Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement (this “Agreement”) has been executed by the
purchaser set forth on the signature page hereof (the “Purchaser”) in connection
with the private placement offering (the “Offering”) by Amesite Inc., a Delaware
corporation (the “Company”).

 

RECITALS

 

A. The Company is offering a minimum of 1,000,000 shares of the Company’s common
stock, par value $0.0001 per share (“Common Stock”), at a purchase price of
$2.00 per share (the “Purchase Price”), for an aggregate purchase price of
approximately $2,000,000 (the “Minimum Offering Amount”), and a maximum of
2,500,000 shares of Common Stock at the Purchase Price for an aggregate Purchase
Price of approximately $5,000,000 (the “Maximum Offering Amount”). The Company
may also sell an additional 1,000,000 shares of Common Stock at the Purchase
Price for an aggregate Purchase Price of approximately $2,000,000 to cover
over-subscriptions (the “Over-Subscription Option”), in the event the Offering
is oversubscribed.

 

B. The Shares (as defined below) subscribed for pursuant to this Agreement have
not been registered under the Securities Act of 1933, as amended (the
“Securities Act”). The Offering is being made on a reasonable best efforts basis
to “accredited investors,” as defined in Regulation D under the Securities Act
in reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act and Rule 506 of Regulation D thereunder.

 

AGREEMENT

 

The Company and the Purchaser hereby agree as follows:

 

1. Subscription.

 

1.1 Purchase and Sale of the Shares.

 

(a) Subject to the terms and conditions of this Agreement, the undersigned
Purchaser agrees to purchase, and the Company agrees to sell and issue to such
Purchaser, that number of shares set forth on such Purchaser’s Omnibus Signature
Page attached hereto at the Purchase Price, for a total aggregate Purchase Price
as set forth on such Omnibus Signature Page. The minimum subscription amount for
each Purchaser in the Offering is $50,000 (or 25,000 Shares). The Company may
accept subscriptions for less than $50,000 from any Purchaser in its sole
discretion with the consent of the Placement Agents. For the purposes of this
Agreement, “Shares” means the shares of Common Stock issued in the Offering at
the Initial Closing (as defined below) or at any Subsequent Closing (as defined
below).

 

(b) This Agreement is one of a series of subscription agreements issued (and to
be issued) by the Company to purchasers of Shares in connection with the
Offering with the same terms and conditions set forth in this Agreement (each, a
“Subscription Agreement”, and collectively, the “Subscription Agreements”) and
the Company’s confidential private placement memorandum, dated July 10, 2019, as
such may be amended and or supplemented on or after the date hereof (the
“Memorandum”).

 

 

 

 

1.2 Subscription Procedure; Closing.

 

(a) Initial Closing. Subject to the terms and conditions of this Agreement, the
initial closing of the Shares shall take place remotely via the exchange of
documents and signatures following the receipt of subscriptions equal to or
exceeding the Minimum Offering Amount or at such other time and place as
mutually agreed to by the Company and the Placement Agent (as defined in Section
2) (the “Initial Closing”).

 

(b) Subsequent Closings. If the Maximum Offering Amount is not sold at the
Initial Closing, at any time prior the earliest of (i) the date upon which
subscriptions for the Maximum Offering Amount as may be increased in connection
with the Over-Subscription Option) have been accepted, (ii) August 31, 2019
unless extended by the Company and the Placement Agent to September 30, 2019,
and (iii) the date upon which the Company and the Placement Agent elect to
terminate the Offering (the earliest of such dates, the “Termination Date”), the
Placement Agent and the Company may continue to accept, and continue to have
closings (each a “Subsequent Closing” and collectively the “Subsequent
Closings”), up to the Maximum Offering Amount, and if there are
over-subscriptions, such additional Shares as may be sold in connection with the
Over-Subscription Option (the “Subsequent Closing Shares”) to such persons as
may be approved by the Company and who are reasonably acceptable to the
Placement Agent (the “Additional Purchasers”). All such sales made at any
Subsequent Closing, shall be made on the terms and conditions set forth in the
Subscription Agreements, and (i) the representations and warranties of the
Company set forth in Section 3 hereof (and the Disclosure Schedule) shall speak
as of each Closing (except to the extent specified otherwise in Section 3) and
(ii) the representations and warranties of the Additional Purchasers in Section
4 hereof shall speak as of such Subsequent Closing. Any Subsequent Closing
Shares issued and sold pursuant to this Section 1.2(b) shall be deemed to be
“Shares” for all purposes under this Agreement, and any Additional Purchasers
thereof shall be deemed to be “Purchasers” for all purposes under this
Agreement. The Initial Closing and the Subsequent Closings, if any, shall be
known collectively herein as the “Closings” or individually as a “Closing.”

 

(c) Subscription Procedure. To complete a subscription for the Shares, the
Purchaser must fully comply with the subscription procedure provided in
paragraphs a. through c. of this Section on or before the applicable Closing:

 

(i) Subscription Documents. At or before the applicable Closing, the Purchaser
shall review, complete and execute the Omnibus Signature Page to this Agreement
and the Registration Rights Agreement substantially in the form of Exhibit A
hereto (the “Registration Rights Agreement”), Investor Profile, Selling
Securityholder Questionnaire and Investor Certification, attached hereto
following the Omnibus Signature Page (collectively, the “Subscription
Documents”), if applicable, additional forms and questionnaires distributed to
the Purchaser and deliver the Subscription Documents and such additional forms
and questionnaires to the party indicated thereon at the address set forth under
the caption “How to subscribe for Shares in the private offering of the
Company.” below. Executed documents may be delivered to such party by facsimile
or .pdf sent by electronic mail (e-mail).

 

(ii) Purchase Price. Simultaneously with the delivery of the Subscription
Documents as provided herein, and in any event at or prior to the applicable
Closing, the Purchaser shall deliver to Signature Bank, in its capacity as
escrow agent (the “Escrow Agent”), under an escrow agreement among the Company,
the Placement Agents (as defined below) and the Escrow Agent (the “Escrow
Agreement”) the full Purchase Price by certified or other bank check or by wire
transfer of immediately available funds, pursuant to the instructions set forth
under the caption “How to subscribe for Shares in the private offering of the
Company” below. Such funds will be held for the Purchaser’s benefit in the
escrow account established for the Offering (the “Escrow Account”) and will be
returned promptly, without interest or offset, if this Agreement is not accepted
by the Company, or the Minimum Offering Amount has not been sold or the Offering
is terminated pursuant to its terms prior to the Closing.

 

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(iii) Company Discretion. The Purchaser understands and agrees that the Company
in its sole discretion reserves the right to accept or reject this or any other
subscription for Shares, in whole or in part, notwithstanding prior receipt by
the Purchaser of notice of acceptance of this subscription. The Company shall
have no obligation hereunder until the Company shall execute and deliver to the
Purchaser an executed copy of this Agreement. If this subscription is rejected
in whole, or the Offering is terminated, all funds received from the Purchaser
will be returned without interest or offset, and this Agreement shall thereafter
be of no further force or effect. If this subscription is rejected in part, the
funds for the rejected portion of this subscription will be returned without
interest or offset, and this Agreement will continue in full force and effect to
the extent this subscription was accepted.

 

1.3 Additional Terms of the Offering.

 

(a) Anti-Dilution Protection. For the period beginning on the date of the
Initial Closing and ending on the date that the Company has consummated a
Qualified Public Offering (as defined herein), if the Company shall issue any
Common Stock or securities convertible into or exercisable for shares of Common
Stock (or modify any of the foregoing which may be outstanding) to any person or
entity at a price per share or conversion or exercise price per share which
shall be less than $2.00 per share, being the Purchase Price for the Shares
hereunder (the “Lower Price Issuance”) and other than with regard to Exempt
Issuances (as defined herein), then the Company shall issue the Purchaser such
number of additional shares of Common Stock to reflect such lower price for the
shares of Common Stock such that the Purchaser shall hold such number of shares
of Common Stock, in total, had the Purchaser paid a Purchase Price equal to the
Lower Price Issuance (with any fractional shares rounded up to the nearest whole
number). For purposes herein, “Exempt Issuance” shall mean (i) the issuance of
shares of Common Stock (or options to purchase Common Stock) to employees,
consultants, officers or directors of the Company or any affiliate or subsidiary
of the Company pursuant to stock option plans or restricted stock plans, which
issuance of shares of Common Stock (or options to purchase Common Stock) is
approved by the Board of the Company and (ii) the issuance of securities
pursuant to capital reorganization, reclassification or similar transactions
that are primarily for purposes other than raising equity capital; and
“Qualified Public Offering” shall mean the Company’s underwritten offering of
its securities pursuant to a registration statement under the Securities Act of
1933, as amended, with aggregate gross proceeds to the Company of at least Five
Million Dollars ($5,000,000) that involves the simultaneous listing of the
Company’s Common Stock on a United States national securities exchange.

 

(b) Premium Shares. If the Company does not consummate a Qualified Public
Offering (as defined above) on or before December 31, 2020 (the “Public Offering
Deadline”), then the Company shall deliver to each Purchaser and each Purchaser
shall receive, for each Share purchased in this Offering, one (1) additional
share of Common Stock, within three (3) Business Days from the Public Offering
Deadline.

 

2. Placement Agent. Laidlaw & Company (UK) Ltd., a U.S.-registered broker-dealer
(“Laidlaw”), has been engaged by the Company as placement agent on a reasonable
best efforts basis, for the Offering. The Company, subject to its agreement with
Laidlaw, or Laidlaw itself, may engage additional placement agents (Laidlaw
together with any such additional placement agents, the “Placement Agents”). The
Placement Agents, collectively, will be paid at each Closing from the Offering
proceeds a total cash commission of ten percent (10%) of the gross Purchase
Price paid by Purchasers in the Offering introduced by them (the “Cash Fee”) and
will collectively receive warrants to purchase a number of shares of Common
Stock equal to 10% of the number of shares of Common Stock sold to investors in
the Offering, introduced by them, with a term of five (5) years from the date of
the applicable Closing, and an exercise price of $2.00 per share (the “Placement
Agent Warrants”). The Company will also pay certain expenses of the Placement
Agents in connection with the Offering and Laidlaw will receive an activation
fee of $50,000, payable at the Initial Closing of the Offering. Any sub-agent of
the Placement Agent that introduces investors to the Offering will be entitled
to share in the Cash Fee and/or Placement Agent Warrants attributable to those
investors pursuant to the terms of an executed sub-agent agreement.

 

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3. Representations and Warranties of the Company. Except (i) as set forth in the
Disclosure Schedule delivered to the Purchasers concurrently with the execution
of this Agreement (the “Disclosure Schedule”), or (ii) as disclosed in the
Company’s filings with the Securities and Exchange Commission (the “SEC”), which
such exception shall be explicitly noted below, the Company hereby represents
and warrants to the Purchaser, as of the Closing, the following:

 

a. Organization and Qualification. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware, and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company and each of its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have any
material adverse effect on (i) the business, properties, assets, liabilities,
operations (including results thereof), condition (financial or otherwise) or
prospects of the Company and its subsidiaries, individually or taken as a whole,
(ii) the transactions contemplated hereby or in the other Transaction Documents
(as defined below) or by the agreements and instruments to be entered into in
connection herewith or therewith or (iii) the authority or ability of the
Company to perform its obligations under the Transaction Documents (a “Material
Adverse Effect”). Each subsidiary of the Company is identified on Schedule 3a
attached hereto.

 

b. Authorization, Enforcement, Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Registration Rights Agreement
and the Escrow Agreement (the “Transaction Documents”) and to issue the Shares,
in accordance with the terms hereof and thereof; (ii) the execution and delivery
by the Company of each of the Transaction Documents and the consummation by it
of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Shares, have been, or will be at the time of
execution of such Transaction Document, duly authorized by the Company’s Board
of Directors, and no further consent or authorization is, or will be at the time
of execution of such Transaction Document, required by the Company, its Board of
Directors or its stockholders; (iii) each of the Transaction Documents will be
duly executed and delivered by the Company; and (iv) the Transaction Documents
when executed will constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies and, with respect to any rights to indemnity or contribution contained
in the Transaction Documents, as such rights may be limited by state or federal
laws or public policy underlying such laws.

 

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c. Capitalization. The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par
value $0.0001 per share (the “Preferred Stock”). Immediately before the Initial
Closing, the Company will have 13,490,586 shares of Common Stock and no shares
of Preferred Stock issued and outstanding. All of the outstanding shares of
Common Stock and of the capital stock of each of the Company’s subsidiaries have
been duly authorized, validly issued and are fully paid and nonassessable.
Immediately after giving effect to the Closing of the Minimum Offering Amount or
the Maximum Offering Amount (in each case, assuming no sales pursuant to the
Over-Subscription Option), the pro forma outstanding capitalization of the
Company will be as set forth under “Pro Forma Capitalization” in Schedule 3c.
Except as set forth in the SEC Reports (as defined below) or on Schedule 3c,
where indicated: (i) no shares of capital stock of the Company or any of its
subsidiaries will be subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company; (ii) except as
contemplated by the Transaction Documents and Placement Agent Warrants, there
will be no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries;
(iii) there will be no outstanding debt securities of the Company or any of its
subsidiaries; (iv) there will be no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the Securities Act; (v) there will be no outstanding
registration statements of the Company or any of its subsidiaries, and there
will be no outstanding comment letters from the SEC or any other regulatory
agency; (vi) except as provided in this Agreement, there will be no securities
or instruments of the Company or any of its subsidiaries containing
anti-dilution or similar provisions, including the right to adjust the exercise,
exchange or reset price under such securities, that will be triggered by the
issuance of the Shares as described in this Agreement; and (vii) no co-sale
right, right of first refusal or other similar right will exist with respect to
the Shares or the issuance and sale thereof. Upon request, the Company will make
available to the Purchaser true and correct copies of the Company’s Amended and
Restated Certificate of Incorporation (the “Certificate of Designation”), as in
effect as of the Initial Closing, and the Company’s Amended and Restated Bylaws
(the “Bylaws”), as in effect as of the Initial Closing, and the terms of all
securities exercisable for Common Stock and the material rights of the holders
thereof in respect thereto other than stock options issued to officers,
directors, employees and consultants.

 

d. Issuance of Shares. The Shares that are being issued to the Purchaser
hereunder, when issued, sold and delivered in accordance with the terms and for
the consideration set forth in this Agreement, will be duly and validly issued,
fully paid and nonassessable, and free of restrictions on transfer other than
restrictions on transfer under the Transaction Documents, applicable state and
federal securities laws and liens or encumbrances created by or imposed by the
Purchaser.

 

e. No Conflicts. The execution, delivery and performance of each of the
Transaction Documents by the Company, and the consummation by the Company of the
transactions contemplated hereby and thereby including issuance and sale of the
Shares in accordance with this Agreement will not (i) result in a violation of
the Certificate of Incorporation or the Bylaws (or equivalent constitutive
document) of the Company or any of its subsidiaries or (ii) violate or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any subsidiary is a party, except for those which would not reasonably be
expected to have a Material Adverse Effect, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including U.S. federal and
state securities laws and regulations) applicable to the Company or any
subsidiary or by which any property or asset of the Company or any subsidiary is
bound or affected, except for those which would not reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any subsidiary is in
violation of or in default under, any provision of its Certificate of
Incorporation or Bylaws. Neither the Company nor any subsidiary is in violation
of any term of or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or any subsidiary, which violation
or breach has had or would reasonably be expected to have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as required
under the Securities Act and any applicable state securities laws, neither the
Company nor any of its subsidiaries is required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by this Agreement or the other Transaction
Documents in accordance with the terms hereof or thereof other than (i) the
filings required pursuant to Section 9(j), (ii) the filing of the registration
statement contemplated by the Registration Rights Agreement and (iii) the filing
of Form D with the SEC. Except as set forth on Schedule 3e, neither the
execution and delivery by the Company of the Transaction Documents, nor the
consummation by the Company of the transactions contemplated hereby or thereby,
will require any notice, consent or waiver under any contract or instrument to
which the Company or any subsidiary is a party or by which the Company or any
subsidiary is bound or to which any of their assets is subject, except for any
notice, consent or waiver the absence of which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. All
consents, authorizations, orders, filings and registrations which the Company or
any of its subsidiaries is required to obtain pursuant to the preceding two
sentences have been or will be obtained or effected on or prior to the Closing.

 

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f. Absence of Litigation. Except as set forth on Schedule 3f, there is no
action, suit, claim, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation before or by any
court, public board, governmental or administrative agency, self-regulatory
organization, arbitrator, regulatory authority, stock market, stock exchange or
trading facility (an “Action”) now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries or any of
their respective officers or directors, which would be reasonably likely to (i)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
other Transaction Documents, or (ii) have a Material Adverse Effect. For the
purpose of this Agreement, the knowledge of the Company means the knowledge of
the officers of the Company. Neither the Company nor any of its subsidiaries is
subject to any judgment, decree, or order which has had, or would reasonably be
expected to have a Material Adverse Effect.

 

g. Acknowledgment Regarding Purchaser’s Purchase of the Shares. The Company
acknowledges and agrees that each Purchaser is acting solely in the capacity of
an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. The Company further acknowledges
that no Purchaser is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchaser’s purchase of the Shares.

 

h. No General Solicitation. Neither the Company, nor any of its Affiliates, nor,
to the knowledge of the Company, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the Shares.
“Affiliate” means, with respect to any person, any other person that, directly
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with such person, as such terms are used in and
construed under Rule 144 under the Securities Act (“Rule 144”). With respect to
a Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser.

 

i. No Integrated Offering. Neither the Company, nor any of its Affiliates, nor
to the knowledge of the Company, 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 require
registration of the Shares under the Securities Act or cause this offering of
the Shares to be integrated with prior offerings by the Company for purposes of
the Securities Act.

 

j. Employee Relations. Neither Company nor any subsidiary is involved in any
labor dispute nor, to the knowledge of the Company, is any such dispute
threatened. Neither Company nor any subsidiary is party to any collective
bargaining agreement. Except as disclosed in the SEC Reports, the Company’s
and/or its subsidiaries’ employees are not members of any union, and the Company
believes that its and its subsidiaries’ relationship with their respective
employees is good.

 

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k. Intellectual Property Rights. Except as set forth on Schedule 3k, the Company
and each of its subsidiaries owns, possesses, or has rights to use, all
Intellectual Property necessary for the conduct of the Company’s and its
subsidiaries’ business as now conducted, except as such failure to own, possess
or have such rights would not reasonably be expected to result in a Material
Adverse Effect and there are no unreleased liens or security interests which
have been filed, or which the Company has received notice of, against any of the
patents owned to the Company. Furthermore, (A) to the Company’s knowledge, there
is no infringement, misappropriation or violation by third parties of any such
Intellectual Property, except as such infringement, misappropriation or
violation would not result in a Material Adverse Effect; (B) there is no pending
or, to the Company’s knowledge, threatened, Action by others challenging the
Company’s or any of its subsidiaries’ rights in or to any such Intellectual
Property, and to the Company’s knowledge, there are no facts which would form a
reasonable basis for any such Action; (C) the Intellectual Property owned by the
Company and its subsidiaries, and to the Company’s knowledge, the Intellectual
Property licensed to the Company and its subsidiaries, has not been adjudged
invalid or unenforceable, in whole or in part, and there is no pending or, to
the Company’s knowledge, threatened Action by others challenging the validity,
enforceability or scope of any such Intellectual Property, and, to the Company’s
knowledge, there are no facts which would form a reasonable basis for any such
Action; (D) there is no pending or, to the Company’s knowledge, threatened
Action by others that the Company or any of its subsidiaries infringes,
misappropriates or otherwise violates any Intellectual Property or other
proprietary rights of others, neither the Company nor any of its subsidiaries
has received any written notice of such Action, and, to the Company’s knowledge,
there are no other facts which would form a reasonable basis for any such
Action, except in each case for any Action as would not be reasonably expected
to have a Material Adverse Effect; and (E) to the Company’s knowledge, no
employee of the Company or any of its subsidiaries is in violation of any term
of any employment contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement, nondisclosure
agreement or any restrictive covenant to or with a former employer where the
basis of such violation relates to such employee’s employment with the Company
or any of its subsidiaries or actions undertaken by the employee while employed
with the Company or any of its subsidiaries, except such violation as would not
reasonably be expected to have a Material Adverse Effect. Except as would not
reasonably be expected to have a Material Adverse Effect, (1) the Company and
its subsidiaries have disclosed to the U.S. Patent and Trademark Office (USPTO)
all information known to the Company to be relevant to the patentability of its
inventions in accordance with 37 C.F.R. Section 1.56, and (2) neither the
Company nor any of its subsidiaries made any misrepresentation or concealed any
information from the USPTO in any of the patents or patent applications owned or
licensed to the Company, or in connection with the prosecution thereof, in
violation of 37 C.F.R. Section 1.56. Except as would not reasonably be expected
to have a Material Adverse Effect and to the Company’s knowledge, (x) there are
no facts that are reasonably likely to provide a basis for a finding that the
Company or any of its subsidiaries does not have clear title to the patents or
patent applications owned or licensed to the Company or other proprietary
information rights as being owned by the Company or any of its subsidiaries, (y)
no valid issued U.S. patent would be infringed by the activities of the Company
or any of its subsidiaries relating to products currently or proposed to be
manufactured, used or sold by the Company or any of its subsidiaries and (z)
there are no facts with respect to any issued patent owned that would cause any
claim of any such patent not to be valid and enforceable with applicable
regulations. “Intellectual Property” shall mean all patents, patent
applications, trade and service marks, trade and service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets, domain names,
technology and know-how.

 

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l. Environmental Laws.

 

(i) The Company and each subsidiary has complied with all applicable
Environmental Laws (as defined below), except for violations of Environmental
Laws that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect. There is no pending
or, to the knowledge of the Company, threatened civil or criminal litigation,
notice of violation, formal administrative proceeding, or investigation, inquiry
or information request, relating to any Environmental Law involving the Company
or any subsidiary, except for litigation, notices of violations, formal
administrative proceedings or investigations, inquiries or information requests
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect. For purposes of this Agreement,
“Environmental Law” means any national, state, provincial or local law, statute,
rule or regulation or the common law relating to the environment or occupational
health and safety, including without limitation any statute, regulation,
administrative decision or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous materials or
substances or solid or hazardous waste; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release or threatened release
into the environment of industrial, toxic or hazardous materials or substances,
or solid or hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants or chemicals;
(v) the protection of wild life, marine life and wetlands, including without
limitation all endangered and threatened species; (vi) storage tanks, vessels,
containers, abandoned or discarded barrels, and other closed receptacles; (vii)
health and safety of employees and other persons; and (viii) manufacturing,
processing, using, distributing, treating, storing, disposing, transporting or
handling of materials regulated under any law as pollutants, contaminants, toxic
or hazardous materials or substances or oil or petroleum products or solid or
hazardous waste. As used above, the terms “release” and “environment” shall have
the meaning set forth in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.

 

(ii) To the knowledge of the Company there is no material environmental
liability with respect to any solid or hazardous waste transporter or treatment,
storage or disposal facility that has been used by the Company or any
subsidiary.

 

m. Authorizations; Regulatory Compliance. The Company and each of its
subsidiaries holds, and is operating in compliance with, all authorizations,
licenses, permits, approvals, clearances, registrations, exemptions, consents,
certificates and orders of any governmental authority and supplements and
amendments thereto (collectively, “Authorizations”) required for the conduct of
its business in all applicable jurisdictions and all such Authorizations are
valid and in full force and effect, except for Authorizations the absence of
which would not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its subsidiaries is in material violation of any
terms of any such Authorizations, except, in each case, such as would not
reasonably be expected to have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received written notice of any
revocation or modification of any such Authorization, or written notice that
such revocation or modification is being considered, except to the extent that
any such revocation or modification would not be reasonably expected to have a
Material Adverse Effect. The Company and each of its subsidiaries is in
compliance with all applicable federal, state, local and foreign laws,
regulations, orders and decrees, including such laws and regulations applicable
to the manufacture, distribution, import and export of regulated products and
component parts and ingredients, except as would not reasonably be expected to
have a Material Adverse Effect.

 

n. Title. Neither the Company nor any of its subsidiaries owns any real
property. Except as set forth on Schedule 3n, each of the Company and its
subsidiaries has good and marketable title to all of its personal property and
assets (i) purportedly owned or used by them as reflected in the SEC Reports, as
of their respective dates, or (ii) necessary for the conduct of their business
as currently conducted, free and clear of any restriction, mortgage, deed of
trust, pledge, lien, security interest or other charge, claim or encumbrance
which would have a Material Adverse Effect. Except as set forth on Schedule 3n,
with respect to properties and assets it leases, each of the Company and its
subsidiaries is in compliance with such leases and holds a valid leasehold
interest free of any liens, claims or encumbrances which would have a Material
Adverse Effect.

 

8

 

 

o. Tax Status. The Company and each subsidiary has made and filed (taking into
account any valid extensions) all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject and (unless and only to the extent that the Company or such subsidiary
has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. To the knowledge of the Company, there
are no unpaid taxes in any material amount claimed to be due from the Company or
any subsidiary by the taxing authority of any jurisdiction, and the officers of
the Company know of no basis for any such claim.

 

p. Certain Transactions. Except as set forth in the SEC Reports, none of the
officers, directors of the Company or any Subsidiary and, to the knowledge of
the Company, none of the employees of the Company or any Subsidiary is presently
a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), 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, providing for
the borrowing of money from or lending of money to or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee, stockholder,
member or partner, in each case in excess of $120,000 other than for (i) payment
of salary or consulting fees for services rendered, (ii) reimbursement for
expenses incurred on behalf of the Company and (iii) other employee benefits,
including stock option and restricted stock agreements under any equity
compensation plan of the Company.

 

q. Insurance. The Company and its subsidiaries have insurance policies of the
type and in amounts customarily carried by organizations conducting businesses
or owning assets similar to those of the Company and its subsidiaries. There is
no material claim pending under any such policy as to which coverage has been
questioned, denied or disputed by the underwriter of such policy.

 

r. SEC Reports. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by the Company under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (the “SEC Reports”) for
the two (2) years preceding the date hereof (or such shorter period since the
Company was first required by law or regulation to file such material). There
are no contracts, agreements or other documents that are required to be
described in the SEC Reports and/or to be filed as exhibits thereto that are not
described, in all material respects, and/or filed as required. There has not
been any material change or amendment to, or any waiver of any material right
under, any such contract or agreement that has not been described in and/or
filed as an exhibit to the SEC Reports.

 

s. Financial Statements. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
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 taken as a
whole as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal, year-end audit adjustments. The pro forma financial information and
the related notes, if any, included in the SEC Reports have been properly
compiled and prepared in accordance with the applicable requirements of the
Securities Act and the regulations promulgated thereunder and fairly present in
all material respects the information shown therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein.

 

9

 

 

t. Material Changes. Since the date of the latest balance sheet of the Company
included in the financial statements contained within the SEC Reports, except as
specifically disclosed in a subsequent SEC Report filed prior to the date
hereof, (i) there have been no events, occurrences or developments that have had
or would reasonably be expected to have a Material Adverse Effect with respect
to the Company, (ii) there have not been any changes in the authorized capital,
assets, financial condition, business or operations of the Company from that
reflected in the financial statements contained within the SEC Reports except
changes in the ordinary course of business which have not been, either
individually or in the aggregate, materially adverse to the business,
properties, financial condition, results of operations or future prospects of
the Company, (iii) neither the Company nor any subsidiary has incurred any
material liabilities (contingent or otherwise) other than (A) trade payables,
accrued expenses and other liabilities incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the financial statements of the Company, pursuant to GAAP or to be
disclosed in the SEC Reports, (iv) neither the Company nor any subsidiary has
materially altered its method of accounting or the manner in which it keeps its
accounting books and records, and (v) neither the Company nor any subsidiary has
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 (other than in connection with repurchases of
unvested stock issued to employees of the Company). The Company and its
subsidiaries, individually and on a consolidated basis, are not as of the date
hereof, and after giving effect to the transactions contemplated hereby to occur
at the Closing, will not be Insolvent (as defined below). For purposes of this
SectionError! Reference source not found., “Insolvent” means, with respect to
the Company, on a consolidated basis with its subsidiaries, (i) the present fair
saleable value of the Company’s and its subsidiaries’ assets is less than the
amount required to pay the Company’s and its subsidiaries’ total indebtedness),
(ii) the Company and its subsidiaries are unable to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (iii) the Company and its
subsidiaries intend to incur or believe that they will incur debts that would be
beyond their ability to pay as such debts mature.

 

u. Disclosure Controls. The Company has established and maintains disclosure
controls and procedures (as defined in Rules 13a-14 and 15d-15 under the
Exchange Act) and such controls and procedures are effective in ensuring that
material information relating to the Company, including its subsidiaries, is
made known to the principal executive officer and the principal financial
officer.

 

v. Sarbanes-Oxley. The Company is in compliance in all material respects with
all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to
it.

 

w. Off-Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company or any subsidiary and an unconsolidated
or other off-balance sheet entity that is required to be disclosed by the
Company in its SEC Reports and is not so disclosed or that otherwise would have
a Material Adverse Effect.

 

x. Foreign Corrupt Practices. Neither the Company and its subsidiaries, nor to
the Company’s knowledge, any agent or other person acting on behalf of the
Company or its subsidiaries, has: (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or 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 “FCPA”).

 

10

 

 

y. Brokers’ Fees. Neither of the Company nor any of its subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement, except
for the payment of fees to the Placement Agent as described in Section 2 above.

 

z. Disclosure Materials. The SEC Reports and the Disclosure Materials taken as a
whole do not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein (in the case of SEC Reports) or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. For the purposes of this Agreement
“Disclosure Materials” means the Transaction Documents previously provided to
the Purchaser, as amended from time to time, relating to the Offering and any
supplement or amendment thereto, and any disclosure schedule or other
information document, delivered to the Purchaser prior to Purchaser’s execution
of this Agreement, and any such document delivered to the Purchaser after
Purchaser’s execution of this Agreement and prior to the closing of the
Purchaser’s subscription hereunder.

 

aa. Investment Company. The Company is not required to be registered as, and is
not an Affiliate of, and immediately following the Closing will not be required
to register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

bb. Reliance. The Company acknowledges that the Purchaser is relying on the
representations and warranties (as modified by the disclosures on the Disclosure
Schedules (but excluding any disclosures contained under the heading “Risk
Factors” and any disclosures of risks included in any “forward looking
statements” or cautionary, predictive or forward-looking in nature) made by the
Company hereunder and that such representations and warranties (as modified by
the disclosures on the Disclosure Schedule (but excluding any disclosures
contained under the heading “Risk Factors” and any disclosures of risks included
in any “forward looking statements” or cautionary, predictive or forward-looking
in nature) are a material inducement to the Purchaser purchasing the Shares.

 

cc. Use of Proceeds. The Company presently intends to use the net proceeds from
the Offering to fund the product development, marketing and for working capital
and other general corporate purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other than the payment of
trade payables in the ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Common Stock or any securities
convertible into and/or exercisable for Common Stock, (c) for the settlement of
any outstanding litigation or (d) in violation of FCPA or OFAC (as defined
below) regulations.

 

dd. Bad Actor Disqualification. No “bad actor” disqualifying event described in
Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is
applicable to the Company or, to the Company’s knowledge, any Company Covered
Person, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or
(d)(3), is applicable. “Company Covered Person” means, with respect to the
Company as an “issuer” for purposes of Rule 506 promulgated under the Securities
Act, any person listed in the first paragraph of Rule 506(d)(1).

 

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

 

11

 

 

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

 

gg. The Company’s transfer agent (the “Transfer Agent”) is a participant in and
the Common Stock is eligible for transfer pursuant to the Depository Trust
Company Automated Securities Transfer Program.

 

hh. The Company has not, and to its knowledge no one acting on its behalf has,
(i) taken, directly or indirectly, any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the Company, other than,
in the case of clauses (ii) and (iii), compensation paid to the Company’s
placement agent in connection with the placement of the Securities.

 

ii. The Common Stock is registered pursuant to Section 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that
the SEC is contemplating terminating such registration.

 

4. Representations, Warranties and Agreements of the Purchaser. The Purchaser,
severally and not jointly with any other Purchaser, represents and warrants to,
and agrees with, the Company the following:

 

a. The Purchaser has the knowledge and experience in financial and business
matters necessary to evaluate the merits and risks of its prospective investment
in the Company, and has carefully reviewed and understands the risks of, and
other considerations relating to, the purchase of Shares and the tax
consequences of the investment, and has the ability to bear the economic risks
of the investment. The Purchaser can afford the loss of his, her or its entire
investment.

 

b. The Purchaser is acquiring the Shares for investment for his, her or its own
account and not with the view to, or for resale in connection with, any
distribution thereof. The Purchaser understands and acknowledges that the
Offering and sale of the Shares have not been registered under the Securities
Act or any state securities laws, by reason of a specific exemption from the
registration provisions of the Securities Act and applicable state securities
laws, which depends upon, among other things, the bona fide nature of the
investment intent as expressed herein. The Purchaser further represents that he,
she or it does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to any third person with
respect to any of the Shares. The Purchaser understands and acknowledges that
the Offering of the Shares will not be registered under the Securities Act nor
under the state securities laws on the ground that the sale of the Shares to the
Purchaser as provided for in this Agreement and the issuance of securities
hereunder is exempt from the registration requirements of the Securities Act and
any applicable state securities laws. The Purchaser is an “accredited investor”
as defined in Rule 501 of Regulation D as promulgated by the SEC under the
Securities Act, for the reason(s) specified on the Accredited Investor
Certification attached hereto as completed by Purchaser, and Purchaser shall
submit to the Company such further assurances of such status as may be
reasonably requested by the Company. The Purchaser resides in the jurisdiction
set forth on the Purchaser’s Omnibus Signature Page affixed hereto. The
Purchaser has not taken any of the actions set forth in, and is not subject to,
the disqualification provisions of Rule 506(d)(1) of the Securities Act.

 

12

 

 

c. The Purchaser (i) if a natural person, represents that he or she is the
greater of (A) 21 years of age or (B) the age of legal majority in his or her
jurisdiction of residence, and has full power and authority to execute and
deliver this Agreement and all other related agreements or certificates and to
carry out the provisions hereof and thereof; (ii) if a corporation, partnership,
limited liability company, association, joint stock company, trust,
unincorporated organization or other entity, represents that such entity was not
formed for the specific purpose of acquiring the Shares, such entity is duly
organized, validly existing and in good standing under the laws of the state or
jurisdiction of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such entity has full
power and authority to execute and deliver this Agreement and all other related
agreements or certificates and to carry out the provisions hereof and thereof
and to purchase and hold the Shares, the execution and delivery of this
Agreement has been duly authorized by all necessary action, this Agreement has
been duly executed and delivered on behalf of such entity and is a legal, valid
and binding obligation of such entity; or (iii) if executing this Agreement in a
representative or fiduciary capacity, represents that he, she or it has full
power and authority to execute and deliver this Agreement in such capacity and
on behalf of the subscribing individual, ward, partnership, trust, estate,
corporation, or limited liability company or partnership, or other entity for
whom the Purchaser is executing this Agreement, and such individual,
partnership, ward, trust, estate, corporation, or limited liability company or
partnership, or other entity has full right and power to perform pursuant to
this Agreement and make an investment in the Company, and represents that this
Agreement constitutes a legal, valid and binding obligation of such entity. The
execution and delivery of this Agreement will not violate or be in conflict with
any order, judgment, injunction, agreement or controlling document to which the
Purchaser is a party or by which it is bound.

 

d. The Purchaser understands that the Shares are being offered and sold to him,
her or it in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and such Purchaser’s compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
such securities. The Purchaser further acknowledges and understands that the
Company is relying on the representations and warranties made by the Purchaser
hereunder and that such representations and warranties are a material inducement
to the Company to sell the Shares to the Purchaser. The Purchaser further
acknowledges that without such representations and warranties of the Purchaser
made hereunder, the Company would not enter into this Agreement with the
Purchaser.

 

e. The Purchase understands that, other than as expressly provided in the
Registration Rights Agreement, the Company does not currently intend to register
the Shares under the Securities Act at any time in the future; and the
undersigned will not immediately be entitled to the benefits of Rule 144 with
respect to the Shares. The Purchaser understands that no public market exists
for the Company’s Common Stock and that there can be no assurance that any
public market for the Common Stock will exist or continue to exist. The
Company’s Common Stock is not approved for quotation on OTC Markets or any other
quotation system or listed on any exchange. The Company makes no representation,
warranty or covenant with respect to the initiation of or continued quotation of
the Common Stock on the OTC Markets quotation or listing on any other market or
exchange.

 

13

 

 

f. The Purchaser has received, reviewed and understood the information about the
Company, including all Disclosure Materials, and has had an opportunity to
discuss the Company’s business, management and financial affairs with the
Company’s management. The Purchaser understands that such discussions, as well
as any Disclosure Materials provided by the Company, were intended to describe
the aspects of the Company’s business and prospects and the Offering which the
Company believes to be material, but were not necessarily a thorough or
exhaustive description, and except as expressly set forth in this Agreement, the
Company makes no representation or warranty with respect to the completeness of
such information and makes no representation or warranty of any kind with
respect to any information provided by any entity other than the Company. Some
of such information may include projections as to the future performance of the
Company, which projections may not be realized, may be based on assumptions
which may not be correct and may be subject to numerous factors beyond the
Company’s control. The Purchaser acknowledges that he, she or it is not relying
upon any person or entity, other than the Company and its officers and
directors, in making its investment or decision to invest in the Company.
Additionally, the Purchaser understands and represents that he, she or it is
purchasing the Shares notwithstanding the fact that the Company may disclose in
the future certain material information the Purchaser has not received,
including (without limitation) financial statements of the Company for the
current or prior fiscal periods, and any subsequent period financial statements
that will be filed with the SEC, that he, she or it is not relying on any such
information in connection with his, her or its purchase of the Shares and that
he, she or it waives any right of action with respect to the nondisclosure to
him, her or it prior to his, her or its purchase of the Shares of any such
information. Each Purchaser has sought such accounting, legal and tax advice as
the Purchaser has considered necessary to make an informed investment decision
with respect to his, her or its acquisition of the Shares.

 

g. The Purchaser acknowledges that none of the Company or the Placement Agents
is acting as a financial advisor or fiduciary of the Purchaser (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and no investment advice has been given by the
Company, the Placement Agents or any of their respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby. The Purchaser further represents to the Company
that the Purchaser’s decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Purchaser and the Purchaser’s
representatives.

 

h. As of the applicable Closing, all actions on the part of Purchaser, and its
officers, directors and partners, if applicable, necessary for the
authorization, execution and delivery of this Agreement and the Registration
Rights Agreement and the performance of all obligations of the Purchaser
hereunder and thereunder shall have been taken, and this Agreement and the
Registration Rights Agreement, assuming due execution by the parties hereto and
thereto, constitute valid and legally binding obligations of the Purchaser,
enforceable in accordance with their respective terms, subject to: (i) judicial
principles limiting the availability of specific performance, injunctive relief,
and other equitable remedies and (ii) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect generally relating
to or affecting creditors’ rights.

 

i. Purchaser represents that neither it nor, to its knowledge, any person or
entity controlling, controlled by or under common control with it, nor any
person having a beneficial interest in the Purchaser, nor any person on whose
behalf the Purchaser is acting: (i) is a person listed in the Annex to Executive
Order No. 13224 (2001) issued by the President of the United States (Executive
Order Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism); (ii) is named on the List of
Specially Designated Nationals and Blocked Persons maintained by the U.S. Office
of Foreign Assets Control; (iii) is a non-U.S. shell bank or is providing
banking services indirectly to a non-U.S. shell bank; (iv) is a senior non-U.S.
political figure or an immediate family member or close associate of such
figure; or (v) is otherwise prohibited from investing in the Company pursuant to
applicable U.S. anti-money laundering, anti-terrorist and asset control laws,
regulations, rules or orders (categories (i) through (v), each a “Prohibited
Purchaser”). The Purchaser agrees to provide the Company, promptly upon request,
all information that the Company reasonably deems necessary or appropriate to
comply with applicable U.S. anti-money laundering, anti-terrorist and asset
control laws, regulations, rules and orders. The Purchaser consents to the
disclosure to U.S. regulators and law enforcement authorities by the Company and
its Affiliates and agents of such information about the Purchaser as the Company
reasonably deems necessary or appropriate to comply with applicable U.S.
anti-money laundering, anti-terrorist and asset control laws, regulations, rules
and orders. If the Purchaser is a financial institution that is subject to the
USA Patriot Act, the Purchaser represents that it has met all of its obligations
under the USA Patriot Act. The Purchaser acknowledges that if, following its
investment in the Company, the Company reasonably believes that the Purchaser is
a Prohibited Purchaser or is otherwise engaged in suspicious activity or refuses
to promptly provide information that the Company requests, the Company has the
right or may be obligated to prohibit additional investments, segregate the
assets constituting the investment in accordance with applicable regulations or
immediately require the Purchaser to transfer the Shares. The Purchaser further
acknowledges that neither the Purchaser nor any of the Purchaser’s Affiliates or
agents will have any claim against the Company for any form of damages as a
result of any of the foregoing actions.

 

14

 

 

j. If the Purchaser is Affiliated with a non-U.S. banking institution (a
“Foreign Bank”), or if the Purchaser receives deposits from, makes payments on
behalf of, or handles other financial transactions related to a Foreign Bank,
the Purchaser represents and warrants to the Company that: (1) the Foreign Bank
has a fixed address, other than solely an electronic address, in a country in
which the Foreign Bank is authorized to conduct banking activities; (2) the
Foreign Bank maintains operating records related to its banking activities; (3)
the Foreign Bank is subject to inspection by the banking authority that licensed
the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does
not provide banking services to any other Foreign Bank that does not have a
physical presence in any country and that is not a regulated Affiliate.

 

k. The Purchaser or its duly authorized representative realizes that because of
the inherently speculative nature of businesses of the kind conducted and
contemplated by the Company, the

 

Company’s financial results may be expected to fluctuate from month to month and
from period to period and will, generally, involve a high degree of financial
and market risk that could result in substantial or, at times, even total losses
for investors in securities of the Company. The Purchaser has carefully read the
risk factors and other information included in the Memorandum. The Purchaser has
carefully considered such risk factors before deciding to invest in the Shares.

 

l. The Purchaser has adequate means of providing for its current and anticipated
financial needs and contingencies, is able to bear the economic risk for an
indefinite period of time and has no need for liquidity of the investment in the
Shares and could afford complete loss of such investment.

 

m. The Purchaser is not subscribing for Shares as a result of or subsequent to
any advertisement, article, notice or other communication, published in any
newspaper, magazine or similar media or broadcast over television, radio, or the
internet, or presented at any seminar or meeting, or any solicitation of a
subscription by a person not previously known to the Purchaser in connection
with investments in securities generally.

 

n. The Purchaser acknowledges that no U.S. federal or state agency or any other
government or governmental agency has passed upon the Shares or made any finding
or determination as to the fairness, suitability or wisdom of any investments
therein.

 

o. Other than consummating the transactions contemplated hereunder, the
Purchaser has not directly or indirectly, nor has any individual or entity
acting on behalf of or pursuant to any understanding with such Purchaser,
executed any purchases or sales, including Short Sales, of the securities of the
Company during the period commencing as of the time that such Purchaser first
received a term sheet (written or oral) from the Company or any other individual
or entity representing the Company setting forth the material terms of the
transactions contemplated hereunder and ending immediately prior to the
execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Shares
covered by this Agreement. Other than to other individuals or entities party to
this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, for
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future. For purposes of this
Agreement, “Short Sales” means all “short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act (but shall not be deemed to include the
location and/or reservation of borrowable shares of Common Stock).

 

15

 

 

p. The Purchaser agrees to be bound by all of the terms and conditions of the
Registration Rights Agreement and to perform all obligations thereby imposed
upon it.

 

q. The Purchaser is aware that the anti-manipulation rules of Regulation M under
the Exchange Act may apply to sales of the Shares and other activities with
respect to the Shares by the Purchaser.

 

r. All of the information concerning the Purchaser set forth herein, and any
other information furnished by the Purchaser in writing to the Company or a
Placement Agent for use in connection with the transactions contemplated by this
Agreement, is true, correct and complete in all material respects as of the date
of this Agreement, and, if there should be any material change in such
information prior to the Purchaser’s purchase of the Shares, the Purchaser will
promptly furnish revised or corrected information to the Company.

 

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

 

t. If the Purchaser is not a United States person (as defined by Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended), the Purchaser
hereby represents that it has satisfied itself as to the full observance of the
laws of its jurisdiction in connection with any invitation to subscribe for the
Shares or any use of this Agreement, including (a) the legal requirements within
its jurisdiction for the purchase of the Shares; (b) any foreign exchange
restrictions applicable to such purchase; (c) any governmental or other consents
that may need to be obtained; and (d) the income tax and other tax consequences,
if any, that may be relevant to the purchase, holding, redemption, sale or
transfer of the Shares. The Purchaser’s subscription and payment for and
continued beneficial ownership of the Shares will not violate any applicable
securities or other laws of the Purchaser’s jurisdiction.

 

u. (For ERISA plans only) The fiduciary of the Employee Retirement Income
Security Act of 1974 (“ERISA”) plan (the “Plan”) represents that such fiduciary
has been informed of and understands the Company’s investment objectives,
policies and strategies, and that the decision to invest “plan assets” (as such
term is defined in ERISA) in the Company is consistent with the provisions of
ERISA that require diversification of plan assets and impose other fiduciary
responsibilities. The Purchaser fiduciary or Plan (a) is responsible for the
decision to invest in the Company; (b) is independent of the Company or any of
its Affiliates; (c) is qualified to make such investment decision; and (d) in
making such decision, the Purchaser fiduciary or Plan has not relied primarily
on any advice or recommendation of the Company or any of its Affiliates.

 

16

 

 

v. Neither the Purchaser nor, to the Purchaser’s knowledge, any of its
directors, executive officers, other officers that may serve as a director or
officer of any company in which it invests, general partners or managing members
is subject to any Disqualification Events, except for Disqualification Events
covered by Rule 506(d)(2)(ii) or (iii) under the Securities Act, and disclosed
in writing in reasonable detail to the Company.

 

w. The Purchaser understands that there are substantial restrictions on the
transferability of the Shares and that the certificates representing the Shares
shall bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such certificates or other
instruments):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH
REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR APPLICABLE STATE SECURITIES LAWS OR (3) SOLD PURSUANT TO RULE 144 UNDER
THE SECURITIES ACT.

 

In addition, if any Purchaser is an Affiliate of the Company, certificates
evidencing the Shares issued to such Purchaser may bear a customary “Affiliates”
legend.

 

The Company shall be obligated to promptly reissue unlegended certificates upon
the request of any holder thereof (x) at such time as the holding period under
Rule 144 or another applicable exemption from the registration requirements of
the Securities Act has been satisfied or (y) at such time as a registration
statement is available for the transfer of the Shares. The Company is entitled
to request from any holder requesting unlegended certificates under clause (x)
of the foregoing sentence an opinion of counsel reasonably acceptable to the
Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend.

 

x. If the Purchaser is an individual, then the Purchaser resides in the state or
province identified in the address of the Purchaser set forth on such
Purchaser’s Omnibus Signature Page to this Agreement; if the Purchaser is a
partnership, corporation, limited liability company or other entity, then the
office or offices of the Purchaser in which its principal place of business is
identified in the address or addresses of the Purchaser set forth on such
Purchaser’s Omnibus Signature Page to this Agreement.

 

y. Intentionally Omitted.

 

z. Each Purchaser purchasing Shares in any Subsequent Closing represents that it
(1) has a substantive, pre-existing relationship with the Company or (2) has
direct contact by the Company or its Placement Agents outside of the Offering
and (3) was not identified or contacted through the marketing of the public
offering and (4) did not independently contact the issuer as a result of general
solicitation or any press release or any other public disclosure disclosing the
material terms of the Offering.

 

17

 

 

aa. To effectuate the terms and provisions hereof, the Purchaser hereby appoints
Laidlaw as its attorney-in-fact (and Laidlaw hereby accepts such appointment)
for the purpose of carrying out the provisions of the Escrow Agreement by and
between the Company, Laidlaw and Signature Bank (the “Escrow Agreement”)
including, without limitation, taking any action on behalf of, or at the
instruction of, the Purchaser and executing any release notices required under
the Escrow Agreement and taking any action and executing any instrument that
Laidlaw may deem necessary or advisable (and lawful) to accomplish the purposes
hereof. All acts done under the foregoing authorization are hereby ratified and
approved and neither Laidlaw nor any designee nor agent thereof shall be liable
for any acts of commission or omission, for any error of judgment, for any
mistake of fact or law except for acts of gross negligence or willful
misconduct. This power of attorney, being coupled with an interest, is
irrevocable while the Escrow Agreement remains in effect.

 

5. Conditions to Company’s Obligations at the applicable Closing. The Company’s
obligation to complete the sale and issuance of the Shares and deliver the
Shares to each Purchaser, individually, at the applicable Closing shall be
subject to the following conditions to the extent not waived by the Company:

 

a. Receipt of Payment. The Company shall have received payment, by certified or
other bank check or by wire transfer of immediately available funds, in the full
amount of the Purchase Price for the number of Shares being purchased by such
Purchaser at such Closing.

 

b. Representations and Warranties. The representations and warranties made by
each Purchaser in Section 4 of the applicable Subscription Agreement with
respect to such Closing shall be true and correct in all respects when made, and
shall be true and correct in all respects on the applicable Closing date with
the same force and effect as if they had been made on and as of said date.

 

c. Performance. The Purchaser shall have performed in all material respects all
obligations and covenants herein required to be performed by it on or prior to
the applicable Closing.

 

d. Receipt of Executed Documents. Each Purchaser participating in such Closing
shall have executed and delivered to the Company the Omnibus Signature Page, the
Purchaser Questionnaire and the Selling Securityholder Questionnaire (as defined
in the Registration Rights Agreement).

 

e. Minimum Offering. In connection with the Initial Closing Only, the Initial
Closing shall be for at least the Minimum Offering Amount.

 

f. Intentionally Omitted.

 

g. Qualifications. All authorizations, approvals or permits, of any governmental
authority or regulatory body of the United States or of any state that are
required in connection with the lawful issuance and sale of the Shares pursuant
to this Agreement at each Closing shall be obtained and effective as of such
Closing except for Blue Sky law permits and qualifications that may be properly
obtained after such Closing.

 

18

 

 

6. Conditions to Purchasers’ Obligations at the applicable Closing. Each
Purchaser’s obligation to accept delivery of the Shares and to pay for the
Shares at the applicable Closing shall be subject to the following conditions to
the extent not waived by the holders of at least a majority of the Shares to be
purchased at such Closing and the Placement Agents on behalf of the Purchasers
at the applicable Closing:

 

a. Representations and Warranties. The representations and warranties made by
the Company in Section 3 hereof (as modified by the disclosures on the
Disclosure Schedule (but excluding any disclosures contained under the heading
“Risk Factors” and any disclosure of risks included in any “forward-looking
statements” disclaimer or in any other section to the extent they are
forward-looking statements or cautionary, predictive or forward-looking in
nature) shall be true and correct in all material respects (except to the extent
any such representation and warranty is qualified by materiality or reference to
Material Adverse Effect, in which case, such representation and warranty shall
be true and correct in all respects as so qualified) as of, and as if made on,
the date of this Agreement and as of such Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and in all material respects
correct as of such earlier date (except in each case to the extent any such
representation and warranty is qualified by materiality or reference to Material
Adverse Effect, in which case, such representation and warranty shall be true
and correct in all respects as so qualified).

 

b. Performance. The Company shall have performed in all material respects all
obligations and covenants herein required to be performed by it on or prior to
the applicable Closing.

 

c. Receipt of Executed Transaction Documents. In connection with the Initial
Closing only, the Company shall have executed and delivered to the Placement
Agents the Registration Rights Agreement and the Escrow Agreement.

 

d. Minimum Offering. In connection with the Initial Closing only, the Initial
Closing shall be at least for the Minimum Offering.

 

e. Certificate. In connection with the each Closing, the Chief Executive Officer
of the Company shall execute and deliver to the Placement Agents a certificate
addressed to the Purchasers to the effect that the representations and
warranties of the Company in Section 3 hereof (as modified by the disclosures on
the Disclosure Schedule (but excluding any disclosures contained under the
heading “Risk Factors” and any disclosure of risks included in any
“forward-looking statements” disclaimer or in any other section to the extent
they are forward-looking statements or cautionary, predictive or forward-looking
in nature) shall be true and correct in all material respects (except to the
extent any such representation and warranty is qualified by materiality or
reference to Material Adverse Effect, in which case, such representation and
warranty shall be true and correct in all respects as so qualified) as of, and
as if made on, the date of the such Closing.

 

f. Good Standing. The Company and each of its subsidiaries shall be a
corporation or other business entity duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its formation.

 

g. Judgments. No judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy court or judge,
or any order of or by any governmental authority, shall have been issued, and no
action or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated
hereby.

 

h. Legal Opinion. At each Closing, legal counsel for the Company shall deliver
an opinion to Purchaser and the Placement Agents, dated as of such Closing, in
form and substance reasonably acceptable to the Placement Agents.

 

19

 

 

i. Issuance in Compliance with Laws. The sale and issuance of the Shares shall
be legally permitted by all laws and regulations to which the Company is
subject.

 

j. No Material Adverse Effect. Since the date hereof, there shall not have
occurred any effect, event, condition or circumstance (including, without
limitation, the initiation of any litigation or other legal, regulatory or
investigative proceeding) that individually or in the aggregate, with or without
the passage of time, the giving of notice, or both, that has had, or could
reasonably be expected to have, a Material Adverse Effect or which could
adversely affect the Company’s ability to perform its respective obligations
under this Agreement or any of the other Transaction Documents.

 

k. Updated Disclosures. As to any Subsequent Closing, the Company must have
delivered to the Purchasers an updated set of schedules in accordance with
Section 3 and such updated schedules do not reveal any information or the
occurrence, since the Initial Closing Date, of any effect, event, condition or
circumstance, which individually, or in the aggregate, has had or could
reasonably be expected to have, a Material Adverse Effect and do not include any
state of facts that occur as a result of the breach by the Company of any of its
obligations under this Agreement or any of the other Transaction Documents.

 

7. Indemnification.

 

a. The Company agrees to indemnify and hold harmless the Purchaser, and its
directors, officers, stockholders, members, partners, employees and agents (and
any other persons with a functionally equivalent role of a person holding such
titles notwithstanding a lack of such title or any other title), each person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other persons with a
functionally equivalent role of a person holding such titles notwithstanding a
lack of such title or any other title) of such controlling person (collectively,
the “Purchaser Indemnitees”), from and against all losses, liabilities, claims,
damages, costs, fees and expenses whatsoever (including, but not limited to, any
and all expenses incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of the Company’s
breach of any representation, warranty or covenant contained herein; provided,
however, that the Company will not be liable in any such case to the extent and
only to the extent that any such loss, liability, claim, damage, cost, fee or
expense arises out of or is based upon the inaccuracy of any representations
made by such indemnified party in this Agreement, or the failure of such
indemnified party to comply with the covenants and agreements contained herein.
The liability of the Company under this paragraph shall not exceed the total
Purchase Price paid by the Purchaser hereunder, except in the case of fraud.

 

20

 

 

b. Promptly after receipt by an indemnified party under this Section 7 of notice
of the commencement of any Action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this Section
7, notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7 except to the extent the indemnified party is actually prejudiced by
such omission. In case any such Action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such Action include both the indemnified party
and the indemnifying party and either (i) the indemnifying party or parties and
the indemnified party or parties mutually agree or (ii) representation of both
the indemnifying party or parties and the indemnified party or parties by the
same counsel is inappropriate under applicable standards of professional conduct
due to actual or potential differing interests between them, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such Action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such Action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any reasonable legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed counsel in connection with the assumption
of legal defenses in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel in such circumstance), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the Action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened Action in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such Action) unless such
settlement, compromise or consent requires only the payment of money damages,
does not subject the indemnified party to any continuing obligation or require
any admission of criminal or civil responsibility, and includes an unconditional
release of each indemnified party from all liability arising out of such Action,
or (ii) be liable for any settlement of any such Action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the
plaintiff in any such Action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.

 

c. Purchaser acknowledges on behalf of itself and each Purchaser Indemnitee
that, other than for actions seeking specific performance of the obligations
under this Agreement or in the case of fraud, the sole and exclusive remedy of
the Purchaser and the Purchaser Indemnitee with respect to any and all claims
relating to this Agreement shall be pursuant to the indemnification provisions
set forth in this Section 7.

 

8. Revocability; Binding Effect. The subscription hereunder may be revoked prior
to the Closing thereon, provided that written notice of revocation is sent and
is received by the Company or a Placement Agent at least one Business Day prior
to the applicable Closing on such subscription. The Purchaser hereby
acknowledges and agrees that this Agreement shall survive the death or
disability of the Purchaser and shall be binding upon and inure to the benefit
of the parties and their heirs, executors, administrators, successors, legal
representatives and permitted assigns. If the Purchaser is more than one person,
the obligations of the Purchaser hereunder shall be joint and several and the
agreements, representations, warranties and acknowledgments herein shall be
deemed to be made by and be binding upon each such person and such person’s
heirs, executors, administrators, successors, legal representatives and
permitted assigns. For the purposes of this Agreement, “Business Day” means a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.

 

21

 

 

9. Miscellaneous.

 

a. Modification. This Agreement shall not be amended, modified or waived except
by an instrument in writing signed by the Company and the holders of at least a
majority of the then held Shares. Any amendment, modification or waiver effected
in accordance with this Section 9(a) shall be binding upon the Purchaser and
each transferee of the Shares, each future holder of all such Shares, and the
Company.

 

b. Immaterial Modifications to the Registration Rights Agreement. The Company
and the Placement Agents may, at any time prior to the Initial Closing, amend
the Registration Rights Agreement if necessary to clarify any provision therein,
without first providing notice or obtaining prior consent of the Purchaser.

 

c. Third-Party Beneficiary. The Placement Agents shall be express third party
beneficiaries of the representations and warranties included in Sections 3 and 4
of this Agreement. 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 7 and this Section 9(c).

 

d. Notices. Any notice, consents, waivers or other communication required or
permitted to be given hereunder shall be in writing and will be deemed to have
been delivered: (i) upon receipt, when personally delivered; (ii) upon receipt
when sent by certified mail, return receipt requested, postage prepaid; (iii)
upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party;
(iv) when sent, if by e-mail, (provided that such sent e-mail is kept on file
(whether electronically or otherwise) by the sending party and the sending party
does not receive an automatically generated message from the recipient’s e-mail
server that such e-mail could not be delivered to such recipient); or (v) one
(1) Business Day after deposit with an overnight courier service with next day
delivery specified, in each case, properly addressed to the party to receive the
same. The addresses, facsimile numbers and email addresses for such
communications shall be:

 

(a) if to the Company, at

 

Amesite Inc.

205 East Washington Street

Suite B

Ann Arbor, Michigan 48104

Attn: Ann Marie Sastry, CEO

Facsimile: N/A

Email: ams@amesite.com

 

with copies (which shall not constitute notice) to:

 

Sheppard, Mullin, Richter & Hampton LLP

30 Rockefeller Plaza

New York, New York 10112

Attn: Richard A. Friedman, Esq.

Facsimile: 212.653.8701

Email: rafriedman@sheppardmullin.com

 

Ogawa Professional Corporation

313 Bryant Court

Palo Alto, California 94301

Attn: Richard Ogawa, Esq.

Email: richard@rtogawa.com

 

or

 

22

 

 

(b) if to the Purchaser, at the address set forth on the Omnibus Signature Page
hereof (or, in either case, to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section). Any
notice or other communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a party’s
address which shall be deemed given at the time of receipt thereof.

 

e. Assignability. This Agreement and the rights, interests and obligations
hereunder are not transferable or assignable by the Company, and the transfer or
assignment of the Shares shall be made only in accordance with all applicable
laws. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to the
principles thereof relating to the conflict of laws.

 

g. Arbitration. All disputes arising out of or in connection with this Agreement
shall be submitted to the International Court of Arbitration of the
International Chamber of Commerce and shall be finally settled under the Rules
of Arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with the said Rules. The place of
arbitration shall be New York, New York.

 

h. Form D; Blue Sky Qualification. The Company agrees to timely file a Form D
with respect to the Securities and to provide a copy thereof, promptly upon
request of any Purchaser. The Company shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or
to qualify the Securities for, sale to the Purchaser at such Closing under
applicable securities or “Blue Sky” laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of any Purchaser.

 

i. Use of Pronouns. All pronouns and any variations thereof used herein shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons referred to may require.

 

j. Securities Law Disclosure; Publicity. The Company will file a Current Report
on Form 8-K with the SEC within the time required by the Exchange Act disclosing
the material terms of the transactions contemplated hereby. The Company shall
not publicly disclose the name of any Purchaser or an Affiliate of any
Purchaser, or include the name of any Purchaser or an Affiliate of any Purchaser
in any press release or filing with the SEC (other than the Registration
Statement) or any regulatory agency or principal trading market, without the
prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with (A) any registration statement contemplated by
the Registration Rights Agreement and (B) the filing of final Transaction
Documents with the SEC or (ii) to the extent such disclosure is required by law,
request of the staff of the SEC or of any regulatory agency or principal trading
market regulations, in which case the Company shall provide the Purchasers with
prior written notice of such disclosure permitted under this sub-clause (ii).
From and after the filing of the Current Report on Form 8-K, no Purchaser shall
be in possession of any material, non-public information received from the
Company or any of its respective officers, directors, employees or agents that
is not disclosed in the Current Report on Form 8-K unless a Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions contemplated by
this Agreement are publicly disclosed by the Company as described in this
Section 9, such Purchaser will maintain the confidentiality of all disclosures
made to it in connection with such transactions (including the existence and
terms of such transactions).

 

k. Non-Public Information. Except for information (including the terms of this
Agreement and the transactions contemplated hereby) that will be disclosed on a
Current Report on Form 8-K, the Company shall not and shall cause each of its
officers, directors, employees and agents, not to, provide any Purchaser with
any material, non-public information regarding the Company without the express
written consent of such Purchaser.

 

23

 

 

l. This Agreement, together with the Registration Rights Agreement, and all
exhibits, schedules and attachments hereto and thereto and any confidentiality
agreement between the Purchaser and the Company, constitute the entire agreement
between the Purchaser and the Company with respect to the Offering and supersede
all prior oral or written agreements and understandings, if any, relating to the
subject matter hereof. The terms and provisions of this Agreement may be waived,
or consent for the departure therefrom granted, only by a written document
executed by the party entitled to the benefits of such terms or provisions.

 

m. If the Shares are certificated and any certificate or instrument evidencing
any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Transfer Agent, a bond in such form and amount as is required by the Transfer
Agent. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Shares. If a replacement certificate or
instrument evidencing any Shares is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or instrument as a
condition precedent to any issuance of a replacement.

 

n. Each of the parties hereto shall pay its own fees and expenses (including the
fees of any attorneys, accountants, appraisers or others engaged by such party)
in connection with this Agreement and the transactions contemplated hereby,
whether or not the transactions contemplated hereby are consummated. The Company
shall pay all expenses and fees of its counsel in connection with the issuance
of an opinion to the Transfer Agent for the removal of any legend on the Shares.

 

o. This Agreement may be executed in one or more original or facsimile or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page counterparts, each of which shall be deemed an original, but all
of which shall together constitute one and the same instrument and which shall
be enforceable against the parties actually executing such counterparts. The
exchange of copies of this Agreement and of signature pages by facsimile
transmission or in .pdf format shall constitute effective execution and delivery
of this Agreement as to the parties and may be used in lieu of the original
Agreement for all purposes. Signatures of the parties transmitted by facsimile
or by e-mail of a document in pdf format shall be deemed to be their original
signatures for all purposes.

 

p. Each provision of this Agreement shall be considered separable and, if for
any reason any provision or provisions hereof are determined to be invalid or
contrary to applicable law, such invalidity or illegality shall not impair the
operation of or affect the remaining portions of this Agreement.

 

q. Paragraph titles are for descriptive purposes only and shall not control or
alter the meaning of this Agreement as set forth in the text.

 

r. The Purchaser understands and acknowledges that there may be multiple
Closings for the Offering.

 

s. The Purchaser hereby agrees to furnish the Company such other information as
the Company may request prior to the applicable Closing with respect to its
subscription hereunder.

 

24

 

 

t. The representations and warranties of the Company and each Purchaser
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement for a period of one (1) year from the date of the
applicable Closing and shall in no way be affected by any investigation or
knowledge of the subject matter thereof made by or on behalf of the Purchasers
or the Company.

 

u. Omnibus Signature Page. This Agreement is intended to be read and construed
in conjunction with the Registration Rights Agreement. Accordingly, pursuant to
the terms and conditions of this Agreement and the Registration Rights
Agreement, it is hereby agreed that the execution by the Purchaser of this
Agreement, in the place set forth on the Omnibus Signature Page below, shall
constitute agreement to be bound by the terms and conditions hereof and the
terms and conditions of the Registration Rights Agreement, with the same effect
as if each of such separate but related agreement were separately signed.

 

v. Public Disclosure. Neither the Purchaser nor any officer, manager, director,
member, partner, stockholder, employee, Affiliate, Affiliated person or entity
of the Purchaser shall make or issue any press releases or otherwise make any
public statements or make any disclosures to any third person or entity with
respect to the transactions contemplated herein and will not make or issue any
press releases or otherwise make any public statements of any nature whatsoever
with respect to the Company without the Company’s express prior approval (which
may be withheld in the Company’s sole discretion), except to the extent such
disclosure is required by law, request of the staff of the SEC or of any
regulatory agency or principal trading market regulations.

 

w. Potential Conflicts. The Placement Agents, their sub-agents, legal counsel to
the Company, the Placement Agents and/or their respective Affiliates,
principals, representatives or employees may now or hereafter own shares of the
Company.

 

x. Independent Nature of Each Purchaser’s Obligations and Rights. For avoidance
of doubt, the obligations of the Purchaser under this Agreement are several and
not joint with the obligations of any other Purchaser, and the Purchaser shall
not be responsible in any way for the performance of the obligations of any
other Purchaser under any other Subscription Agreement. Nothing contained herein
and no action taken by the Purchaser shall be deemed to constitute the Purchaser
as a partnership, an association, a joint venture, or any other kind of entity,
or create a presumption that the Purchasers are in any way acting in concert or
as a group with respect to such obligations or the transactions contemplated by
this Agreement and any other Subscription Agreements. The Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

 

[Signature page follows.]

 

25

 

 

IN WITNESS WHEREOF, the Company has duly executed this Agreement as of the ____
day of _________, 2019.

 

  AMESITE INC.       By:                          Name:      Title:  

 

 

 

 

EXHIBIT A

 

Form of Registration Rights Agreement