Exhibit 10.1

 

DIGITAL TURBINE, INC.

 

A Delaware corporation

  

 

 

8.75% CONVERTIBLE NOTES DUE 2020

  

 

 

INITIAL PURCHASER AGREEMENT

 

September 23, 2016

 

 

 

 

 

CONVERTIBLE NOTE INITIAL PURCHASER AGREEMENT

 

Digital Turbine, Inc., a Delaware corporation (the “Company”), proposes to issue
and sell to BTIG, LLC (the “Initial Purchaser”) $16,000,000 principal amount of
its 8.75% convertible notes due September 23, 2020 (the “Notes”). The Notes will
be unconditionally guaranteed as to the payment of principal, premium, if any,
and interest on a senior unsecured basis (the “Guarantee” and together with the
Notes, the “Securities”) by the wholly-owned subsidiaries of the Company listed
on the signature pages hereto as guarantors (the “Guarantors”). The Securities
will be issued pursuant to the provisions of an Indenture, which will be
substantially in the form attached hereto as Exhibit A (the “Indenture”), to be
entered into on the Closing Date (as defined below), among the Company, the
Guarantors and U.S. Bank National Association, as trustee (the “Trustee”). The
Notes will be convertible into shares of common stock of the Company (the
“Underlying Securities”). On the Closing Date, the Company and U.S. Bank
National Association, as warrant agent (the “Warrant Agent”) will also enter
into a warrant agreement, which will be substantially in the form attached
hereto as Exhibit B (the “Warrant Agreement”).

 

The Securities will be offered to the Initial Purchaser without being registered
under the Securities Act of 1933, as amended (the “Securities Act”), in reliance
on the exemption from the registration requirements of the Securities Act
provided by Section 4(a)(2) thereof. The Initial Purchaser has advised the
Company that it will make offers and resales of the Securities purchased from
the Company to qualified institutional buyers in compliance with the exemption
from registration provided by Rule 144A under the Securities Act and to
institutional accredited investors (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act).

 

The Initial Purchaser and its direct and indirect transferees will be entitled
to the benefits of a Registration Rights Agreement, which will be substantially
in the form attached hereto as Exhibit C (the “Registration Rights Agreement”),
to be entered into on the Closing Date, among the Company, the Guarantors and
the Initial Purchaser.

 

In connection with the sale of the Securities, the Company and the Guarantors
have prepared a preliminary offering memorandum dated September 22, 2016 (the
“Preliminary Memorandum”) and will prepare a final offering memorandum (the
“Final Memorandum”) including or incorporating by reference a description of the
terms of the Securities and the Underlying Securities, the terms of the offering
and a description of the Company and the Guarantors. For purposes of this
Agreement, “Additional Written Offering Communication” means any written
communication (as defined in Rule 405 under the Securities Act) that constitutes
an offer to sell or a solicitation of an offer to buy the Securities other than
the Preliminary Memorandum or the Final Memorandum, and “Time of Sale
Memorandum” means the Preliminary Memorandum together with the Additional
Written Offering Communications, if any, each identified in Schedule I hereto.
As used herein, the terms Preliminary Memorandum, Time of Sale Memorandum and
Final Memorandum shall include the documents, if any, incorporated by reference
therein on the date hereof. The terms “supplement”, “amendment” and “amend” as
used herein with respect to the Preliminary Memorandum, the Time of Sale
Memorandum, the Final Memorandum or any Additional Written Offering
Communication shall include all documents subsequently filed by the Company or
the Guarantors with the Securities and Exchange Commission (the “Commission”)
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that are deemed to be incorporated by reference therein.

 

 

 

 

1.          Representations and Warranties. The Company and the Guarantors,
jointly and severally, represent and warrant to, and agree with, the Initial
Purchaser that:

 

(a)          (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Preliminary Memorandum, the
Time of Sale Memorandum or the Final Memorandum complied with, or will comply
with, when filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (ii) the Time of
Sale Memorandum does not at the time of each sale of the Securities in
connection with the offering when the Final Memorandum is not yet available to
prospective purchasers and at the Closing Date (as defined in Section ‎4), the
Time of Sale Memorandum, as then amended or supplemented by the Company and the
Guarantors, if applicable, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
(iii) the Preliminary Memorandum does not contain and the Final Memorandum, in
the form used by the Initial Purchaser to confirm sales and on the Closing Date
(as defined in Section 4), will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Preliminary Memorandum, the Time of
Sale Memorandum or the Final Memorandum based upon information relating to the
Initial Purchaser furnished to the Company in writing by such Initial Purchaser
expressly for use therein.

 

(b)          Except for the Additional Written Offering Communications, if any,
identified in Schedule I hereto, and electronic road shows, if any, furnished to
the Initial Purchaser before first use, the Company and the Guarantors have not
prepared, used or referred to, and will not, without the prior consent of the
Initial Purchaser, prepare, use or refer to, any Additional Written Offering
Communication.

 

(c)          The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Time of Sale Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

 

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(d)          Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation or a limited liability company, as applicable,
in good standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct its
business as described in the Time of Sale Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the Company, and at
the Closing Date will be free and clear of all liens, encumbrances, equities or
claims.

 

(e)          This Agreement has been duly authorized, executed and delivered by
the Company and the Guarantors.

 

(f)          The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in each of the Time of Sale
Memorandum and the Final Memorandum.

 

(g)          The shares of common stock of the Company outstanding prior to the
issuance of the Securities have been duly authorized and are validly issued,
fully paid and non-assessable.

 

(h)          The common stock of the Company is registered pursuant to the
Exchange Act and is listed on NASDAQ, and the Company has taken no action
designed to terminate the registration of its common stock under the Exchange
Act or to delist its common stock from NASDAQ, nor has the Company received any
notification that the Commission or NASDAQ is contemplating terminating such
registration or listing.

 

(i)          The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and the Warrant
Agreement and delivered to and paid for by the Initial Purchaser in accordance
with the terms of this Agreement, will be valid and binding obligations of the
Company or the Guarantors, as applicable, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and equitable principles of general applicability,
and will be entitled to the benefits of the Indenture, the Registration Rights
Agreement and the Warrant Agreement pursuant to which such Securities are to be
issued. The Guarantee conforms to the description thereof in the Time of Sale
Memorandum and the Final Memorandum.

 

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(j)          The Underlying Securities issuable upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the Securities,
will be validly issued, fully paid and non-assessable, and the issuance of the
Underlying Securities will not be subject to any preemptive or similar rights.

 

(k)          Each of the Indenture, the Registration Rights Agreement and the
Warrant Agreement has been duly authorized, and, as of the Closing Date, will be
duly executed and delivered by, and will be a valid and binding agreement of,
the Company, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and equitable principles of general applicability.

 

(l)          Each of the Indenture and the Registration Rights Agreement has
been duly authorized, and, as of the Closing Date, will be duly executed and
delivered by, and will be a valid and binding agreement of, each of the
Guarantors, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and equitable principles of general applicability.

 

(m)          The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture, the
Registration Rights Agreement, the Warrant Agreement and the Securities will not
contravene any provision of applicable law or the certificate of incorporation
or by-laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Indenture, the Registration Rights Agreement, the Warrant Agreement or the
Securities, except such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the Securities and
by federal and state securities laws with respect to the Company’s obligations
under the Registration Rights Agreement.

 

(n)          The execution and delivery by the Guarantors of, and the
performance by the Guarantors of their respective obligations under, this
Agreement, the Indenture, the Registration Rights Agreement and the Securities
will not contravene any provision of applicable law or the certificates of
incorporation or by-laws of the various Guarantors or any agreement or other
instrument binding upon the Guarantors or any of their subsidiaries that is
material to a given Guarantor and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Guarantors or any of their subsidiaries, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Guarantors of their
respective obligations under this Agreement, the Indenture, the Registration
Rights Agreement or the Securities, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Securities and by federal and state securities laws with respect
to the Guarantors’ obligations under the Registration Rights Agreement.

 

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(o)          There has not occurred any material adverse change, or development
involving a reasonably likely prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set forth in the
Time of Sale Memorandum provided to prospective purchasers of the Securities.

 

(p)          Other than proceedings accurately described in all material
respects in the Time of Sale Memorandum, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject that would have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or on the power or ability of
the Company or the Guarantors to perform their respective obligations under this
Agreement, the Indenture, the Registration Rights Agreement, the Warrant
Agreement or the Securities or to consummate the transactions contemplated by
the Time of Sale Memorandum.

 

(q)          The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants, (ii) have received all
permits, licenses or other approvals required of them under applicable laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where under any
of the foregoing such noncompliance, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.

 

(r)          The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as described
in the Final Memorandum will not be, required to register as an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended (the “Investment Company Act”).

 

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(s)          Neither the Company, any of the Guarantors nor any of their
respective affiliates (as defined in Rule 501(b) of Regulation D under the
Securities Act, an “Affiliate”) has directly, or through any agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be integrated
with the sale of the Securities in a manner that would require the registration
under the Securities Act of the Securities or (ii) offered, solicited offers to
buy or sold the Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section
4(a)(2) of the Securities Act.

 

(t)          It is not necessary in connection with the offer, sale and delivery
of the Securities to the Initial Purchaser in the manner contemplated by this
Agreement to register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.

 

(u)          The Securities satisfy the requirements set forth in
Rule 144A(d)(3) under the Securities Act.

 

(v)         Neither the Company, any of the Guarantors nor any of their
respective subsidiaries or affiliates, nor to the Company’s knowledge, any
director, officer, employee, agent or representative of the Company, the
Guarantors or of any of their respective subsidiaries or affiliates, has taken
or will take any action in furtherance of an offer, payment, promise to pay, or
authorization or approval of the payment or giving of money, property, gifts or
anything else of value, directly or indirectly, to any “government official”
(including any officer or employee of a government or government-owned or
controlled entity or of a public international organization, or any person
acting in an official capacity for or on behalf of any of the foregoing, or any
political party or party official or candidate for political office) to
influence official action or secure an improper advantage; and the Company, the
Guarantors and their respective subsidiaries and affiliates have conducted their
businesses in compliance with applicable anti-corruption laws and have
instituted and maintain and will continue to maintain policies and procedures
designed to promote and achieve compliance with such laws and with the
representation and warranty contained herein.

 

(w)          The operations of the Company and its subsidiaries are and have
been conducted at all times in material compliance with all applicable financial
recordkeeping and reporting requirements, including those of the Bank Secrecy
Act, as amended by Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of
jurisdictions where the Company and its subsidiaries conduct business, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Anti-Money Laundering Laws”), and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries with respect to
the Anti-Money Laundering Laws is pending or, to the best knowledge of the
Company, threatened.

 

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(x)          (i) Neither the Company, nor any of its subsidiaries nor, to the
Company’s knowledge, any of their respective directors, officers, employees,
agents, affiliates or representatives, is an individual or entity (“Person”)
that is, or is owned or controlled by a Person that is:

 

      (A) the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United
Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s
Treasury (“HMT”), or other relevant sanctions authority (collectively,
“Sanctions”); nor

 

     (B) located, organized or resident in a country or territory that is the
subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran,
Libya, North Korea, Sudan and Syria).

 

             (ii) The Company and its subsidiaries will not, directly or
indirectly, use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
Person:

 

     (A) to fund or facilitate any activities or business of or with any Person
or in any country or territory that, at the time of such funding or
facilitation, is the subject of Sanctions; or

 

    (B) in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as
underwriter, advisor, investor or otherwise).

 

            (iii) For the past five years, the Company and its subsidiaries have
not knowingly engaged in, are not now knowingly engaged in, and will not engage
in, any dealings or transactions with any Person, or in any country or
territory, that at the time of the dealing or transaction is or was the subject
of Sanctions.

 

(y)          The Company and each of its subsidiaries have filed all federal,
state, local and foreign tax returns required to be filed through the date of
this Agreement or have requested extensions thereof (except where the failure to
file would not, individually or in the aggregate, have a material adverse
effect) and have paid all taxes required to be paid thereon (except for cases in
which the failure to file or pay would not have a material adverse effect, or,
except as currently being contested in good faith and for which reserves
required by U.S. GAAP have been created in the financial statements of the
Company or the Guarantors, as applicable), and no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which has had
(nor does the Company or any of its subsidiaries have any notice or knowledge of
any tax deficiency which could reasonably be expected to be determined adversely
to the Company or its subsidiaries and which could reasonably be expected to
have) a material adverse effect.

 

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(z)          The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Time of Sale Prospectus,
since the end of the Company’s most recent audited fiscal year, there has been
(i) no material weakness in the Company’s or Guarantors’ internal control over
financial reporting (whether or not remediated) and (ii) no change in the
Company’s or Guarantors’ internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s
or Guarantors’ internal control over financial reporting.

 

2.          Agreements to Sell and Purchase. The Company hereby agrees to sell
to the Initial Purchaser, and the Initial Purchaser, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase from the Company $16,000,000 principal
amount of Notes at a purchase price of 92.75% of the principal amount thereof
(the “Purchase Price”) plus accrued interest, if any, to the Closing Date, and
the Guarantors agree to issue the Guarantee to be affixed to the Notes.

 

3.          Terms of Offering. The Initial Purchaser has advised the Company
that the Initial Purchaser will make an offering of the Securities purchased by
the Initial Purchaser hereunder as soon as practicable after this Agreement is
entered into as, in the Initial Purchaser’s judgment, is advisable.

 

4.          Payment and Delivery. Payment for the Securities shall be made by
the Initial Purchaser to the Company in federal or other funds immediately
available in New York City against delivery of such Securities for the account
of the Initial Purchaser at 10:00 a.m., New York City time, on September 28,
2016, or at such other time on the same or such other date, not later than
September 30, 2016, as shall be designated in writing by the Initial Purchaser.
The time and date of such payment are hereinafter referred to as the “Closing
Date.”

 

The Securities shall be delivered in global form, with the Guarantee affixed to
the Notes, not later than one full business day prior to the Closing Date. The
Securities shall be deposited with the Trustee as custodian for The Depository
Trust Company (“DTC”) and registered in the name of Cede & Co., as nominee for
DTC, for the account of the Initial Purchaser, with any transfer taxes payable
in connection with the transfer of the Securities to the Initial Purchaser duly
paid, against payment of the Purchase Price therefor plus accrued interest, if
any, to the date of payment and delivery.

 

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5.          Conditions to the Initial Purchaser’s Obligation. The obligation of
the Initial Purchaser to purchase and pay for the Securities on the Closing Date
is subject to the following conditions:

 

(a)          Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any actual event,
circumstance or change having a material adverse effect, or a development
involving a reasonably likely prospective material adverse effect, on the
business, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the Time
of Sale Memorandum provided to the prospective purchasers of the Securities
that, in the Initial Purchaser’s reasonable determination, is material and
adverse and that makes it, in the Initial Purchaser’s reasonable determination,
impracticable to market the Securities on the terms and in the manner
contemplated in the Time of Sale Memorandum.

 

(b)          The Initial Purchaser shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of each
of the Company and the Guarantors, to the effect set forth in Section 5(a) and
to the effect that the representations and warranties of the Company and the
Guarantors contained in this Agreement are true and correct as of the Closing
Date (except to the extent that such representations and warranties speak as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date) and that the Company and the Guarantors have
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied hereunder on or before the Closing Date.

 

The officer signing and delivering such certificate may rely upon the best of
his or her knowledge as to proceedings threatened.

 

(c)          The Initial Purchaser shall have received on the Closing Date, the
following:

 

(i)          the Indenture, duly executed and delivered by the Company, the
Guarantors and the Trustee;

 

(ii)         the Warrant Agreement, duly executed and delivered by the Company
and the Warrant Agent; and

 

(iii)        the Registration Rights Agreement, duly executed and delivered by
the Company and the Guarantors.

 

(d)          The Initial Purchaser shall have received on the Closing Date an
opinion and negative assurance statement of Manatt, Phelps & Phillips, LLP,
outside counsel for the Company and the Guarantors, dated the Closing Date, to
the effect set forth in Exhibit D. Such opinion and negative assurance statement
shall be rendered to the Initial Purchaser at the request of the Company and the
Guarantors and shall so state therein.

 

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(e)          The Initial Purchaser shall have received on the Closing Date an
opinion of O’Melveny & Myers LLP, counsel for the Initial Purchaser, dated the
Closing Date, to the effect set forth in Exhibit E.

 

(f)          The Initial Purchaser shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Initial Purchaser,
from SingerLewak LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants’ “comfort letters” to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Time of Sale
Memorandum and the Final Memorandum; provided that the letter delivered on the
Closing Date shall use a “cut-off date” not earlier than the date hereof.

 

6.          Covenants of the Company and the Guarantors. The Company and the
Guarantors, jointly and severally, covenant with the Initial Purchaser as
follows:

 

(a)          To furnish to the Initial Purchaser in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(d) or (e), as many copies of the Final Memorandum and any supplements
and amendments thereto as the Initial Purchaser may reasonably request.

 

(b)          Before amending or supplementing the Preliminary Memorandum, the
Time of Sale Memorandum or the Final Memorandum, to furnish to the Initial
Purchaser a copy of each such proposed amendment or supplement and not to use
any such proposed amendment or supplement to which the Initial Purchaser
objects.

 

(c)          To furnish to the Initial Purchaser a copy of each proposed
Additional Written Offering Communication to be prepared by or on behalf of,
used by, or referred to by the Company or the Guarantors and not to use or refer
to any proposed Additional Written Offering Communication to which the Initial
Purchaser reasonably objects.

 

(d)          If the Time of Sale Memorandum is being used to solicit offers to
buy the Securities at a time when the Final Memorandum is not yet available to
prospective purchasers and any event shall occur or condition exist as a result
of which it is necessary to amend or supplement the Time of Sale Memorandum in
order to make the statements therein, in the light of the circumstances, not
misleading, or if, in the opinion of counsel for the Initial Purchaser, it is
necessary to amend or supplement the Time of Sale Memorandum to comply with
applicable law, forthwith to prepare and furnish, at its own expense, to the
Initial Purchaser and to any dealer upon request, either amendments or
supplements to the Time of Sale Memorandum so that the statements in the Time of
Sale Memorandum as so amended or supplemented will not, in the light of the
circumstances when delivered to a prospective purchaser, be misleading or so
that the Time of Sale Memorandum, as amended or supplemented, will comply with
applicable law.

 

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(e)          If, during such period after the date hereof and prior to the date
on which all of the Securities shall have been sold by the Initial Purchaser,
any event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Final Memorandum in order to make the statements
therein, in the light of the circumstances when the Final Memorandum is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Initial Purchaser, it is necessary to amend or supplement the Final
Memorandum to comply with applicable law, forthwith to prepare and furnish, at
its own expense, to the Initial Purchaser, either amendments or supplements to
the Final Memorandum so that the statements in the Final Memorandum as so
amended or supplemented will not, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, be misleading or so that the Final
Memorandum, as amended or supplemented, will comply with applicable law.

 

(f)          To furnish such information as may be reasonably required and
otherwise to cooperate with the Initial Purchaser to qualify the Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchaser shall reasonably request; provided, however, that the
Company shall not be required to qualify as a foreign corporation or to consent
to the service of process under the laws of, or subject itself to taxation as
doing business in, any such state or other jurisdiction (except service of
process with respect to the offering and sale of the Securities).

 

(g)          To apply the net proceeds from the sale of the Securities in
accordance with the statements under the caption “Use of Proceeds” in the
Preliminary Memorandum, the Time of Sale Memorandum and the Final Memorandum.

 

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(h)          Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company’s and
Guarantors’ counsel and the Company’s and Guarantors’ accountants in connection
with the issuance and sale of the Securities and all other fees or expenses in
connection with the preparation of the Preliminary Memorandum, the Time of Sale
Memorandum, the Final Memorandum, any Additional Written Offering Communication
prepared by or on behalf of, used by, or referred to by the Company or the
Guarantors and any amendments and supplements to any of the foregoing, including
all printing costs associated therewith, and the delivering of copies thereof to
the Initial Purchaser, in the quantities herein above specified, (ii) all costs
and expenses related to the transfer and delivery of the Securities to the
Initial Purchaser, including any transfer or other taxes payable thereon, (iii)
the cost of printing or producing any Blue Sky or legal investment memorandum in
connection with the offer and sale of the Securities under state securities laws
and all expenses in connection with the qualification of the Securities for
offer and sale under state securities laws as provided in Section 6(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Initial Purchaser, in connection with such qualification and in connection
with the Blue Sky or legal investment memorandum, (iv) any fees charged by
rating agencies for the rating of the Securities, (v) the fees and expenses, if
any, incurred in connection with the admission of the Securities for trading any
appropriate market system, (vi) the costs and charges of the Trustee and any
transfer agent, registrar or depositary, (vii) the cost of the preparation,
issuance and delivery of the Securities, (viii) the costs and expenses of the
Company and the Guarantors relating to investor presentations on any “road show”
undertaken in connection with the marketing of the offering of the Securities,
including, without limitation, expenses associated with the preparation or
dissemination of any electronic road show, expenses associated with production
of road show slides and graphics, fees and expenses of any consultants engaged
in connection with road show presentations with the prior approval of the
Company or the Guarantors, travel and lodging expenses of the representatives
and officers of the Company and the Guarantors and any such consultants, and the
cost of any aircraft chartered in connection with any road show, (ix) the
document production charges and expenses associated with printing this Agreement
and (x) all other cost and expenses incident to the performance of the
obligations of the Company and the Guarantors hereunder for which provision is
not otherwise made in this Section 6. It is understood, however, that except as
provided in this Section 6 (and subject to the aggregate limit of $100,000 for
out-of-pocket expenses reimbursed by the Company to the Initial Purchaser
pursuant to this Section 6), Section 8, and the last paragraph of Section 10,
the Initial Purchaser will pay all of their costs and expenses, including fees
and disbursements of their counsel, transfer taxes payable on resale of any of
the Securities by them and any advertising expenses connected with any offers
they may make.

 

(i)          Neither the Company, the Guarantors nor any of their respective
Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which would
require the registration under the Securities Act of the Securities.

 

(j)          Not to solicit any offer to buy or offer or sell the Securities or
the Underlying Securities by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(a)(2) of the Securities Act.

 

(k)          While any of the Securities or the Underlying Securities remain
“restricted securities” within the meaning of the Securities Act, to make
available, upon request, to any seller of such Securities the information
specified in Rule 144A(d)(4) under the Securities Act, unless the Company is
then subject to Section 13 or 15(d) of the Exchange Act.

 

12 

 

 

(l)          During the period of two years after the Closing Date, the Company
will not be, nor will it become, an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act.

 

(m)          Not to take any action prohibited by Regulation M under the
Exchange Act in connection with the distribution of the Securities contemplated
hereby.

 

The Company also agrees that, without the prior written consent of the Initial
Purchaser, it will not, during the period ending 90 days after the date of the
Final Memorandum ( the “Restricted Period”), (1) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of common
stock of the Company or any securities convertible into or exercisable or
exchangeable for common stock of the Company or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the common stock of the Company, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
common stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) the sale of the Securities under this Agreement,
(b) the issuance by the Company of any shares of common stock upon the exercise
of an option or warrant or the conversion of a security outstanding on the date
hereof as disclosed in the Company’s filings with the Commission, (c) issuances
of options or grants of restricted stock under the Company’s stock option and
incentive plans, or (d) the establishment of a trading plan pursuant to Rule
10b5-1 under the Exchange Act for the transfer of shares of common stock,
provided that (i) such plan does not provide for the transfer of common stock
during the Restricted Period and (ii) to the extent a public announcement or
filing under the Exchange Act, if any, is required of or voluntarily made by the
Company regarding the establishment of such plan, such announcement or filing
shall include a statement to the effect that no transfer of common stock may be
made under such plan during the Restricted Period.

 

7.          Offering of Securities; Restrictions on Transfer. The Initial
Purchaser represents and warrants that the Initial Purchaser is a qualified
institutional buyer as defined in Rule 144A under the Securities Act (a “QIB”).
The Initial Purchaser agrees with the Company that (i) it will not solicit
offers for, or offer or sell, such Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(a)(2) of the Securities Act and (ii) it will solicit
offers for such Securities only from, and will offer such Securities only to,
persons that it reasonably believes to be (1) QIBs or (2) other institutional
accredited investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act (“institutional accredited investors”) that, prior to their
purchase of the Securities, deliver to the Initial Purchaser a letter containing
the representations and agreements set forth in a representational letter that,
in either case, in purchasing such Securities are deemed to have represented and
agreed as provided in the Final Memorandum under the caption “Transfer
Restrictions”.

 

13 

 

 

8.          Indemnity and Contribution. (a) The Company and the Guarantors,
jointly and severally, agree to indemnify and hold harmless the Initial
Purchaser, each person, if any, who controls the Initial Purchaser within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, and each affiliate of the Initial Purchaser within the meaning of Rule 405
under the Securities Act from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Memorandum, the Time of Sale
Memorandum or any amendment or supplement thereto, any Additional Written
Offering Communication prepared by or on behalf of, used by, or referred to by
the Company or any of the Guarantors, any “road show” as defined in Rule 433(h)
under the Securities Act (a “road show”) or the Final Memorandum or any
amendment or supplement thereto, or caused by any omission or alleged omission
to state therein a material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to the Initial Purchaser furnished to the Company or any of
the Guarantors in writing by the Initial Purchaser expressly for use therein.

 

(b)          The Initial Purchaser agrees to indemnify and hold harmless the
Company and the Guarantors, their directors, their officers and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company and the Guarantors to the Initial
Purchaser, but only with reference to information relating to the Initial
Purchaser furnished to the Company or the Guarantors in writing by the Initial
Purchaser expressly for use in the Preliminary Memorandum, the Time of Sale
Memorandum, any Additional Written Offering Communication prepared by or on
behalf of, used by or referred to by the Company, Guarantors, road show, or the
Final Memorandum or any amendment or supplement thereto.

 

14 

 

 

(c)          In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a) or 8(b), such person (the “indemnified party”)
shall promptly notify the person against whom such indemnity may be sought (the
“indemnifying party”) in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel shall have been reasonably concluded (based on the
advice of counsel) to be inappropriate due to an actual conflict between them.
It is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by the Initial
Purchaser, in the case of parties indemnified pursuant to Section 8(a), and by
the Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.

 

15 

 

 

(d)          To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchaser on the other hand from the offering of the Securities or (ii)
if the allocation provided by Section 8(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in Section 8(d)(i) above but also the relative
fault of the Company and the Guarantors on the one hand and of the Initial
Purchaser on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Guarantors on the one hand and the Initial Purchaser on the other hand
in connection with the offering of the Securities shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the
Guarantors and the total discounts and commissions received by the Initial
Purchaser bear to the aggregate offering price of the Securities. The relative
fault of the Company and the Guarantors on the one hand and of the Initial
Purchaser on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Guarantors on the one hand, or by the Initial
Purchaser on the other hand, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.

 

(e)          The Company, the Guarantors and the Initial Purchaser agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 8(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities resold
by it in the initial placement of such Securities were offered to investors
exceeds the amount of any damages that the Initial Purchaser has otherwise been
required to pay by reason of such untrue statement or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

 

(f)          The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and the Guarantors contained in this Agreement shall remain operative
and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of the Initial Purchaser,
any person controlling the Initial Purchaser or any affiliate of the Initial
Purchaser or by or on behalf of the Company, the Guarantors, their respective
officers or directors or any person controlling the Company or the Guarantors
and (iii) acceptance of and payment for any of the Securities.

 

16 

 

 

9.          Termination. The Initial Purchaser may terminate this Agreement by
notice given to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, the NASDAQ Global
Market, (ii) a material disruption in securities settlement, payment or
clearance services in the United States or other relevant jurisdiction shall
have occurred, (iii) any moratorium on commercial banking activities shall have
been declared by federal, New York State or California State authorities, (iv)
the Company shall have received, on or after the date of this Agreement, any
inquiry, notice, complaint or any other communication from a governmental body
that, in the reasonable judgment of the Initial Purchaser, is material and
adverse to the Company, or (v) there shall have occurred any event, circumstance
or change having a material adverse effect on the business, condition (financial
or otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Time of Sale Memorandum provided to
the prospective purchasers of the Securities that, in the Initial Purchaser’s
reasonable determination, is material and adverse and that makes it, in the
Initial Purchaser’s reasonable determination, impracticable to market and sell
the Securities on the terms and in the manner contemplated in the Time of Sale
Memorandum.

 

10.         Effectiveness. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.

 

If this Agreement shall be terminated by the Initial Purchaser prior to closing
because of any inability, failure or refusal on the part of the Company or any
of the Guarantors to comply with the terms or to fulfill any of the conditions
of this Agreement, the Company and the Guarantors will reimburse the Initial
Purchaser for up to $50,000 of out-of-pocket expenses (including the fees and
disbursements of its counsel) reasonably incurred by the Initial Purchaser in
connection with this Agreement or the offering contemplated hereunder.

 

11.       Entire Agreement.

 

(a)          This Agreement, together with any contemporaneous written
agreements and any prior written agreements (to the extent not superseded by
this Agreement) that relate to the offering of the Securities, represents the
entire agreement between the Company, the Guarantors and the Initial Purchaser
with respect to the preparation of the Preliminary Memorandum, the Time of Sale
Memorandum, the Final Memorandum, the conduct of the offering, and the purchase
and sale of the Securities.

 

(b)          The Company and the Guarantors acknowledge that in connection with
the offering of the Securities: (i) the Initial Purchaser has acted at
arms’-length, is not an agent of, and owes no fiduciary duties to, the Company,
the Guarantors or any other person, (ii) the Initial Purchaser owes the Company
and the Guarantors only those duties and obligations set forth in this Agreement
and prior written agreements (to the extent not superseded by this Agreement) if
any, and (iii) the Initial Purchaser may have interests that differ from those
of the Company or the Guarantors. The Company and the Guarantors waive to the
full extent permitted by applicable law any claims it may have against the
Initial Purchaser arising from an alleged breach of fiduciary duty in connection
with the offering of the Securities.

 

17 

 

 

12.         Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

 

13.         Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.

 

14.         Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.

 

15.         Notices. All communications hereunder shall be in writing and
effective only upon receipt and:

 

(a)          if to the Initial Purchaser shall be delivered, mailed or sent to
BTIG, LLC, 600 Montgomery Street, 6th Floor, San Francisco, CA 94111, Attn:
Steve Druskin, Esq., with a copy to O’Melveny & Myers LLP, 2 Embarcadero Center,
27th Floor, San Francisco, CA 94111, Attn: Peter T. Healy, Esq.

 

(b)          if to the Company or any of the Guarantors shall be delivered,
mailed or sent to Digital Turbine, Inc., 1300 Guadalupe Street, Suite 302,
Austin, TX 78701, Attn: Chief Executive Officer, with a copy to Manatt, Phelps &
Phillips, LLP, 11355 W. Olympic Blvd., Los Angeles, CA 90064, Attn: Ben
Orlanski, Esq.

 

[Signature Pages Follow]

 

18 

 

 

IN WITNESS WHEREOF, the Company and each of the Guarantors have caused this
Agreement to be duly executed by its authorized person as of this _____ day of
September, 2016.

 

The Company         DIGITAL TURBINE, INC.       By:     Name: William Stone  
Title: Chief Executive Officer  

 

Guarantors         DIGITAL TURBINE USA, INC., a Delaware corporation   DIGITAL
TURBINE ASIA PACIFIC PTY LTD., a company formed under the laws of Australia    
    By:     By:   Name:     Name: Title:     Title:         DIGITAL TURBINE
MEDIA, INC., a Delaware corporation             By:       Name: William Stone  
  Title: Chief Executive Officer             DIGITAL TURBINE (EMEA) LTD., a
company formed under the laws of Israel             By:       Name:       Title:
              By:       Name:       Title:      

 

Company and Guarantor Signature Page to Convertible Note Initial Purchaser
Agreement

 

 

 

 

IN WITNESS WHEREOF, the undersigned Initial Purchaser has caused this Agreement
to be duly executed by its authorized person as of this ______ day of September,
2016.

 

  Initial Purchaser
BTIG, LLC       By:     Name:     Title:  

 

Initial Purchaser Signature Page to Convertible Note Initial Purchaser Agreement

 

 

 

 

Schedule I

  

Time of Sale Memorandum

 

1.Preliminary Memorandum issued September 23, 2016

 

2.orally communicated pricing information, as follows:

 

-Closing price of Company’s common stock on September 22, 2016: $1.24 (the
latest market value of the Company’s common stock prior to the time of pricing)

 

-Interest rate of Notes: 8.75%

 

-Conversion price of Notes: $1.364

 

-Purchasers of Notes to receive warrants subject to the Warrant Agreement to
purchase 256.60 shares of common stock for every $1,000 of Note purchased at an
exercise price of $1.364 per share.

 

 I-1 

 

 

EXHIBIT A

 

FORM OF INDENTURE

 

 A-1 

 

 

EXHIBIT B

 

FORM OF WARRANT AGREEMENT

 

 B-1 

 

 

EXHIBIT C

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 C-1 

 

 

EXHIBIT D

 

OPINION OF MANATT, PHELPS & PHILLIPS, LLP

 

 

 D-1 

 

 

EXHIBIT E

 

OPINION OF O’MELVENY & MYERS LLP

 

 

 E-1