam shall have any outstanding indebtedness, other
than (A) that in favor of the Purchasers pursuant to the Note, (B) indebtedness
incurred in the ordinary course of business in connection with the purchase of
equipment, trade debt incurred in the ordinary course of business, and (C)
indebtedness set forth on the Schedules hereto; and

 

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company and its Subsidiaries and Mount
Tam. Except as set forth in the Disclosure Schedule which shall be deemed a part
hereof, each of the Company and its Subsidiaries and Mount Tam, hereby makes the
representations and warranties set forth below to the Purchasers.

 

  a) Subsidiaries. All of the direct and indirect subsidiaries of the Company
and Mount Tam are set forth in Schedule 3.1(a) hereto. The Company and Mount Tam
each owns, directly or indirectly, all of the capital stock or other equity or
membership interests of each Subsidiary free and clear of any Liens, other than
the Lien granted to the Purchasers, and all the issued and outstanding shares of
capital stock or membership interests of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.         b) Organization and Qualification.
Each of the Company and the Subsidiaries and Mount Tam is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary not Mount Tam is in violation or default
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries and Mount Tam is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not have or reasonably
be expected to result in (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Documents, (ii) a material adverse effect
on the results of operations, assets, business, prospects or financial condition
of the Company and the Subsidiaries and Mount Tam, taken as a whole, or (iii) a
material adverse effect on the Company’s or its Subsidiaries or Mount Tam’s
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

 

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  c) Authorization; Enforcement. The Company and each of its Subsidiaries and
Mount Tam has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its respective obligations thereunder. The execution
and delivery of each of the Transaction Documents by the Company and each of its
Subsidiaries and Mount Tam and the consummation by it of the transactions
contemplated thereby have been duly authorized by all action on the part of the
Company and each of its Subsidiaries and Mount Tam and no further action is
required by the Company and each of its Subsidiaries and Mount Tam in connection
therewith. Each Transaction Document has been (or upon delivery will have been)
duly executed by the Company and each of its Subsidiaries and Mount Tam and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligation of the Company and each of its Subsidiaries and Mount Tam
enforceable against the Company and each of its Subsidiaries and Mount Tam in
accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.         d) No Conflicts. The execution, delivery and
performance of the Transaction Documents by the Company and each of its
Subsidiaries and Mount Tam and the consummation by the Company and each of its
Subsidiaries and Mount Tam of the other transactions contemplated thereby do not
and will not: (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s or Mount Tam’s certificate or articles of incorporation, bylaws or
other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary or Mount Tam, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing indebtedness of the Company or any of its Subsidiaries or
Mount Tam or otherwise) or other understanding to which the Company or any
Subsidiary or Mount Tam is a party or by which any property or asset of the
Company or any Subsidiary or Mount Tam is bound or affected, or (iii) conflict
with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary or Mount Tam is subject (including federal
and state securities laws and regulations), or by which any property or asset of
the Company or a Subsidiary or Mount Tam is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

 

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  e) Filings, Consents and Approvals. Except as set forth in Schedule 3.1 (e)
hereto, neither the Company, its Subsidiaries nor Mount Tam is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company or such Subsidiaries or Mount
Tam of the Transaction Documents.         f) Issuance of the Securities. The
Securities are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the other than
restrictions on transfer provided for in the Transaction Documents. The Common
Shares issuable upon exercise of the Notes, when issued in accordance with the
terms of the Transaction Documents, and the Shares are validly issued, fully
paid and non-assessable, free and clear of all Liens imposed by the Company, its
Subsidiaries or Mount Tam. Mount Tam has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance of at least equal
to the amount required to satisfy the conversion of the Note.         g)
Capitalization. The capitalization of the Company and its Subsidiaries and Mount
Tam is as set forth on Schedule 3.1(g). Other than as set forth on Schedule
3.1(g), the Company and the Subsidiaries and Mount Tam have no indebtedness for
money borrowed. Except as set forth on Schedule 3.1(g), neither the Company nor
Mount Tam has not issued any capital stock since September 30, 2019, other than
in connection with the Reverse Merger. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except as set forth
on Schedule 3.1(g), as a result of the purchase and sale of the Securities,
there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of common stock of the Company or Mount
Tam, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary or Mount Tam is or may become bound to issue
additional shares of common stock, of the Company or Mount Tam or securities or
rights convertible or exchangeable into shares of common stock of the Company,
its Subsidiaries or Mount Tam. The issuance and sale of the Securities will not
obligate the Company or any Subsidiary or Mount Tam to issue shares of common
stock of the Company or any Subsidiary or Mount Tam or other securities to any
Person (other than the Purchasers) and will not result in a right of the
Company’s or any of its Subsidiaries’ or Mount Tam’s securities to adjust the
exercise, conversion, exchange or reset price under such securities. All of the
outstanding shares of capital stock of and membership interests in the Company
and its Subsidiaries and Mount Tam are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares or membership interests was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. No further approval or authorization of any stockholder,
the Board of Directors of the Company or any of its Subsidiaries or Mount Tam or
others is required for the issuance and sale of the Securities. There are no
stockholders’ agreements, voting agreements or other similar agreements with
respect to Company’s or any of its Subsidiaries’ or Mount Tam’s capital stock to
which the Company or any of its Subsidiaries or Mount Tam is a party or, to the
knowledge of the Company or such Subsidiary or Mount Tam, between or among any
of the Company’s stockholders or any stockholder of its Subsidiaries or Mount
Tam. Neither the Company nor any Subsidiary nor Mount Tam has any outstanding
indebtedness for borrowed money except for the indebtedness described in
Schedule 3.1 (g) hereto.

 

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  h)  Financial Statements. The financial statements of the Company and its
Subsidiaries and of Mount Tam have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated subsidiaries and of Mount Tam as of and for the dates thereof and
the results of operations for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.        
i) Material Changes. Since September 30, 2019, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) except as set forth on Schedule
3.1(i), each of the Company and its Subsidiaries and Mount Tam has not incurred
any liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s,
its Subsidiaries’ or Mount Tam’s financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, (iii) each of the
Company and its Subsidiaries and Mount Tam has not altered its method of
accounting, (iv) each of the Company and its Subsidiaries and Mount Tam has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) each of the Company and its Subsidiaries
and Mount Tam has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing stock option plans.         j)
Litigation. Other than as set forth in Schedule 3.1 (j) hereto, there is no
action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company or Mount Tam, threatened against or
affecting the Company , any Subsidiary, Mount Tam or any of their respective
properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary nor Mount Tam, nor any director or officer thereof,
is or has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company or any
Subsidiary, there is not pending or contemplated, any investigation by the
Commission involving the Company or any Subsidiary or Mount Tam or any current
or former director or officer of the Company or any Subsidiary or Mount Tam.

 

  Page 11 of 29 

 

 

  k) Labor Relations. No material labor dispute exists or, to the knowledge of
the Company or Subsidiary or Mount Tam, is imminent with respect to any of the
employees of the Company or any Subsidiary which could reasonably be expected to
result in a Material Adverse Effect.         l) Compliance, Material Contracts.
Except as set forth on Schedule 3.1(l) hereto, neither the Company nor any
Subsidiary nor Mount Tam (i) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary or Mount Tam
under), nor has the Company or any Subsidiary or Mount Tam received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement, services, marketing or processing agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute, rule or
regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws applicable to its business except in each
case as could not have a Material Adverse Effect. Except as set forth on
Schedule 3.1(l), each Material Contract is in full force and effect and is
enforceable in accordance with its terms, and no material defaults enforceable
against the Company or any Subsidiary or Mount Tam exist thereunder. Neither the
Company nor any Subsidiary nor Mount Tam has received notice from any party to
any Material Contract stating that it intends to terminate or amend such
contract.         m) Regulatory Permits and Licenses. The Company and the
Subsidiaries and Mount Tam possess all certificates, authorizations,
memberships, sponsorships and permits issued by the appropriate federal, state,
local or foreign regulatory authorities or other Person necessary to conduct
their respective businesses and are in good standing under all such
certificates, authorizations, memberships, sponsorship and permits, except where
the failure to possess such permits could not have or reasonably be expected to
result in a Material Adverse Effect (“Material Permits”), and neither the
Company nor any Subsidiary nor Mount Tam has received any notice of proceedings
relating to the revocation or modification of any Material Permit.         n)
Title to Assets. The Company and the Subsidiaries and Mount Tam have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and Mount Tam and
good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries and Mount Tam, in
each case free and clear of all Liens, except Liens as do not materially affect
the value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the Subsidiaries and
Mount Tam and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries and
Mount Tam are held by them under valid, subsisting and enforceable leases of
which the Company and the Subsidiaries and Mount Tam are in compliance.

 

  Page 12 of 29 

 

 

  o) Intellectual Property. The Company and the Subsidiaries and Mount Tam have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights necessary or material for use in connection with their respective
businesses and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Neither the Company nor any
Subsidiary nor Mount Tam has received a written notice that the Intellectual
Property Rights used by the Company or any Subsidiary or Mount Tam violates or
infringes upon the rights of any Person. To the knowledge of the Company or
Mount Tam, all such Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual Property
Rights of others.         p) Insurance. The Company and the Subsidiaries and
Mount Tam are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries and Mount Tam are engaged.
To the best of the Company’s and Mount Tam’s knowledge, such insurance contracts
and policies are accurate and complete. Neither the Company nor any Subsidiary
nor Mount Tam has any reason to believe that it will not be able 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 without a significant increase in cost.         q) Transactions With
Affiliates and Employees. None of the officers or directors of the Company or
any Subsidiary or Mount Tam and, to the knowledge of the Company or any
Subsidiary or Mount Tam, none of the employees of the Company or any Subsidiary
or Mount Tam is presently a party to any transaction with the Company or any
Subsidiary or Mount Tam (other than for services as employees, officers and
directors and other than for indebtedness), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company or any Subsidiary or Mount Tam, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner, in each case in excess of $10,000 other than (i)
for payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company or any Subsidiary
or Mount Tam and (iii) for other employee benefits, including stock option
agreements under any stock option plan of the Company or any Subsidiary or Mount
Tam.         r) Certain Fees. Except as set forth on Schedule 3.1(r), no
brokerage or finder’s fees or commissions are or will be payable by the Company
or Mount Tam to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.         s)
Private Placement. Assuming the accuracy of the Purchasers representations and
warranties set forth in Section 3.2, no registration under the Securities Act is
required for the offer and sale of the Securities by the Company and its
Subsidiaries and Mount Tam to the Purchasers as contemplated hereby.

 

  Page 13 of 29 

 

 

  t) Investment Company. The Company, its Subsidiairies and Mount Tam is not,
and is not an Affiliate of, and immediately after receipt of payment for the
Securities, will not be or be an Affiliate of, an “investment company” within
the meaning of the Investment Company Act of 1940, as amended. The Company, its
Subsidiaries and Mount Tam shall conduct its business in a manner so that it
will not become subject to the Investment Company Act.         u) Registration
Rights. Except as contemplated by the transactions hereunder or as set forth on
Schedule 3.1(u), no Person has any right to cause the Company or Mount Tam to
effect the registration under the Securities Act of any securities of the
Company or Mount Tam.         v) Application of Takeover Protections. The
Company’s and its Subsidiaries’ and Mount Tam’s Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company’s, its Subsidiaries’ and Mount Tam’s
fulfilling their obligations or exercising their rights under the Transaction
Documents, including without limitation as a result of the Company’s and Mount
Tam’s issuance of the Securities and the Purchasers’ ownership of the
Securities.         w) Disclosure. All disclosure provided to the Purchasers
regarding each of the Company, its Subsidiaries, Mount Tam, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, furnished by or on behalf of the Company, its Subsidiaries and Mount
Tam with respect to the representations and warranties made herein are true and
correct with respect to such representations and warranties and do 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 light of the
circumstances under which they were made, not misleading. The Company and its
Subsidiaries and Mount Tam acknowledge and agree that the Purchasers makes no
nor has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.         x) No Integrated Offering. Assuming the accuracy of the
Purchasers’ representations and warranties set forth in Section 3.2, neither the
Company, nor any of its Subsidiaries or Affiliates, nor Mount Tam nor any Person
acting on its or 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 be integrated
with prior offerings by the Company or its Subsidiaries or Mount Tam for
purposes of the Securities Act or any applicable shareholder approval
provisions.

 

  Page 14 of 29 

 

 

  y) Solvency. For purposes of this representation, the term the “Company” shall
include all of its Subsidiaries and Mount Tam. Based on the financial condition
of the Company as of the Closing Date after giving effect to the receipt by the
Company and its Subsidiaries of the proceeds from the sale of the Securities
hereunder and the application of the proceeds thereof, (i) the Company’s fair
saleable value of its assets exceeds the amount that will be required to be paid
on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature; (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business for
the current fiscal year as now conducted and as proposed to be conducted
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company’s, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt). The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date.
Schedule 3.1(g) sets forth all outstanding secured and unsecured Indebtedness of
the Company, is Subsidiaries and Mount Tam or for which any such party has
commitments. For the purposes of this Agreement, “Indebtedness” shall mean (a)
any liabilities for borrowed money or amounts owed in excess of $10,000 (other
than trade accounts payable incurred in the ordinary course of business), (b)
all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
such party’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $10,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary nor
Mount Tam is in default with respect to any Indebtedness.         z)
Environmental Matters. The Company and each its Subsidiaries and Mount Tam (a)
is in compliance with any and all Environmental Laws (as herein defined), (b)
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its respective businesses and (c) is in
compliance with all terms and conditions of any such permit, license or
approval. The term “Environmental Laws” means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

  Page 15 of 29 

 

 

aa)Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary and Mount Tam has filed all necessary
federal, state and foreign income and franchise tax returns and has paid or
accrued all taxes shown as due thereon, and the Company and Mount Tam have no
knowledge of a tax deficiency which has been asserted or threatened against the
Company or any Subsidiary or Mount Tam.     bb)No General Solicitation. Neither
the Company, Mount Tam nor any person acting on behalf of the Company or Mount
Tam has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company and Mount Tam have offered the
Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.    
cc)Foreign Corrupt Practices; Patriot Act, etc. For purposes of this
representation, the term the “Company” shall include all of its Subsidiaries and
Mount Tam. Neither The Company, nor to the knowledge of the Company, any agent
or other person acting on behalf of the Company, has (i) directly or indirectly,
used any corrupt funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made
any unlawful payment to foreign or domestic government officials or employees or
to any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended.       The Company and its
Subsidiaries and Mount Tam are in compliance, in all material respects, with (a)
the Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 C.F.R.,
Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) the USA Patriot Act (Title III of Pub.
L. 107-56,signed into law October 26, 2001) (the “Act”). No part of the proceeds
of the Note will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended. None of the Company or any of its Subsidiaries and Mount Tam
is a Person named on a list published by OFAC or a Person with whom dealings are
prohibited under any OFAC Regulations.     dd)Seniority. As of the Closing Date,
no Indebtedness, equity or other security of the Company or the Subsidiaries or
Mount Tam is senior to, or, except as set forth on Schedule 3.1(dd) hereto, pari
passu with, the Notes in right of payment, whether with respect to interest or
upon liquidation or dissolution, or otherwise.

 

  Page 16 of 29 

 

 

ee)No Disagreements with Accountants and Lawyers. There are no disagreements of
any kind presently existing, or reasonably anticipated by the Company or any
Subsidiary or Mount Tam to arise, between the accountants and lawyers formerly
or presently employed by the Company or any Subsidiary of Mount Tam and, except
as set forth on Schedule 3.1(ee), the Company and each Subsidiary and Mount Tam
is current with respect to any fees owed to its accountants and lawyers. By
making this representation, each of the Company and its Subsidiaries and Mount
Tam does not, in any manner, waive the attorney/client privilege or the
confidentiality of the communications between the Company and its Subsidiaries
and Mount Tam and its lawyers.     ff)Acknowledgment Regarding Purchasers’
Purchase of Securities. The Company and its Subsidiaries and Mount Tam
acknowledge and agree that the Purchasers are acting solely in the capacity of
an arm’s length Purchasers with respect to the Transaction Documents and the
transactions contemplated hereby. The Company and its Subsidiaries and Mount Tam
further acknowledge that the Purchasers are not acting as a financial advisor or
fiduciary of the Company and its Subsidiaries and Mount Tam (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by the Purchasers or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to the Purchasers’ purchase of the Securities. The
Company and its Subsidiaries and Mount Tam further represent to the Purchasers
that Company’s and its Subsidiaries’ and Mount Tam’s decision to enter into this
Agreement has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company, Mount Tam and their
representatives.     gg)Rule 506(d) Bad Actor Disqualification Representations
and Covenants.

 

(i)No Disqualification Events. Neither the Company, Mount Tam nor any of its
predecessors affiliates, any manager, executive officer, other officer of the
Company or such Subsidiary or Mount Tam participating in the offering, any
beneficial owner (as that term is defined in Rule 13d-3 under the Exchange Act)
of 20% or more of the Company’s or such Subsidiaries’ or Mount Tam’s outstanding
voting equity securities, calculated on the basis of voting power, nor any
promoter (as that term is defined in Rule 405 under the Securities Act)
connected with the Company or such Subsidiary or Mount Tam in any capacity as of
the date of this Agreement and on the Closing Date (each, a “Company Covered
Person” and, together, “Company Covered Persons”) is subject to any of the “Bad
Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the
Securities Act (a “Disqualification Event”), except for a Disqualification Event
covered by Rule 506(d)(2) or (d)(3). The Company and its Subsidiaries and Mount
Tam has exercised reasonable care to determine (i) the identity of each person
that is a Company Covered Person; and (ii) whether any Company Covered Person is
subject to a Disqualification Event. The Company and its Subsidiaries and Mount
Tam will comply with its disclosure obligations under Rule 506(e).     (ii)Other
Covered Persons. None of the Company and its Subsidiaries or Mount Tam is aware
of any person (other than any Company Covered Person) that has been or will be
paid (directly or indirectly) remuneration in connection with the Note that is
subject to a Disqualification Event (each an “Other Covered Person”).

 

  Page 17 of 29 

 

 

(iii)Reasonable Notification Procedures. With respect to each Company Covered
Person, the Company and its Subsidiaries and Mount Tam has established
procedures reasonably designed to ensure that they receive notice from each such
Company Covered Person of (i) any Disqualification Event relating to that
Company Covered Person, and (ii) any event that would, with the passage of time,
become a Disqualification Event relating to that Company Covered Person; in each
case occurring up to and including the Closing Date.     (iv)Notice of
Disqualification Events. The Company and Mount Tam will notify the Purchasers
immediately in writing upon becoming aware of (i) any Disqualification Event
relating to any Company Covered Person and (ii) any event that would, with the
passage of time, become a Disqualification Event relating to any Company Covered
Person and/or Other Covered Person.

 

hh)Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company and
its Subsidiaries and Mount Tam acknowledge and agree that the Purchasers are
acting solely in the capacity of an arm’s length Purchasers with respect to this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby and that the Purchasers is not (i) an officer or director of
the Company or the Subsidiaries or Mount Tam, (ii) an Affiliate of the Company
or the Subsidiaries or Mount Tam or (iii) to the knowledge of the Company or
such Subsidiaries or Mount Tam , 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 and the Subsidiaries and Mount Tam further acknowledge that the
Purchasers are not acting as a financial advisor or fiduciary of the Company or
its Subsidiaries or Mount Tam (or in any similar capacity) with respect to this
Agreement or the other Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by the Company or the Subsidiaries or
Mount Tam or any of its representatives or agents in connection with this
Agreement or the other Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Purchasers’ purchase of the
Notes and Common Shares.

 

3.2  Representations and Warranties of the Purchasers. Each Purchaser hereby
represents and warrants as of the date hereof and as of the Closing Date to the
Company and Mount Tam as follows:

 

a)Organization; Authority. Such Purchaser is an entity duly organized under the
laws of the jurisdiction of its organization with full right, corporate or
partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or similar action on the part of the
Purchaser. Each Transaction Document to which it is a party has been duly
executed by the Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of the Purchaser, enforceable against it in accordance with its terms, except
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

 

  Page 18 of 29 

 

 

b)Purchasers Representation. The Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable securities
laws and has no arrangement or understanding with any other persons regarding
the distribution of such Securities (this representation and warranty not
limiting the Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable federal and
state securities laws). Nothing contained herein shall be deemed a
representation or warranty by such Purchasers to hold Securities for any period
of time.     c)Purchasers Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
converts any of the Notes into shares of Common Stock it will be either: (i) an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
(a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as
defined in Rule 144A(a) under the Securities Act.     d)Experience of the
Purchasers. Such Purchaser, either alone or together with its representatives,
has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, and has so evaluated the merits and
risks of such investment. Such Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.

 

e)General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

 

The Company and its Subsidiaries and Mount Tam acknowledge and agree that the
Purchasers does not make or have not made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in this Section 3.2.

 

  Page 19 of 29 

 

 

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

 

a)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
any Subsidiary or Mount Tam or to an affiliate of a Purchasers or in connection
with a pledge as contemplated in Section 4.1(b), the Company or Mount Tam may,
at its expense, require the transferor thereof to provide to the Company or
Mount Tam an opinion of counsel selected by the transferor and reasonably
acceptable to the Company or Mount Tam, the form and substance of which opinion
shall be reasonably satisfactory to the Company or Mount Tam, 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
of a Purchasers under this Agreement.     b)The Purchasers agrees to the
imprinting, so long as is required by this Section 4.1(b), of a legend on any of
the Securities in the following form:

 

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

 

c)Certificates evidencing the Common Shares underlying the Note shall not
contain any legend (including the legend set forth in Section 4.1(b) hereof):
(i) while a registration statement (including the Registration Statement)
covering the resale of such security is effective under the Securities Act, or
(ii) following any sale of such Common Shares pursuant to Rule 144, or (iii) if
such Common 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
Commission). The Company and Mount Tam shall, at its expense, cause its counsel
to issue a legal opinion to the Mount Tam’s transfer agent promptly after the
Effective Date if required by the Mount Tam’s transfer agent to effect the
removal of the legend hereunder. If all or any portion of a Note is converted at
a time when there is an effective registration statement to cover the resale of
the common shares, or if such common shares may be sold under Rule 144 or if
such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations thereof) then such common
shares shall be issued free of all legends. The Company and Mount Tam agree that
following the Effective Date or at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than two Business Days
following the delivery by a Purchasers to Mount Tam or Mount Tam’s transfer
agent of a certificate representing common shares issued with a restrictive
legend (such third Business Day, the “Legend Removal Date”), deliver or cause to
be delivered to such Purchasers a certificate representing such shares that is
free from all restrictive and other legends. Neither Mount Tam nor the Company
may make any notation on its records or give instructions to any transfer agent
of Mount Tam or the Company that enlarge the restrictions on transfer set forth
in this Section. Certificates for common shares subject to the legend removal
hereunder shall be transmitted by the transfer agent of Mount Tam or the Company
to the Purchasers by crediting the account of the Purchasers’ prime broker with
the DTC.

 

  Page 20 of 29 

 

 

d)In addition to the Purchasers’ other available remedies, the Company and Mount
Tam shall pay to each Purchasers, in cash, as partial liquidated damages and not
as a penalty, $1,000 per Business Day for each Business Day after the Legend
Removal Date until such certificate is delivered without a legend. Nothing
herein shall limit each Purchasers’ right to pursue actual damages for the
Company’s and Mount Tam’s failure to deliver certificates representing any
Securities as required by the Transaction Documents, and each Purchasers shall
have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.     e)The Purchasers agrees that the removal of the
restrictive legend from certificates representing Securities as set forth in
this Section 4.1 is predicated upon the Company’s and Mount Tam’s reliance that
such Purchasers will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom.

 

4.2 Acknowledgment of Dilution. The Company and its Subsidiaries and Mount Tam
acknowledge that the issuance of the Securities may result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company and its Subsidiaries and Mount Tam
further acknowledge that its obligations under the Transaction Documents,
including without limitation its obligation to issue the Common Shares
underlying the Notes pursuant to the Transaction Documents, are unconditional
and absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim the
Company or its Subsidiaries and Mount Tam may have against any Purchasers and
regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Company and its Subsidiaries and Mount Tam.

 

4.3 Furnishing of Information. Prior to the time the Company or Mount Tam is a
reporting company under the Exchange Act,, the Company and its Subsidiaries and
Mount Tam covenant to provide the Purchasers with (1) monthly statement of
operations, balance sheet and cash flow information within 30 days of the end of
each month, (2) annual audited consolidated financial statements prepared by its
independent certified financial accountants and (3) such other financial
information reasonably requested by Purchasers.

 

4.4 Shareholder Rights Plan. No claim will be made or enforced by the Company or
its Subsidiaries or Mount Tam or, to the knowledge of any such party, any other
Person that any Purchasers is an “Acquiring Person” under any shareholder rights
plan or similar plan or arrangement in effect or hereafter adopted by the
Company or its Subsidiaries or Mount Tam, or that any Purchasers could be deemed
to trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities under the Transaction Documents or under any other
agreement between the Company any of its Subsidiaries and Mount Tam and any
Purchasers. The Company and its Subsidiaries and Mount Tam shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act.

 

  Page 21 of 29 

 

 

4.5 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder to repay indebtedness owing to Catalytic Capital LLC c/o
Thoroughbred Pinnacle LLC and the payment of fees and expenses (in each case
satisfactory to the Investor) incurred in connection herewith and for working
capital purposes satisfactory to the Purchasers. The Company and Mount Tam may
not use funds at any time to repay indebtedness, lend money, give credit or make
advances to any officers, directors, employees, affiliates or debtholders of the
Company, its Subsidiaries or Mount Tam.

 

4.6 Reimbursement. If the Purchasers becomes involved in any capacity in any
Proceeding by or against any Person who is a stockholder of the Company or its
Subsidiaries or Mount Tam (except as a result of sales, pledges, margin sales
and similar transactions by the Purchasers to or with any current stockholder),
solely as a result of such Purchasers’ acquisition of the Securities under this
Agreement, the Company and its Subsidiaries and Mount Tam will reimburse such
Purchasers for its reasonable legal and other expenses (including the cost of
any investigation preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. The reimbursement
obligations of the Company and its Subsidiaries and Mount Tam under this
paragraph shall be in addition to any liability which the Company or such
Subsidiaries and Mount Tam may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of such
Purchasers and any such Affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, its Subsidiaries, Mount Tam, the Purchasers and any such Affiliate and
any such Person. The Company and its Subsidiaries and Mount Tam also agree that
neither the Purchasers nor any such Affiliates, partners, directors, agents,
employees or controlling persons shall have any liability to the Company, its
Subsidiaries, Mount Tam or any Person asserting claims on behalf of or in right
of the Company, its Subsidiaries, Mount Tam solely as a result of acquiring the
Securities under this Agreement.

 

4.7 Indemnification of Purchasers. Subject to the provisions of this Section
4.7, the Company and its Subsidiaries and Mount Tam will indemnify and hold the
Purchasers and its directors, officers, shareholders, partners, employees and
agents (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title),
each Person who controls such Purchasers (within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, shareholders, agents, members, partners or employees (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling
person (each, a “Purchasers Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any Purchasers Party may suffer
or incur as a result of, arising from, or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company and
its Subsidiaries and Mount Tam in this Agreement or in the other Transaction
Documents (or any allegation by a third-party that, if true would constitute
such a breach) or (b) any action instituted against a Purchasers, or any of them
or their respective Affiliates, by any stockholder of the Company or its
Subsidiaries or Mount Tam who is not an Affiliate of such Purchasers, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchasers’ representation,
warranties or covenants under the Transaction Documents or any agreements or
understandings any Purchasers may have with any such stockholder or any
violations by such Purchasers of state or federal securities laws or any conduct
by such Purchasers which constitutes fraud, gross negligence or willful
misconduct). If any action shall be brought against any Purchasers Party in
respect of which indemnity may be sought pursuant to this Agreement, the
Purchasers Party shall promptly notify the Company and Mount Tam in writing, and
the Company and Mount Tam shall have the right to assume the defense thereof
with counsel of its own choosing. Any Purchasers Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Purchasers Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company and Mount Tam in writing, (ii) the
Company and Mount Tam has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and Mount Tam and the position of the
Purchasers Party. The Company and Mount Tam will not be liable to any Purchasers
Party under this Agreement (i) for any settlement by a Purchasers Party effected
without the Company’s and Mount Tam’s prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchasers
Party’s breach of any of the representations, warranties, covenants or
agreements made by the Purchasers in this Agreement or in the other Transaction
Documents.

 

  Page 22 of 29 

 

 

4.8 Participation in Future Financing. From the date hereof until the date that
is the eighteen month anniversary of the Closing Date, upon any issuance by the
Company or any of its Subsidiaries or Mount Tam of debt or common stock or
common stock equivalents for cash consideration, indebtedness or a combination
of units thereof (a “Subsequent Financing”), the Purchasers shall have the right
to participate in up to an amount of the Subsequent Financing equal to 100% of
the amount invested hereunder (the “Participation Maximum”) on the same terms,
conditions and price provided for in the Subsequent Financing. At least five (5)
Business Days prior to the closing of the Subsequent Financing, the Company and
Mount Tam shall deliver to each Purchasers a written notice of its intention to
effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the
Purchasers if it wants to review the details of such financing (such additional
notice, a “Subsequent Financing Notice”). Upon the request of a Purchasers, and
only upon a request by such Purchasers, for a Subsequent Financing Notice, the
Company and Mount Tam shall promptly, but no later than one (1) Business Day
after such request, deliver a Subsequent Financing Notice to such Purchasers.
The Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder and the Person or Persons through or with whom such Subsequent
Financing is proposed to be effected and shall include a term sheet or similar
document relating thereto as an attachment.

 

If the Purchasers desires to participate in such Subsequent Financing must
provide written notice to the Company and Mount Tam by not later than 5:30 p.m.
(New York City time) on the fifth (5th) Business Day after the Purchasers has
received the Pre-Notice that such Purchasers is willing to participate in the
Subsequent Financing, the amount of such Purchaser’s participation, and
representing and warranting that such Purchasers has such funds ready, willing,
and available for investment on the from the Purchasers as of such fifth (5th)
Business Day, the Purchasers shall be deemed to have notified the Company and
Mount Tam that it does not elect to participate.

 

If by 5:30 p.m. (New York City time) on the fifth (5th) Business Day after the
Purchasers have received the Pre-Notice, notifications by the Purchasers of
their willingness to participate in the Subsequent Financing (or to cause their
designees to participate) is, in the aggregate, less than the total amount of
the Subsequent Financing, then the Company or Mount Tam may effect the remaining
portion of such Subsequent Financing on the terms and with the Persons set forth
in the Subsequent Financing Notice.

 

If by 5:30 p.m. (New York City time) on the fifth (5th) Business Day after the
Purchasers has received the Pre-Notice, the Company or Mount Tam receives
responses to a Subsequent Financing Notice from Purchasers seeking to purchase
more than the aggregate amount of the Participation Maximum, the Purchasers
shall have the right to purchase its portion of the Participation Maximum.

 

  Page 23 of 29 

 

 

The Company and Mount Tam must provide the Purchasers with a second Subsequent
Financing Notice, and the Purchasers will again have the right of participation
set forth above in this Section 4.12, if the Subsequent Financing subject to the
initial Subsequent Financing Notice is not consummated for any reason on the
terms set forth in such Subsequent Financing Notice within thirty (30) Business
Days after the date of the initial Subsequent Financing Notice.

 

The Company and Mount Tam and the Purchasers agree that if the Purchasers elects
to participate in the Subsequent Financing, the transaction documents related to
the Subsequent Financing shall not include any term or provision whereby such
Purchasers shall be required to agree to any restrictions on trading as to any
of the Securities purchased hereunder or be required to consent to any amendment
to or termination of, or grant any waiver, release or the like under or in terms
set forth in the Subsequent Financing Notice. If the Company and Mount Tam
receives no such notice connection with, this Agreement, without the prior
written consent of the Purchasers.

 

Notwithstanding anything to the contrary in this Section 4.8 and unless
otherwise agreed to by the Purchasers, the Company and Mount Tam shall either
confirm in writing to the Purchasers that the transaction with respect to the
Subsequent Financing has been abandoned or shall publicly disclose its intention
to issue the securities in the Subsequent Financing, in either case in such a
manner such that the Purchasers will not be in possession of any material,
non-public information, by the tenth (10th) Business Day following delivery of
the Subsequent Financing Notice. If by such tenth (10th) Business Day, no public
disclosure regarding a transaction with respect to the Subsequent Financing has
been made, and no notice regarding the abandonment of such transaction has been
received by the Purchasers, such transaction shall be deemed to have been
abandoned and the Purchasers shall not be deemed to be in possession of any
material, non-public information with respect to the Company or Mount Tam or any
Subsequent Financing.

 

4.9 Most Favored Nations. In the event that while the any of the Notes are
outstanding, the Company or Mount Tam issues or sells any securities to a third
party in a capital raising transaction or series of related transactions which
grants to such investor investment terms that in the opinion of the Purchasers
are more favorable as a whole to those granted to Purchasers in this offering,
the agreements between the Company, Mount Tam and the Purchasers shall be
amended to include such better terms on any outstanding Notes.

 

4.10 Insurance Matters. The Company agrees that within 30 days of Closing it
will obtain Key man insurance on J. D. Reedy in an amount equal to the Notes and
Directors’ and Officers’ insurance in an amount satisfactory to the Purchasers.
By such date, the Company will also name Purchasers as lender loss payee and
additional insured under each Company such insurance policy

 

MISCELLANEOUS

 

5.1 Termination. This Agreement may be terminated by the Purchasers, as to such
Purchasers’ obligation hereunder by written notice to the other parties, if the
Closing has not been consummated on or before November 30, 2019; provided that
no such termination will affect the right of any party to sue for any breach by
the other party (or parties).

 

5.2  Fees. At the Closing, the Company has agreed to reimburse Purchasers (i)
$25,000 (less any amounts previously received) for legal expenses incurred in
connection with the transaction, and (ii) all other costs and expenses incurred
in connection with the due diligence and documentation of the transaction by the
Purchasers (e.g., background checks (to the extent not provided to Purchasers),
lien searches and UCC filings (less any amounts previously received). Such
expenses shall also include $20,000 payable to a third party for accounting due
diligence, to the extent not previously paid. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of any Securities.

 

  Page 24 of 29 

 

 

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

5.4 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via email or facsimile at the facsimile
number set forth on the signature pages attached hereto prior to 5:30 p.m. (New
York City time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via email or
facsimile at the facsimile number set forth on the signature pages attached
hereto on a day that is not a Business Day or later than 5:30 p.m. (New York
City time) on any Business Day, (c) the second Business Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or
(d) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as set forth on
the signature pages attached hereto.

 

5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of amendments, by the
Company, Mount Tam and the Majority Purchasers or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.

 

5.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company and Mount Tam may not assign this Agreement or any rights or obligations
hereunder. Any Purchasers may assign any or all of its rights under this
Agreement to any Person to whom such Purchasers assigns or transfers any
Securities, provided such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions hereof that apply to such
“Purchasers.”

 

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.11.

 

  Page 25 of 29 

 

 

5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any 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 improper
or inconvenient venue for such proceeding. 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 via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

 

5.10 Survival. The representations and warranties contained herein shall survive
for a period of 18 months following the Closing, the delivery of the Securities
and the conversion or payment of the Notes.

 

5.11 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile signature page or data file were an original thereof.

 

5.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Purchasers exercises a right, election, demand or option
under a Transaction Document and the Company and its Subsidiaries and Mount Tam
does not timely perform their related obligations within the periods therein
provided, then such Purchasers may rescind or withdraw, in its sole discretion
from time to time upon written notice to the Company and Mount Tam , any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.

 

5.14 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company and its
Subsidiaries or Mount Tam shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company or Mount Tam of such loss, theft or
destruction and customary and reasonable indemnity, if requested. The applicants
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such replacement
Securities.

 

5.15 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company and Mount Tam will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

 

  Page 26 of 29 

 

 

5.16 Payment Set Aside. To the extent that the Company or its Subsidiaries or
Mount Tam makes a payment or payments to any Purchasers pursuant to any
Transaction Document or a Purchasers enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, such
Subsidiary, or Mount Tam a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

 

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

 

5.18 Liquidated Damages. The Company’s and its Subsidiaries and Mount Tam’s
obligations to pay any partial liquidated damages or other amounts owing under
the Transaction Documents is a continuing obligation of the Company and its
Subsidiaries and Mount Tam and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

 

(Signature Pages Follow)

 

  Page 27 of 29 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

BANNER MIDSTREAM CORP.   Address for Notice:               5899 Preston Rd.,
Unit 505       Frisco, TX 75034         By:     Telephone: Name: Jay Puchir  
Email: jpuchir@pinnaclefrac.com Title: CEO             MTB CORP.   Address for
Notice:               106 Main Street, #4E       Burlington, VT 05401        
By:     Telephone: Name:     Email: Title:      

 

With a copy to (which shall not constitute notice):

 

Telephone:

Email:

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

SIGNATURE PAGE FOR PURCHASERS FOLLOWS]

 

  Page 28 of 29 

 

 

[PURCHASERS SIGNATURE PAGES TO COMPANY, SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Name of Investing Entity:
________________________________________________________

Signature of Authorized Signatory of Investing Entity:
__________________________________

Name of Authorized Signatory:
____________________________________________________

 

Title of Authorized Signatory:
_____________________________________________________

Email Address of Authorized
Entity:_______________________________________________

 

Address for Notice of Investing Entity:

 

Address for Delivery of Securities for Investing Entity (if not same as above):

 

Subscription Amount: $1,500,000

Principal Amount of Notes: $1,666,666.67

Common Shares: 300,000

 

  Page 29 of 29