AMENDMENT AND EXCHANGE AGREEMENT

 

This Amendment and Exchange Agreement (the “Agreement”) is entered into as of
the 20th day of August, 2018, by and among Longfin Corp., a Delaware corporation
with offices located at 16-017, 85 Broad Street, New York, New York 10004 (the
“Company”) and the investor signatory hereto (the “Holder”), with reference to
the following facts:

 

A. Prior to the date hereof, pursuant to that Securities Purchase Agreement,
dated as of January 22, 2018, by and between the Company and the Holder (as
amended, the “Securities Purchase Agreement”), the Company issued to the Holder,
(a) two series of convertible notes with an aggregate principal amount of
$52,700,000 as follows: (i) a Series A Senior Convertible Note of the Company,
in the aggregate original principal amount of $10,095,941.18 (including any
principal, interest, or other amounts outstanding thereunder, the “Existing
Series A Note”), which Existing Series A Note is convertible into shares of
Common Stock (as defined in the Securities Purchase Agreement) in accordance
with the terms of the Existing Series A Note and (ii) a Series B Senior Secured
Convertible Note of the Company, in the aggregate original principal amount of
$42,604,058.82, (including any principal, interest, or other amounts outstanding
thereunder, the “Existing Series B Note”, and together with the Existing Series
A Notes, the “Existing Notes”), which Existing Series B Note is convertible into
shares of Common Stock in accordance with the terms of the Existing Series B
Note and (b) a warrant to purchase 751,896 shares of Common Stock (as defined in
the Securities Purchase Agreement) (the “Existing Warrant”, and together with
the Existing Notes, the “Existing Securities”).

 

B. As consideration for the acquisition of the Existing Series B Note, the
Holder issued to the Company a secured promissory note in the aggregate original
principal amount of $42,604,058.82 (the “Existing Investor Note”).

 

C. On April 13, 2018, the Holder delivered that certain Event of Default
Redemption Notice (as defined in the Existing Series A Note) to the Company (the
“Existing Redemption Notice”), pursuant to which the Holder required the
Company, on or prior to April 20, 2018, to redeem all of the Existing Series A
Note for a cash amount equal to $33,648,374.90 (the “Existing Series A
Redemption Price”);

 

D. The Company and the Holder desire to (I) consummate an Event of Default
Netting (as defined in the Existing Series B Note) of $37,604,058.82 in
aggregate principal amount of the Existing Series B Note against $37,604,058.82
in aggregate principal amount of the Investor Note, after which only $5 million
in aggregate principal amount of the Existing Series B Note and only $5 million
in aggregate principal amount of the Existing Investor Note, respectively, shall
remain outstanding (the “Netting Transaction”) and (II) immediately thereafter
exchange (the “Exchange”, and together with the Netting Transaction, the
“Transactions”) (i) the Existing Series A Note (including all obligations of the
Company to pay the Investor any Registration Delay Payments (as defined in the
Registration Rights Agreement) or other amounts pursuant to the Registration
Rights Agreement as permitted by Section 11(a) of the Existing Series A Note)
for (x) a new senior convertible note issued by the Company, in the form
attached hereto as Exhibit A, with an initial aggregate principal amount of
$12.5 million (as such note may be amended, modified, supplemented, extended,
renewed, restated or replaced from time to time in accordance with the terms
thereof, “New Series A Note”, and as converted, the “New Series A Conversion
Shares”) and (y) a new senior convertible note issued by the Company, in the
form attached hereto as Exhibit B, with an initial aggregate principal amount of
$1,000 (as such note may be amended, modified, supplemented, extended, renewed,
restated or replaced from time to time in accordance with the terms thereof,
“New Series A-1 Note”, and as converted, the “New Series A-1 Conversion
Shares”), (ii) the $5 million balance of the Existing Series B Note for a new
senior secured convertible note issued by the Company, in the form attached
hereto as Exhibit C, with an initial aggregate principal amount of $5 million
(as such note may be amended, modified, supplemented, extended, renewed,
restated or replaced from time to time in accordance with the terms thereof,
“New Series B Note”, and as converted, the “New Series B Conversion Shares”),
(iii) the $5 million balance of the Existing Investor Note for a new promissory
note issued by the Holder, in the form attached hereto as Exhibit D, with an
initial aggregate principal amount of $5 million (as such note may be amended,
modified, supplemented, extended, renewed, restated or replaced from time to
time in accordance with the terms thereof, “New Investor Note”) on the basis and
subject to the terms and conditions set forth in this Agreement. The New Series
A Note, the New Series A-1 Note and the New Series B Note are collectively
referred to herein as the “New Notes” and (iv) the Existing Warrant for a new
warrant to initially purchase 751,896 shares of Common Stock (subject to
adjustment in accordance therewith) in the form attached hereto as Exhibit E
(the “New Warrant”, as exercised, the “New Warrant Shares”). The New Series A
Conversion Shares, the New Series A-1 Conversion Shares and the New Series B
Conversion Shares are collectively referred to herein as the “New Conversion
Shares”, and together with the New Warrant Shares, the “New Underlying Shares”).
The New Notes and the New Warrant are collectively referred to therein as the
“New Primary Securities”) The New Primary Securities and the New Underlying
Shares are collectively referred to herein as the “New Securities”. The New
Securities, the New Investor Note and this Agreement and such other documents
and certificates related thereto are collectively referred to herein as the
“Exchange Documents”.

 

   

 

 

E. The Exchange is being made in reliance upon the exemption from registration
provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the
“Securities Act”).

 

F. Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the Securities Purchase Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:

 

1. Transactions. On the date hereof, (I) the Company and the Holder shall
consummate the Netting Transaction and (II) immediately following the Netting
Transaction, pursuant to Section 3(a)(9) of the Securities Act, (a) the Holder
hereby agrees to convey, assign and transfer the Existing Securities to the
Company in exchange for which the Company agrees to issue the New Securities to
the Holder; and (b) the Company hereby agrees to convey, assign and transfer the
Existing Investor Note to the Holder in exchange for which the Holder agrees to
issue the New Investor Note to the Company. As of the date hereof, the Holder
shall be owner of the New Primary Securities and the Company shall be the owner
of the New Investor Note, with all respective rights set forth therein
(including, without limitation, the Holder’s right to convert the New Notes and
exercise the New Warrant) regardless of the date of delivery of the certificates
evidencing the New Securities to the Holder (or its designee). The Company
hereby instructs the Holder to maintain possession of the New Investor Note, as
collateral for the New Series B Note. No later than two (2) Trading Days after
the date hereof, the Company shall deliver or cause to be delivered to the
broker of the Holder certificates evidencing the New Primary Securities at the
following address: Attn: Kevin Thomas, UBS Securities LLC, 1000 Harbor Blvd, 5th
Floor, Weehawken, NJ 07086.

 

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2. Ratifications; Amendments; Withdraw of Redemption Notice.

 

(a) Ratifications. Except as otherwise expressly provided herein, the Securities
Purchase Agreement and each other Transaction Document, is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects, except that on and after the date hereof: (i) all references in the
Securities Purchase Agreement to “this Agreement”, “hereto”, “hereof”,
“hereunder” or words of like import referring to the Securities Purchase
Agreement shall mean the Securities Purchase Agreement as amended by this
Agreement, and (ii) all references in the other Transaction Documents, to the
“Securities Purchase Agreement”, “thereto”, “thereof”, “thereunder” or words of
like import referring to the Securities Purchase Agreement shall mean the
Securities Purchase Agreement as amended by this Agreement.

 

(b) Amendments to Transaction Documents. Effective as of the date hereof, the
Securities Purchase Agreement and each of the Transaction Documents (as defined
in the Securities Purchase Agreement) are hereby amended as follows:

 

(i) The defined term “Series A Notes” is hereby amended to include “the New
Series A Note (as defined in the that certain Amendment and Exchange Agreement,
dated August 20, 2018, by and between the Company and the Buyer signatory
thereto (the “Exchange Agreement”)) and the New Series A-1 Note (as defined in
the Exchange Agreement)”.

 

(ii) The defined term “Series A Conversion Shares” is hereby amended to include
“the New Series A Conversion Shares (as defined in the Exchange Agreement) and
the New Series A-1 Conversion Shares (as defined in the Exchange Agreement)”.

 

(iii) The defined term “Series B Notes” is hereby amended to include “the New
Series B Notes (as defined in the Exchange Agreement)”.

 

(iv) The defined term “Series B Conversion Shares” is hereby amended to include
“the New Series B Conversion Shares (as defined in the Exchange Agreement)”.

 

(v) The defined term “Investor Note” is hereby amended to include the “the New
Investor Note (as defined in the Exchange Agreement)”.

 

(vi) The defined term “Warrants” is hereby amended to include “the New Warrant
(as defined in the Exchange Agreement)”.

 

(iv) The defined term “Warrant Shares” is hereby amended to include “the New
Warrant Shares (as defined in the Exchange Agreement)”.

 

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The defined term “Transaction Documents” shall be amended to include this
Agreement.

 

(vii) The defined term “Eligible Market” shall be amended to include “the OTCQX,
the OTCQB and the OTC Pink Open Market (including all successor markets
thereto)”.

 

(viii) The Master Netting Agreement is hereby amended and restated in the form
attached hereto as Exhibit E (the “Amended Master Netting Agreement”) and the
defined term “Master Netting Agreement” shall hereafter be deemed to refer to
the Amended Master Netting Agreement.

 

(ix) The Registration Rights Agreement shall terminate and the Company shall
have no further obligations under the Registration Rights Agreement with respect
to the Existing Securities or the New Securities and the Holder hereby waives
any and all payments, liquidated damages or penalties that may have accrued as a
result of the Company’s prior obligations under the Registration Rights
Agreement. All references to the Registration Rights Agreement or the Company’s
obligations thereunder shall be hereinafter disregarded.

 

(x) Section 4(f) of the Securities Purchase Agreement shall be amended such that
the definition of “Excluded Securities” shall include “(vi) up to Ten Million
(10,000,000) shares of Common Stock (including shares of Common Stock issuable
upon conversion of Convertible Securities) for capital raising purposes”.

 

(xi) Section 3.01 of the Voting and Lockup Agreement shall be amended to add the
following provision as subsection (d): “Notwithstanding the foregoing, the
Stockholder may transfer, assign, pledge or sell the Lock-Up Securities if the
sole use of proceeds of such disposition results in the full repayment (or
prepayment, as the case may be) of all of the outstanding Principal, accrued and
unpaid Interest or accrued and unpaid Late Charges on Principal and Interest (if
any) of the New Notes (as defined in that certain Amendment and Exchange
Agreement dated as of August 20, 2018).”

 

(c) Withdrawal of Redemption Notice. Effective as of the date hereof, the Holder
hereby withdraws the Existing Redemption Notice.

 

(d) Securities Contract Status. Notwithstanding anything herein to the contrary,
the parties hereby acknowledge and agree that the New Notes shall be deemed to
have been issued pursuant to the Securities Purchase Agreement and the New
Investor Note shall be deemed to have been issued pursuant to the Note Purchase
Agreement, in each case, as a “securities contract” as defined in 11 U.S.C. §
741, and that the Holder shall have all rights in respect of the New Note, the
Amendment and Exchange Agreement, the Amended Master Netting Agreement, the New
Investor Note, the Securities Purchase Agreement and the Note Purchase Agreement
as are set forth in 11 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including,
without limitation, all rights of credit, deduction, setoff, offset, and netting
as are available under the New Notes, the Amended Master Netting Agreement and
the New Investor Note and all netting provisions of the New Note, the New
Investor Note and the Amended Master Netting Agreement.

 

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3. Representations and Warranties. As of the date hereof:

 

3.1 Organization and Qualification. Each of the Company and each of its
Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authority to own their properties and to carry on their
business as now being conducted and as presently proposed to be conducted. Each
of the Company and each of its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect (as defined below). As used in this Agreement, “Material
Adverse Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, operations (including results thereof),
condition (financial or otherwise) or prospects of the Company or any
Subsidiary, individually or taken as a whole, (ii) the transactions contemplated
hereby or in any of the other Transaction Documents or (iii) the authority or
ability of the Company or any of its Subsidiaries to perform any of their
respective obligations under any of the Transaction Documents (as defined
below). Other than the Persons set forth on Schedule 3.1 to this Agreement, the
Company has no Subsidiaries. “Subsidiaries” means any Person in which the
Company, directly or indirectly, (I) owns any of the outstanding capital stock
or holds any equity or similar interest of such Person or (II) controls or
operates all or any part of the business, operations or administration of such
Person, and each of the foregoing, is individually referred to herein as a
“Subsidiary.” For purposes of this Agreement, (x) “Person” means an individual,
a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any Governmental
Entity or any department or agency thereof and (y) “Governmental Entity” means
any nation, state, county, city, town, village, district, or other political
jurisdiction of any nature, federal, state, local, municipal, foreign, or other
government, governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal), multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature or
instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or
any of the foregoing.

 

3.2 Authorization and Binding Obligation. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement,
the New Securities and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by the Exchange
Documents and to consummate the Transactions (including, without limitation, the
issuance of the New Securities in accordance with the terms hereof and thereof).
The execution and delivery of the Exchange Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the Transactions, the issuance of the New Notes
and the reservation for issuance and issuance of New Conversion Shares issuable
upon conversion of the New Notes and the issuance of the New Warrant and the
reservation for issuance and issuance of New Warrant Shares issuable upon
exercise of the New Warrants has been duly authorized by the Company’s Board of
Directors and no further filing, consent, or authorization is required by the
Company, its Board of Directors or its stockholders. This Agreement and the
other Exchange Documents have been duly executed and delivered by the Company,
and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies and except as rights to indemnification and to
contribution may be limited by federal or state securities laws.

 

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3.3 No Conflict. The execution, delivery and performance of the Exchange
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
Transactions, the issuance of the New Notes and reservation for issuance and
issuance of the New Conversion Shares and the issuance of the New Warrant and
the reservation for issuance and issuance of New Warrant Shares issuable upon
exercise of the New Warrants) will not (i) result in a violation of the
Certificate of Incorporation (as defined below) or any other organizational
documents of the Company or any of its Subsidiaries, any capital stock of the
Company or any of its Subsidiaries or Bylaws (as defined below) of the Company
or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations, including all applicable federal laws,
rules and regulations) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected except, in the case of clause (ii) or (iii) above, to the
extent such violations that would not reasonably be expected to have a Material
Adverse Effect.

 

3.4 No Consents. Neither the Company nor any Subsidiary is required to obtain
any consent from, authorization or order of, or make any filing or registration
with (other than the filing with the Securities and Exchange Commission (the
“SEC”) of a Form D with the SEC and any other filings as may be required by any
state securities agencies), any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its respective obligations under or contemplated by the
Exchange Documents, in each case, in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations which
the Company or any Subsidiary is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof, and
neither the Company nor any of its Subsidiaries are aware of any facts or
circumstances which might prevent the Company or any of its Subsidiaries from
obtaining or effecting any of the registration, application or filings
contemplated by the Exchange Documents.

 

3.5 Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Holder contained herein, the offer and issuance by the Company
of the New Securities is exempt from registration under the Securities Act
pursuant to the exemption provided by Section 3(a)(9) thereof.

 

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3.6 Status of Existing Securities; Issuance of New Securities. The issuance of
the New Primary Securities has been duly authorized and upon issuance in
accordance with the terms of the Exchange Documents, the New Primary Securities
shall be validly issued, fully paid and non-assessable and free from all Liens,
other than as otherwise contemplated hereby. Upon issuance or conversion in
accordance with the New Notes, the New Conversion Shares, when issued, will be
validly issued, fully paid and nonassessable and free from all Liens with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. Upon issuance or exercise in accordance
with the New Warrant, the New Warrant Shares, when issued, will be validly
issued, fully paid and nonassessable and free from all Liens with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. By virtue of Rule 3(a)(9) under the Securities Act, the
New Primary Securities will have a Rule 144 holding period that will be deemed
to have commenced as of February 13, 2018, the date of the original issuance of
the Existing Securities to the Holder.

 

3.7 Transfer Taxes. On the date hereof, all share transfer or other taxes (other
than income or similar taxes) which are required to be paid in connection with
the issuance of the New Securities to be exchanged with the Holder hereunder
will be, or will have been, fully paid or provided for by the Company, and all
laws imposing such taxes will be or will have been complied with.

 

3.8 Conduct of Business; Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, any certificate of designation, preferences or rights of any
other outstanding series of preferred stock of the Company or any of its
Subsidiaries or Bylaws or their organizational charter, certificate of
formation, memorandum of association, articles of association, Certificate of
Incorporation or bylaws, respectively. Except as set forth in the SEC Documents,
neither the Company nor any of its Subsidiaries is in violation of any judgment,
decree or order or any statute, ordinance, rule or regulation applicable to the
Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries will conduct its business in violation of any of the foregoing,
except in all cases for possible violations which could not, individually or in
the aggregate, have a Material Adverse Effect. Except as set forth in the SEC
Documents, without limiting the generality of the foregoing, the Company is not
in violation of any of the rules, regulations or requirements of the principal
market or exchange in which the Common Stock is trading or quoted as of the date
hereof (the “Principal Market”) and, except as set forth on Schedule 3.8, has no
knowledge of any facts or circumstances that could reasonably lead to delisting
or suspension of the Common Stock by the Principal Market in the foreseeable
future. The Company and each of its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit. Except as set forth in the SEC Documents, there is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or
any of its Subsidiaries or to which the Company or any of its Subsidiaries is a
party which has or would reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or any
of its Subsidiaries, any acquisition of property by the Company or any of its
Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted other than such effects, individually or in
the aggregate, which have not had and would not reasonably be expected to have a
Material Adverse Effect on the Company or any of its Subsidiaries.

 

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3.9 Transactions With Affiliates. Except as set forth in the SEC Documents, no
current or former employee, partner, director, officer or stockholder (direct or
indirect) of the Company or its Subsidiaries, or any associate, or, to the
knowledge of the Company, any affiliate of any thereof, or any relative with a
relationship no more remote than first cousin of any of the foregoing, is
presently, or has ever been, (i) a party to any transaction with the Company or
its Subsidiaries (including any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal
property from, or otherwise requiring payments to, any such director, officer or
stockholder or such associate or affiliate or relative Subsidiaries (other than
for ordinary course services as employees, consultants, officers or directors of
the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of
an interest in any corporation, firm, association or business organization which
is a competitor, supplier or customer of the Company or its Subsidiaries (except
for a passive investment (direct or indirect) in less than 5% of the common
stock of a company whose securities are traded on or quoted through an Eligible
Market (as defined in the Existing Notes)), nor does any such Person receive
income from any source other than the Company or its Subsidiaries which relates
to the business of the Company or its Subsidiaries or should properly accrue to
the Company or its Subsidiaries. No employee, officer, stockholder or director
of the Company or any of its Subsidiaries or member of his or her immediate
family is indebted to the Company or its Subsidiaries, as the case may be, nor
is the Company or any of its Subsidiaries indebted (or committed to make loans
or extend or guarantee credit) to any of them, other than (i) for payment of
salary for services rendered, (ii) reimbursement for reasonable expenses
incurred on behalf of the Company, and (iii) for other standard employee
benefits made generally available to all employees or executives (including
stock option agreements outstanding under any stock option plan approved by the
Board of Directors of the Company).

 

3.10 Equity Capitalization.

 

(a) Definitions:

 

(A) “Common Stock” means (x) the Company’s shares of common stock class A, par
value $0.00001 per share, and (y) any capital stock into which such common stock
shall have been changed or any share capital resulting from a reclassification
of such common stock.

 

(B) “Class B Common Stock” means (x) the Company’s shares of common stock class
B, par value $0.00001 per share, and (y) any capital stock into which such
common stock shall have been changed or any share capital resulting from a
reclassification of such common stock.

 

(C) “Class C Common Stock” means (x) the Company’s shares of common stock class
B, par value $0.00001 per share, and (y) any capital stock into which such
common stock shall have been changed or any share capital resulting from a
reclassification of such common stock.

 

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(b) Authorized and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (A) 100,000,000 shares of
Common Stock, of which, 44,040,989 are issued and outstanding and 39,834 shares
are reserved for issuance pursuant to Convertible Securities (other than the
Existing Notes) exercisable or exchangeable for, or convertible into, shares of
Common Stock, (B) 75,000,000 shares of Class B Common Stock, 30,000,000 of which
are issued and outstanding and (C) 25,000,000 shares of Class C Common Stock,
none of which are issued and outstanding.

 

(c) Valid Issuance; Available Shares; Affiliates. All of such outstanding shares
are duly authorized and have been, or upon issuance will be, validly issued and
are fully paid and nonassessable. Schedule 3.10 sets forth the number of shares
of Common Stock that are as of the date hereof, owned by Persons who are
“affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the
assumption that only officers, directors and holders of at least 10% of the
Company’s issued and outstanding Common Stock are “affiliates” without conceding
that any such Persons are “affiliates” for purposes of federal securities laws)
of the Company or any of its Subsidiaries.

 

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

 

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

 

3.11 Indebtedness and Other Contracts. Except as disclosed in the SEC Documents,
neither the Company nor any of its Subsidiaries, (i) has any outstanding debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become
bound, (ii) is a party to any contract, agreement or instrument the violation of
which, or default under which, by the other party(ies) to such contract,
agreement or instrument could reasonably be expected to result in a Material
Adverse Effect, (iii) has any financing statements securing obligations in any
amounts filed in connection with the Company or any of its Subsidiaries; (iv) is
in violation of any term of, or in default under, any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect, or (v) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the
Company’s officers, has or is expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries have any liabilities or
obligations required to be disclosed in the SEC Documents which are not so
disclosed in the SEC Documents, other than those incurred in the ordinary course
of the Company’s or its Subsidiaries’ respective businesses and which,
individually or in the aggregate, do not or could not have a Material Adverse
Effect.

 

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3.12 Litigation. Except as described in the SEC Documents, there is no action,
suit, arbitration, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, other Governmental Entity,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
the Common Stock or any of the Company’s or its Subsidiaries’ officers or
directors that would reasonably be expected to have a Material Adverse Effect on
the Company or its Subsidiaries, whether of a civil or criminal nature or
otherwise, in their capacities as such, except as disclosed in the SEC
Documents. No director, officer or employee of the Company or any of its
subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in
reasonable anticipation of litigation. Without limitation of the foregoing,
except as described in the SEC Documents, there has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the SEC involving the Company, any of its Subsidiaries or any
current or former director or officer of the Company or any of its Subsidiaries.
The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the 1933
Act or the 1934 Act. Except as described in the EC Documents, neither the
Company nor any of its Subsidiaries is subject to any order, writ, judgment,
injunction, decree, determination or award of any Governmental Entity.

 

3.13 Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided the Holder or its agents or counsel with any
information that constitutes or would reasonably be expected to constitute
material, non-public information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Exchange Documents. The Company understands and confirms
that the Holder will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the Holder
regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries is true and
correct in all material respects and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each press release issued by the Company or any of its
Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its
or their business, properties, liabilities, prospects, operations (including
results thereof) or conditions (financial or otherwise), which, under applicable
law, rule or regulation, requires public disclosure at or before the date hereof
or announcement by the Company but which has not been so publicly announced or
disclosed.

 

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3.14 Ownership of Existing Investor Notes. The Company owns the Existing
Investor Note free and clear of any Liens (other than the obligations pursuant
to this Agreement, the Transaction Documents and applicable securities laws).

 

3.15 Reliance on Exemptions. The Company understands that the New Investor Note
is being offered and exchanged in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Holder is relying in part upon the truth and accuracy of, and the
Company’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Company set forth herein and in the
Exchange Documents in order to determine the availability of such exemptions and
the eligibility of the Company to acquire the New Investor Note.

 

3.16 No Governmental Review. The Company understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the New Investor Note or
the fairness or suitability of the investment in the New Investor Note nor have
such authorities passed upon or endorsed the merits of the offering of the New
Investor Note.

 

4. Holder’s Representations and Warranties. As a material inducement to the
Company to enter into this Agreement and consummate the Transactions, the Holder
represents, warrants and covenants with and to the Company as follows:

 

4.1 Authorization and Binding Obligation. The Holder has the requisite power and
authority to enter into and perform its obligations under this Agreement, the
New Investor Note and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by the Exchange
Documents and to consummate the Transaction (including, without limitation, the
issuance of the New Investor Note in accordance with the terms hereof and
thereof). The execution and delivery of the Exchange Documents by the Holder and
the consummation by the Holder of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the New Investor Note
has been duly authorized and no further filing, consent, or authorization is
required by the Holder to effect the issuance of the New Investor Note. This
Agreement and the other Exchange Documents have been duly executed and delivered
by the Holder, and constitute the legal, valid and binding obligations of the
Holder, enforceable against the Holder in accordance with their respective
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities laws.

 

4.2 Issuance of New Investor Note. The issuance of the New Investor Note is duly
authorized and upon issuance in accordance with the terms of the Transaction
Documents, the New Investor Note shall be free from all taxes, liens and charges
with respect to the issue thereof. Assuming the accuracy of each of the
representations and warranties set forth in Section 3 of this Agreement, the
exchange, offer and issuance by the Holder of the New Investor Note is exempt
from registration pursuant to the exemption provided by Rule 3(a)(9) under the
Securities Act.

 

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4.3 Consents. The Holder is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any Governmental Entity or
any other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents, in each case in
accordance with the terms hereof or thereof. The Holder is unaware of any facts
or circumstances that might prevent the Holder from obtaining or effecting any
of the registration, application or filings pursuant to the preceding sentence.

 

4.4 Reliance on Exemptions. The Holder understands that the New Securities are
being offered and exchanged 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 the
Holder’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Holder set forth herein and in the
Exchange Documents in order to determine the availability of such exemptions and
the eligibility of the Holder to acquire the New Securities.

 

4.5 No Governmental Review. The Holder understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the New Securities or the fairness or
suitability of the investment in the New Securities nor have such authorities
passed upon or endorsed the merits of the offering of the New Securities.

 

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

 

4.7 Securities Law Exemptions. Assuming the accuracy of the representations and
warranties of the Company contained herein, the offer and issuance by the Holder
of the New Investor Note is exempt from registration under the Securities Act
pursuant to the exemption provided by Section 3(a)(9) thereof.

 

4.8 Issuance of New Investor Note. The issuance of the New Investor Note has
been duly authorized and upon issuance in accordance with the terms of the
Exchange Documents shall be validly issued, fully paid and non-assessable and
free from all Liens.

 

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4.9 Ownership of Existing Notes. The Holder owns the Existing Primary Securities
free and clear of any Liens (other than the obligations pursuant to this
Agreement, the Transaction Documents, liens in the ordinary course of business
and applicable securities laws).

 

5. 8-K Filing. The Company shall, on or before 8:30 a.m., New York City time, on
the first (1st) business day after the date of this Agreement, issue a Current
Report on Form 8-K disclosing all material terms of the transactions
contemplated hereby and attaching this Agreement, the New Notes, the New Warrant
and the New Investor Note, as exhibits thereto (collectively with all exhibits
attached thereto, the “8-K Filing”). From and after the date of the 8-K Filing,
the Holder shall not be in possession of any material, nonpublic information
received from the Company or any of its Subsidiaries or any of their respective
officers, directors, employees, affiliates or agents, that is not disclosed in
the 8-K Filing. The Company shall not, and shall cause its officers, directors,
employees, affiliates and agents, not to, provide the Holder with any material,
nonpublic information regarding the Company from and after the 8-K Filing
without the express written consent of the Holder. To the extent that the
Company delivers any material, non-public information to the Holder from and
after the 8-K Filing without the Holder’s express prior written consent, the
Company hereby covenants and agrees that the Holder shall not have any duty of
confidentiality to the Company, any of its Subsidiaries or any of their
respective officers, directors, employees, affiliates or agent with respect to,
or a duty to the to the Company, any of its Subsidiaries or any of their
respective officers, directors, employees, affiliates or agent or not to trade
on the basis of, such material, non-public information. The Company shall not
disclose the name of the Holder in any filing, announcement, release or
otherwise, unless such disclosure is required by law or regulation. In addition,
effective upon and after the 8-K Filing, the Company acknowledges and agrees
that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its subsidiaries or any of
their respective officers, directors, affiliates, employees or agents, on the
one hand, and the Holder or any of its affiliates, on the other hand, shall
terminate and be of no further force or effect. The Company understands and
confirms that the Holder will rely on the foregoing representations in effecting
transactions in securities of the Company.

 

6. No Integration. None of the Company, its Subsidiaries, any of their
affiliates, or any Person acting on their behalf shall, directly or indirectly,
make any offers or sales of any security (as defined in the Securities Act) or
solicit any offers to buy any security or take any other actions, under
circumstances that would require registration of any of the New Underlying
Shares under the Securities Act or cause this offering of the New Underlying
Shares to be integrated with such offering or any prior offerings by the Company
for purposes of Regulation D under the Securities Act.

 

7. Fees. The Company shall promptly reimburse Kelley Drye & Warren, LLP (counsel
to the Holder), on demand, for all reasonable, documented costs and expenses
incurred by it in connection with preparing and delivering this Agreement
(including, without limitation, all reasonable, documented legal fees and
disbursements in connection therewith, and due diligence in connection with the
transactions contemplated thereby) in an aggregate amount not to exceed $25,000.

 

8. Holding Period. For the purposes of Rule 144, the Company acknowledges that
(I) the holding period of the New Notes (and upon conversion of the New Notes,
the New Conversion Shares) may be tacked onto the holding period of the Existing
Notes and (II) the holding period of the New Warrant (and upon exercise of the
New Warrant (assuming a cashless exercise thereof), the New Warrant Shares), in
each case, may be tacked onto the holding period of the Existing Notes, and the
Company agrees not to take a position contrary to this Section 8. The Company
acknowledges and agrees that (assuming the Holder is not an affiliate of the
Company) (i) upon issuance in accordance with the terms of the New Notes, the
New Conversion Shares will be, as of August 13, 2018, eligible to be resold
pursuant to Rule 144, (ii) the Company is not aware of any event reasonably
likely to occur that would reasonably be expected to result in the New
Conversion Shares becoming ineligible to be resold by the Holder pursuant to
Rule 144 (iii) upon issuance in accordance with the terms of the New Warrant,
assuming a cashless exercise thereof, the New Warrant Shares will be, as of
August 13, 2018, eligible to be resold pursuant to Rule 144, (iv) the Company is
not aware of any event reasonably likely to occur that would reasonably be
expected to result in the New Warrant Shares (if issued pursuant to a cashless
exercise) becoming ineligible to be resold by the Holder pursuant to Rule 144
and (iv) in connection with any resale of New Underlying Shares pursuant to Rule
144 (if New Warrant Shares, assuming such New Warrant Shares were issued
pursuant to a cashless exercise of the New Warrant), the Holder shall solely be
required to provide reasonable assurances that such New Underlying Shares are
eligible for resale, assignment or transfer under Rule 144, which shall not
include an opinion of Holder’s counsel. The Company shall be responsible for any
transfer agent fees or DTC fees or legal fees of the Company’s counsel with
respect to the removal of legends, if any, or issuance of New Underlying Shares
in accordance herewith.

 

9. Blue Sky. The Company shall make all filings and reports relating to the
Transactions required under applicable securities or “Blue Sky” laws of the
states of the United States following the date hereof, if any.

 

10. Miscellaneous Provisions. Section 9 of the Securities Purchase Agreements
(as amended hereby) is hereby incorporated by reference herein, mutatis
mutandis.

 

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 13 

 

 

IN WITNESS WHEREOF, Holders and the Company have executed this Agreement as of
the date set forth on the first page of this Agreement.

 

  COMPANY: LONGFIN CORP.         By:                           Name:     Title:
 

 

   

 

 

IN WITNESS WHEREOF, Holders and the Company have executed this Agreement as of
the date set forth on the first page of this Agreement.

 

  HOLDER:       HUDSON BAY MASTER FUND LTD         By:
                               Name:     Title: