Exhibit 10.13

 

 

 

Amended and Restated

 

SECURITIES PURCHASE AGREEMENT

 

By and Among

 

STATIONDIGITAL CORPORATION,

 

EACH PURCHASER OF NOTES IDENTIFIED ON THE

 

SIGNATURE PAGES HERETO (EACH, INCLUDING ITS SUCCESSORS AND

 

ASSIGNS, A “PURCHASER” AND COLLECTIVELY THE “PURCHASERS”)

 

and solely for purposes of Section 9 hereof,

 

Steel Pier Capital Advisors, LLC, as collateral agent

 

Dated as of March 16, 2015

 

 

 

 

 

 

AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT, dated as of March 16, 2015
(this “Agreement”), by and among StationDigital Corporation, a Delaware
corporation (the “Company”), each purchaser identified on the signature pages
hereto (each, including its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”) and solely for purposes of Section 9 hereof,
Steel Pier Capital Advisors, LLC, in its capacity as collateral agent (the
“Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS, this Agreement amends and restates in its entirety that Securities
Purchase Agreement dated June 30, 2014.

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:

 

1.      DEFINITIONS. For purposes of this Agreement, unless the context
otherwise requires, the following terms shall have the following respective
meanings:

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

 

“Agreement” has the meaning provided in the preamble.

 

“Business Day” means a day other than a Saturday or Sunday or other day on which
commercial banks in New York, New York are authorized or required to close.

 

“Claim” has the meaning provided in Section 7.3(b).

 

“Closing” has the meaning provided in Section 2.2(a).

 

“Closing Date” shall be March 16, 2015.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

“Collateral” has the meaning provided in Section 3 of the Security Agreement.

 

“Collateral Agent” has the meaning provided in the preamble.

 

“Commission” means the Securities and Exchange Commission.

 

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“Common Stock” means the common stock, $0.0001 par value per share, of the
Company.

 

“Company” has the meaning provided in the preamble.

 

“Company’s Knowledge” means the actual knowledge of the Company’s CEO and any of
the officers of the Company, after due investigation.

 

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

 

“Contracts” has the meaning provided in Section 3.7.

 

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

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options or
restricted stock units to consultants, employees, officers or directors of the
Company approved by the Board of Directors, (b) securities upon the exercise or
exchange of or conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise price, exchange price
or conversion price of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equity holders of a Person) which is, itself or
through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.

 

“Financial Statements” has the meaning provided in Section 3.16.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time and consistently applied and maintained throughout the periods indicated.
Whenever any accounting term is used herein which is not otherwise defined, it
shall have the meaning ascribed thereto under GAAP.

 

“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in
excess of $25,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $25,000 due under leases
required to be capitalized in accordance with GAAP.

 

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“Indemnified Party” has the meaning provided in Section 7.3(b).

 

“Indemnifying Party” has the meaning provided in Section 7.3(b).

 

“Indemnitee Losses” has the meaning provided in Section 7.3(a).

 

“Liabilities” has the meaning provided in Section 3.16.

 

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

 

“Material Adverse Effect” means a material adverse effect on the Company’s
business, assets, properties, condition (financial or otherwise), results of
operation or prospects, or on the ability of the Company to perform its
obligations under and consummate the transactions contemplated by this
Agreement.

 

“Material Contracts” has the meaning provided in Section 3.6.

 

“Notes” means the 15% Senior Secured Convertible Notes due, subject to the terms
therein, 9 months from their date of issuance, issued by the Company to the
Purchasers hereunder, in the form of Exhibit A attached hereto.

 

“Permitted Indebtedness” means (a) the Indebtedness evidenced by the Notes, (b)
the Indebtedness existing on the Original Issue Date and set forth on Schedule
3.21 attached to this Agreement, (c) lease obligations and purchase money
indebtedness of up to $500,000, in the aggregate, incurred in connection with
the acquisition of capital assets and lease obligations with respect to newly
acquired or leased assets, and (d) interest accruing after the date hereof on
the aforesaid items.

 

“Permitted Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not
yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Company) have been
(if required to be) established in accordance with GAAP; (b) Liens imposed by
law which were incurred in the ordinary course of the Company’s business, such
as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens,
and other similar Liens arising in the ordinary course of the Company’s
business, and which (x) do not individually or in the aggregate materially
detract from the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company and its consolidated
Subsidiaries or (y) are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing for the foreseeable
future the forfeiture or sale of the property or asset subject to such Lien; (c)
Liens incurred in connection with Permitted Indebtedness under clauses (a), and
(b) thereunder; and (d) Liens incurred in connection with Permitted Indebtedness
under clause (c) thereunder, provided that such Liens are not secured by assets
of the Company or its Subsidiaries other than the assets so acquired or leased.

 

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“Person” means any natural person, corporation, partnership, limited liability
company, association, government, governmental agency or other entity, whether
acting in an individual, fiduciary or other capacity.

 

“Purchaser” has the meaning provided in the preamble.

 

“Qualified Equity Applicable Price” shall have the meaning ascribed to such term
in the form of Note.

 

“Qualified Financing” shall have the meaning ascribed to such term in the form
of Note.

 

“Secured Parties” has the meaning provided in the Security Agreement.

 

“Securities” means the Notes, the Warrants, and the Underlying Shares.

 

“Security Agreement” means that certain Amended and Restated Security Agreement
between the Company and Steel Pier Capital Advisors, LLC in its capacity as
collateral agent on behalf of the several Purchasers in the form of Exhibit C
attached hereto.

 

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a)
and shall, where applicable, include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.

 

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

 

“Transaction Documents” means this Agreement, the Warrants, the Notes, the
Security Agreement and all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the transactions
contemplated hereunder.

 

“Trading Day” means a day on which the New York Stock Exchange is open for
trading.

 

“Trading Market” means the following markets or exchanges on which the Common

 

 

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Stock is listed or quoted for trading on the date in question: the OTC Bulletin
Board, the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global
Market, the Nasdaq Global Select Market or the New York Stock Exchange.

 

“Transfer Agent” means West Coast Stock Transfer, Inc., the current transfer
agent of the Company with a mailing address of 721 N. Vulcan Ave. Ste. 205,
Encinitas, CA 92024 and a facsimile number of (760) 452-4423, and any successor
transfer agent of the Company.

 

“Underlying Shares” means Warrant Shares and the shares of Common Stock issued
and issuable upon conversion of the Notes.

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York City time);
(b) if the OTC Bulletin Board is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted
on the OTC Bulletin Board and if prices for the Common Stock are then reported
in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported; or (d) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Purchasers of a majority in interest of
the Securities then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company.

 

“Warrants” means, collectively, the Common Stock purchase warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be exercisable commencing on the date of issuance and shall have
a term of exercise equal to five (5) years therefrom, in the form of Exhibit B
attached hereto.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

 

2.PURCHASE AND SALE OF THE NOTES AND WARRANTS.

 

2.1            Sale and Transfer of Notes and Warrants.

 

  (a)                Subject to the terms and conditions set forth in this
Agreement, the Company agrees to sell, and the Purchaser agrees to purchase
$500,000 in principal amount (the “Principal”) of the Notes and the Warrants.

 

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2.2            Closing.

 

  (a)                Place of Closing. The purchase and sale of the Notes and
the Warrants (the “Closing”) shall take place on the Closing Date at the offices
of Sichenzia Ross Friedman Ference LLP (the “Escrow Agent”) located at 61
Broadway, 32nd Fl., New York, NY 10006 or at such other place as the Company and
the Purchasers shall mutually agree. The Closing shall occur upon acceptance by
the Company of a subscription to purchase the $500,000 of the Notes and
Warrants.

 

In the event that the Company conducts the underlying transaction through
Newport Coast Securities, Inc. (the “Placement Agent”), the Company shall pay to
the Placement Agent a fee constituting ten percent (10%) of the Principal.

 

The obligations of Purchaser and the Company shall be subject to the following
conditions: (i) absence of any event having a Material Adverse Effect on the
Company, its business or its assets and (ii) approval by the board of directors
of the Company of the transactions contemplated hereby.

 

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

 

   (i)                 this Agreement duly executed by the Company;

 

   (ii)               a Note with a principal amount equal to such Purchaser’s
Subscription Amount, registered in the name of such Purchaser, evidencing the
principal amount of Notes that Purchaser is purchasing, against payment of the
Subscription Amount therefor by certified or bank check or wire transfer to such
account as the Company may designate to the Purchaser;

 

   (iii)             a Warrant registered in the name of such Purchaser to
purchase up to a number of shares of Common Stock equal to such Purchaser’s
Subscription Amount (i.e., for every dollar paid by such Purchaser for the Note
such Purchaser shall receive a warrant to purchase one share of Common Stock) at
an exercise price equal to the lesser of (A) 70% of the per share price for a
share of Common Stock sold in the Qualified Financing and (B) $0.45 per share,
subject to adjustment therein; and

 

  (c)                Purchaser Deliverables: On the Closing Date, each Purchaser
shall deliver or cause to be delivered to the Company the following:

 

   (i)                 this Agreement duly executed by such Purchaser;

 

   (ii)               Accredited Investor Questionnaire & Form W-9 or Form
W-8BEN duly completed by such Purchaser;

 

   (iii)             such Purchaser’s Subscription Amount by wire transfer to
the following account: [*]

 

 

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Provided that (i) Purchaser has satisfied all conditions set forth in this
paragraph (c), and (ii) the Company has accepted and executed this Agreement,
the Notes and Warrants purchased by Purchaser will be delivered by the Company
promptly following the Closing Date and the Purchaser’s Subscription Amount
shall be released to the Company by the Escrow Agent upon the written
instruction of the Company and Placement Agent. In the event that a Closing does
not occur, Purchaser’s funds will be returned by the Escrow Agent to Purchaser.

 

3.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

 

As a material inducement to the Purchaser to enter into this Agreement and
purchase the Notes, the Company hereby represents, warrants and covenants to
Purchaser as follows:

 

3.1            Organization; Good Standing; Qualification; Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as now conducted and as presently proposed to be conducted. The Company
is duly qualified and is authorized to transact business and is in good standing
as a foreign corporation in each other jurisdiction in which the failure to so
qualify, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect. All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 3.1. The Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary free and
clear of any Liens, and all of the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or purchase
securities.

 

3.2           Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery by the Company of this Agreement, the performance of all
obligations of the Company hereunder and the sale and transfer of the Notes to
Purchaser has been taken, and this Agreement constitutes the valid and legally
binding agreement of the Company, enforceable in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. The sale of the Notes is not subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.

 

3.3           Issuance of the Securities. The issuance of the Notes, Warrants
and Underlying Shares has been duly authorized and, when issued and paid for in
accordance with the applicable Transaction Documents, the Notes and Warrants
will be constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. The Underlying Shares, when
issued in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction documents The Company shall reserve from its duly authorized capital
stock a number of shares of Common Stock for issuance of the Underlying Shares.

 

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3.4          Consents. No consent, approval, qualification, order or
authorization of, or filing with, any Person is required on the part of the
Company in connection with the Company’s valid execution, delivery or
performance of this Agreement and the offer and sale of the Securities hereunder
(other than federal and state securities filings relating to the issuance of the
Securities pursuant to applicable exemptions from registration, which the
Company hereby undertakes to make in a timely fashion).

 

3.5          Capitalization and Voting Rights. The capitalization of the Company
is as set forth on Schedule 3.5, which Schedule 3.5 shall also include the
number of shares of Common Stock owned beneficially, and of record, by
Affiliates of the Company as of the date hereof. Except as set forth on Schedule
3.5, the Company has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock option plans, the issuance of
shares of Common Stock to employees pursuant to the Company’s employee stock
purchase plans and pursuant to the conversion and/or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed periodic
report under the Exchange Act. Except as set forth on Schedule 3.5, no Person
has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents. Except as set forth on Schedule 3.5, and except as a result of the
purchase and sale of the Securities, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire any shares of Common Stock, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents. Except as
set forth on Schedule 3.5, the issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under any of such securities. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities. There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

 

3.6           No Predecessors. The Company has no predecessors, whether by way
of succession by merger, consolidation or other business combination with
another entity or transfer of all or substantially all of another entity’s
assets, or otherwise.

 

3.7        Contracts and Other Commitments. Schedule 3.7 lists all contracts,
agreements, leases, commitments, instruments, arrangements and understandings
(“Contracts” whether written or oral, to which the Company is a party which
require payments by either party thereto in excess of $250,000 or are otherwise
material to the Company (the “Material Contracts”). The Material Contracts are
valid and legally binding, are in full force and effect and are enforceable in
accordance with their respective terms. The Company has not assigned, mortgaged,
pledged, encumbered or otherwise hypothecated any of its right, title or
interest under the Material Contracts. Except as set forth on Schedule 3.7,
neither the Company nor, to the Company’s Knowledge, any other party thereto is
in violation of or in default in respect of any Material Contract. No notice or
other communication has been received by the Company claiming any such violation
or default by the Company or indicating the desire or intention of any other
party thereto to amend, modify, rescind or terminate any Material Contract.

 

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3.8           Related Party Transactions. No employee, officer, director or
member of the Company or member of his or her immediate family is indebted to
the Company, nor is the Company 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 (including stock option agreements outstanding under
any stock option plan approved by the Board of Directors of the Company). None
of such persons has any direct or indirect ownership interest in any entity with
which the Company is affiliated or with which the Company has a business
relationship, or any entity that competes with the Company, except that
employees, officers, directors or stockholders of the Company and members of
their immediate families may own stock (not in excess of 1% of the outstanding
stock) in publicly traded companies that may compete with the Company. No
employee, officer, director or shareholder of the Company or member of his or
her immediate family is, directly or indirectly, interested in any Contract to
which the Company is a party.

 

3.9            Registration Rights. The Company is not under any obligation and
has not granted to any Person any rights to register under the Securities Act
any of its presently outstanding securities or any of its securities that may
subsequently be issued.

 

3.10          Permits. The Company has all franchises, permits, licenses,
approvals and similar authorizations necessary for the conduct of its business
as now being conducted by it, the lack of which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, and
to the Company’s Knowledge, it can obtain, without undue burden or expense, any
such authorization for the conduct of its business as presently planned to be
conducted. The Company is not in default in any material respect under any of
such franchises, permits, licenses or other similar authorizations.

 

3.11          Compliance. The Company is not in violation or default of any
provision of its organizational documents or in default of any provision of any
mortgage, indenture, agreement, instrument or contract to which it is a party or
by which the Company or its assets or properties are bound or of any federal,
state or local judgment, order, writ, decree, statute, rule, regulation or
restriction applicable to the Company or its business including federal or state
securities laws or regulations. The execution, delivery and performance by the
Company of this Agreement, and the consummation of the transactions contemplated
hereby, will not result in any such violation or default or be in material
conflict with or constitute, with or without the passage of time or giving of
notice, either a material default under any such provision or an event that
results in the creation of any material Lien upon any assets or properties of
the Company or the suspension, revocation, impairment, forfeiture or nonrenewal
of any franchise, permit, license, approval or authorization applicable to the
Company, its business or operations, or any of its assets or properties. The
Company has obtained all necessary “Blue Sky” law permits and qualifications, or
secured exemptions therefrom, required by any state for the offer and sale of
the Notes.

 

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3.12          Litigation. There is no action, suit, proceeding or investigation
pending or threatened against or affecting the Company that questions the
validity of this Agreement or the right of the Company to enter into this
Agreement, or to consummate the transactions contemplated hereby, or that might
result, either individually or in the aggregate, in any Material Adverse Effect.
To the Company’s Knowledge, there is no basis upon which any such action, suit,
proceeding or investigation could reasonably be brought or initiated against the
Company or the Company. The foregoing includes, without limitation, any action,
suit, proceeding or investigation pending or threatened involving the prior
employment of any of the Company’s employees, their use in connection with the
Company’s business of any information or techniques allegedly proprietary to any
of their former employers, their obligations under any agreements with former
employers, or negotiations by the Company with potential backers of, or
investors in, the Company or its business. The Company is not a party to or
named in or subject to any order, writ, injunction, judgment or decree of any
court, government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or that the Company
currently intends to initiate.

 

3.13          Sale of the Securities. Subject to the truth and accuracy of
Purchaser’s representations set forth in this Agreement, the offer, sale,
purchase and transfer of the Securities as contemplated by this Agreement, are
exempt from the registration requirements of the Securities Act, and neither the
Company nor any agent acting on his or its behalf will take any action hereafter
that would cause the loss of such exemption.

 

3.14          Title to Property and Assets; Leases. The Company has good and
marketable title to its properties and assets free and clear of all Liens.

 

3.15          Confidentiality Agreements. Each current and former employee,
officer and director of the Company is party to an employment agreement that
contains confidentiality provisions protecting the Company’s proprietary
information and inventions. Each current and former consultant to the Company
has executed a consulting agreement that contains confidentiality provisions
protecting the Company’s proprietary information and inventions. No current or
former employee, officer, director or consultant has excluded works or
inventions made prior to his or her employment or consulting relationship with
the Company from his or her assignment of inventions pursuant to such person’s
employment or consulting agreement, as applicable.

 

3.16          Tax Returns, Payments and Elections.

 

  (a)                The Company has filed all Tax Returns which are required to
be filed by it. Such Tax Returns are true, correct and complete in all material
respects. All Taxes owed by the Company, whether or not shown on any Tax Return,
have been timely paid, except with respect to Taxes which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect. Tax Returns of the Company have not been audited by the Internal Revenue
Service or other applicable Tax authority, and no controversy with respect to
Taxes of any type is pending or, to the Company’s Knowledge, threatened. Since
the date of the Financial Statements, the Company has made adequate provision on
its books of account for all Taxes, assessments and governmental charges with
respect to its business, assets, properties and operations for such period.

 

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  (b)               The Company has never been an S corporation within the
meaning of Sections 1361 and 1362 of the Code at any time during its existence.
The Company has never been the common parent or a member of any affiliated group
of corporations filing a consolidated federal income tax return. The Company is
not a party to any tax sharing agreement or other arrangement pursuant to which
it could be liable for any Taxes of any Person. The Company has not filed a
consent under Section 341(f) of the Code regarding collapsible corporations.

 

  (c)                The Company has withheld and paid all Taxes required to
have been withheld and paid with respect to amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
All independent contractors are properly classified as such.

 

  (d)               For purposes of this Section 3.16:

 

     “Tax” shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on-minimum, estimated or other tax
of any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not.

 

     “Tax Return” shall mean any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto and any amendment thereof.

 

3.17          SEC Reports; Financial Statements. Except as set forth on Schedule
3.17, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated Subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

12

 

 

3.18          Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
a subsequent SEC Report filed prior to the date hereof, (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated by this
Agreement, no event, liability or development has occurred or exists with
respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly disclosed at
least one Trading Day prior to the date that this representation is made.

 

3.19          Listing and Maintenance Requirements. The Common Stock is not
registered pursuant to Section 12(b) or 12(g) of the Exchange Act. The Company
has not, in the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

 

3.20          Regulation M Compliance. The Company has not, and to its knowledge
no one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company.

 

3.21          Acknowledgment Regarding Purchaser’s Trading Activity. Anything in
this Agreement or elsewhere herein to the contrary notwithstanding, it is
understood and acknowledged by the Company that: (i) none of the Purchasers has
been asked by the Company to agree, nor has any Purchaser agreed, to desist from
purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Securities for any specified term, (ii) past or future open market or other
transactions by any Purchaser, specifically including, without limitation, Short
Sales or “derivative” transactions, before or after the closing of this or
future private placement transactions, may negatively impact the market price of
the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a
party, directly or indirectly, may presently have a “short” position in the
Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation
with or control over any arm’s length counter-party in any “derivative”
transaction. The Company further understands and acknowledges that (y) one or
more Purchasers may engage in hedging activities at various times during the
period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Underlying Shares deliverable with
respect to Securities are being determined, and (z) such hedging activities (if
any) could reduce the value of the existing stockholders' equity interests in
the Company at and after the time that the hedging activities are being
conducted. The Company acknowledges that such aforementioned hedging activities
do not constitute a breach of any of the Transaction Documents.

 

13

 

 

3.22          Real Property Holding Corporation. The Company is not and has
never been a United States real property holding corporation within the meaning
of Section 897(c)(2) of the Code and any regulations promulgated thereunder.

 

3.23          Foreign Corrupt Practices Act. The Company has not taken any
action which would cause it to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, or any rules and regulations thereunder. There is not
now, and there has never been, any employment by the Company of, or beneficial
ownership in the Company by, any governmental or political official in any
country in the world.

 

3.24          Disclosure. Neither this Agreement nor any written statement or
certificate made or delivered by or on behalf of the Company in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.

 

3.25          Sarbanes-Oxley; Internal Accounting Controls. The Company and the
Subsidiaries are in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and
all applicable rules and regulations promulgated by the Commission thereunder
that are effective as of the date hereof and as of the Closing Date. The Company
and the 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 GAAP 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. The Company and the Subsidiaries have
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure

that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the
disclosure controls and procedures of the Company and the Subsidiaries as of the
end of the period covered by the most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”). The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of
the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act) that have
materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.

 

14

 

 

 

3.26          Use of Proceeds. The proceeds from the offering and sale of the
Securities will be used for working capital and general corporate purposes as
specified in Schedule 3.26.

 

3.27          No Commissions. The Company has not incurred any obligation for
any finder’s, broker’s or agent’s fees or commissions in connection with the
transaction contemplated hereby other than those fees payable to the Placement
Agent pursuant to that certain Placement Agent Agreement, dated on or about July
21, 2014, or as set forth on Schedule 3.27.

 

3.28          Intellectual Property Rights. The Company and its subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on
Schedule 3.28, there is no claim, action or proceeding being made or brought
against, or to the Company’s knowledge, being threatened against, the Company or
its subsidiaries regarding trademarks, trade name rights, patents, patent
rights, inventions, copyrights, licenses, service names, service marks, service
mark registrations, trade secrets or other infringement.

 

3.29          Employee Benefits; ERISA. The Company has no employee benefit
plans, programs, policies and arrangements.

 

 

4.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.

 

As a material inducement to the Company to enter into this Agreement and
purchase the Notes, the Purchaser hereby represents, warrants and covenants to
Company as follows:

 

 

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4.1            Transaction Documents. In connection with this subscription,
Purchaser has read this Agreement and the other documents contained in this
investor package (this “Investor Package”). Purchaser acknowledges that this
Investor Package is not intended to set forth all of the information which might
be deemed pertinent by an investor who is considering an investment in the
Securities. It is the responsibility of Purchaser (i) to determine what
additional information it desires to obtain in evaluating this investment, and
(ii) to obtain such information from the Company. Purchaser is advised to retain
its own legal counsel and financial advisors in connection with its investment
in this Offering. BY EXECUTING THIS AGREEMENT PURCHASER HEREBY ACKNOWLEDGES THAT
THE PLACEMENT AGENT’S LEGAL COUNSEL’S ONLY ROLE IN CONNECTION WITH THE OFFERING
HAS BEEN TO REVIEW AND COMMENT ON TRANSACTION DOCUMENTS PREPARED BY THE COMPANY
AND ITS LEGAL COUNSEL BASED ON TERMS NEGOTIATED BETWEEN THE PLACEMENT AGENT, THE
PURCHASERS AND THE COMPANY. PURCHASER UNDERSTANDS THAT PLACEMENT AGENT’S COUNSEL
HAS NOT BEEN RETAINED TO CONDUCT DUE DILIGENCE IN CONNECTION WITH THIS OFFERING
AND THAT DUE DILIGENCE MUST BE CONDUCTED BY THE PLACEMENT AGENT AND PURCHASERS.
PURCHASER FURTHER ACKNOWLEDGES THAT PLACEMENT AGENT’S COUNSEL DOES NOT, IN ANY
WAY, REPRESENT PURCHASERS IN CONNECTION WITH THE OFFERING.

 

4.2            Accredited Investor Status. This Offering is limited to persons
who are “accredited investors,” as that term is defined in Regulation D under
the Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the “Act”), and who have the financial means and the
business, financial and investment experience and acumen to conduct an
investigation as to, and to evaluate, the merits and risks of this investment.
Purchaser hereby represents that he, she or it has read, is familiar with and
understands Rule 501 of Regulation D under the Act. Purchaser is an “accredited
investor” as defined in Rule 501(a) of Regulation D, as amended.

 

4.3            Public Information. Purchaser acknowledges that the Company is
not subject to the reporting requirements of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) and voluntarily files current and periodic
reports with the Securities Exchange Commission (the “Commission” or “SEC”)
containing financial and other material information relating to the Company and
its business. Such reports are publicly available on www.sec.gov and Purchaser
has had an opportunity to review such filings in connection with Purchaser’s
decision to invest in the Securities. Purchaser has had full access to all the
information which Purchaser (or Purchaser’s legal and or financial advisors)
consider necessary or appropriate to make an informed decision with respect to
Purchaser’s investment in the Securities. Purchaser acknowledges that the
Company has made available to Purchaser and Purchaser’s advisors the opportunity
to examine and copy any contract, matter or information which Purchaser
considers relevant or appropriate in connection with this investment and to ask
questions and receive answers relating to any such matters including, without
limitation, the financial condition, management, employees, business,
obligation, corporate books and records, budgets, business plans of and other
matters relevant to the Company. To the extent Purchaser has not sought
information regarding any particular matter, Purchaser represents that he or she
had and has no interest in doing so and that such matters are not material to
Purchaser in connection with this investment. Purchaser has accepted the
responsibility for conducting Purchaser’s own investigation, due diligence and
obtaining for itself such information as to the foregoing and all other subjects
as Purchaser deems relevant or appropriate in connection with this investment.
Purchaser is not relying on any representation other than that contained herein.
Purchaser acknowledges that no representation regarding projected financial
performance or a projected rate of return has been made to it by any party.

 

16

 

 

4.4            Restricted Securities. Purchaser understands that the offering of
the Securities has not been registered under the Act, in reliance on an
exemption for private offerings provided pursuant to Section 4(a)(2) and/or
Regulation D promulgated under the Act and that, as a result, the Securities and
the Underlying Shares will be “restricted securities” as that term is defined in
Rule 144 under the Act. Purchaser further understands that the Offering of the
Securities has not been qualified or registered under any foreign or state
securities laws in reliance upon the representations made and information
furnished by Purchaser herein and any other documents delivered by Purchaser in
connection with this subscription; that the Offering has not been reviewed by
the SEC or by any foreign or state securities authorities; that Purchaser’s
rights to transfer the Securities will be restricted, which includes
restrictions against transfers unless the transfer is not in violation of the
Act and applicable state securities laws (including investor suitability
standards); and that the Company may in its sole discretion require Purchaser to
provide at Purchaser’s own expense an opinion of its counsel to the effect that
any proposed transfer is not in violation of the Act or any state securities
laws.

 

4.5            Power and Authority. Purchaser is empowered and duly authorized
to enter into this Agreement, which constitutes a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its terms; and the
person signing this Agreement on behalf of Purchaser is empowered and duly
authorized to do so.

 

4.6            Limited Liquidity. Purchaser acknowledges that, while the Common
Stock is publicly traded on the OTCQB, there is limited trading volume with
respect to the Common Stock and, as such, it may be difficult for Purchaser to
sell or dispose of the Underlying Shares if and when Purchaser converts its Note
or exercises its Warrants. Purchaser hereby represents that it is able to bear
the risk of illiquidity and the risk of a complete loss of this investment.

 

4.7            Investor Questionnaire. The information in any documents
delivered by Purchaser in connection with this subscription, including, but not
limited to the Accredited Investor Questionnaire attached as Exhibit D, is true,
correct and complete in all respects as of the date hereof. Purchaser agrees
promptly to notify the Company in writing of any change in such information
after the date hereof.

 

4.8            No General Solicitation. The offering and sale of the Securities
to Purchaser were not made through any advertisement in printed media of general
and regular paid circulation, radio or television or any other form of
advertisement, or as part of a general solicitation.

 

4.9            Risk Factors. Purchaser recognizes that an investment in the
Securities involves significant risks, including, without limitation, the Risk
Factors set forth herein as Exhibit G. Purchaser has read and understands such
risks and understands that such risks, and others, can result in the loss of
Purchaser’s entire investment in the Securities.

 

17

 

  

4.10         Acquiring for Investment Purposes. Purchaser is acquiring the
Securities, as principal, for Purchaser’s own account for investment purposes
only, and not with a present intention toward or for the resale, distribution or
fractionalization thereof, and no other person has a beneficial interest in the
Securities. Purchaser has no present intention of selling or otherwise
distributing or disposing of the Securities, and understands that an investment
in the Securities must be considered a long-term illiquid investment.

 

4.11         Short Sales and Confidentiality Prior to the Date Hereof. Other
than consummating the transactions contemplated hereunder, such Purchaser has
not directly or indirectly, nor has any Person acting on behalf of or pursuant
to any understanding with such Purchaser, executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing from the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder
until the date hereof (“Discussion Time”). Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement. Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).

 

5.      CONDITIONS OF THE PURCHASER’S OBLIGATIONS AT CLOSING. The obligations of
Purchaser to purchase the Notes are subject to the fulfillment or waiver at or
before the Closing of each of the following conditions:

 

5.1          Representations and Warranties. The representations and warranties
of the Company contained in Section 3 shall be true and correct in all material
respects (except for representations and warranties qualified by materiality or
Material Adverse Effect, which shall be true and correct in all respects) on and
as of the date of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.

 

5.2          Performance. The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing.

 

5.3           Consents. All consents, authorizations, approvals and permits of
any Person that are required in connection with the issuance and sale of the
Notes pursuant to this Agreement shall have been duly obtained and be effective
as of the Closing.

 

5.4          No Material Adverse Change. Since March 30, 2014, there shall have
been no material adverse changes to the business, assets, properties, condition,
financial or otherwise, or results of operations of the Company.

 

5.5          Proceedings. All corporate and other proceedings and all documents
incidental to the transactions involved in the purchase of the Notes by the
Purchaser shall be reasonably satisfactory in substance and form to the
Purchaser and his counsel, and the Purchaser and his counsel shall have received
all such counterpart originals or certified or other copies of such documents as
the Purchaser and his counsel may reasonably request, including, without
limitation, the following, at each Closing:

 

18

 

 

 (a)                A Certificate, as of the most recent practicable dates prior
to the Closing, as to the good standing of the Company issued by the Secretary
of State of the State of Delaware; and

 

 (b)               The Company’s Certificate of Incorporation, as amended to
date, certified by the Company’s Board of Directors as of the date of the
Closing.

 

 (c)                An Officer’s Certificate signed by the Chief Executive
Officer of the Company certifying that each of the conditions set forth in
Sections 5.1 through 5.4 of this Agreement has been satisfied as of such Closing
Date.

 

 (d)               a legal opinion from counsel to the Company substantially in
the form set forth in Exhibit F hereto.

 

5.6         Due Diligence and No Material Adverse Change. The Company shall have
provided Purchaser access to information as Purchaser has reasonably requested
in connection with its due diligence review and Purchaser shall have concluded
its due diligence review of the Company to its complete satisfaction and shall
be reasonably satisfied that there has been no material adverse change in the
business, operations, financial condition or prospects of the Company.

 

6.      CONDITIONS OF THE SELLER’S OBLIGATIONS AT CLOSING. The obligations of
the Company to Purchaser to transfer and sell the Notes to Purchaser are subject
to the fulfillment or waiver at or before the Closing of each of the following
conditions:

 

6.1          Representations and Warranties. The representations and warranties
of Purchaser contained in Section 4 shall be true and correct in all material
respects on and as of the date of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.

 

7.      OTHER AGREEMENTS OF THE PARTIES

 

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

 

19

 

  

The Purchasers agree to the imprinting, so long as is required by this Section
7.1, of a legend on any of the Securities in substantially the following form:

 

NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES
ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

 

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties. Such
a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities.

 

Certificates evidencing the Underlying Shares shall not contain any legend: (i)
while a registration statement covering the resale of such security is effective
under the Securities Act, (ii) following any sale of such Underlying Shares
pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale
under Rule 144 or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company shall cause
its counsel to issue a legal opinion to the Transfer Agent promptly if required
by the Transfer Agent to effect the removal of the legend hereunder. If all or
any portion of a Note is converted or Warrant is exercised at a time when there
is an effective registration statement to cover the resale of the Underlying
Shares, or if such Underlying Shares may be sold under Rule 144 or if such
legend is not otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff
of the Commission) then such Underlying Shares shall be issued free of all
legends. The Company agrees that following such time as such legend is no longer
required under this Section 7.1, it will, no later than three (3) Trading Days
following the delivery by a Purchaser to the Company or the Transfer Agent of a
certificate representing Underlying Shares, as applicable, issued with a
restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver
or cause to be delivered to such Purchaser a certificate representing such
shares that is free from all restrictive and other legends, in addition, the
Company shall deliver such Purchaser a copy of such opinion, the instruction
letter to the Transfer Agent, the resolution of the Board of Directors
authorizing the Transaction Documents and any additional supporting
documentation requested by the Purchaser as may be requested by the Purchaser in
order to deposit Underlying Shares in accounts with its prime broker (or other
brokerage account); provided, however, in the event the restrictive legend on
such certificate is being removed pursuant to Rule 144 or such Underlying Shares
as first being issued without legend in reliance on Rule 144, such Purchaser
shall, at the time of delivery of such certificates to the Company or Transfer
Agent, represent to the Company and Company Counsel that (i) it intends to sell
such Underlying Shares prior to the filing date of the Company’s next period
report and (ii) if such Underlying Shares are not sold by such filing date and
such Underlying Shares are no longer eligible for resale under Rule 144 such
Purchaser will deliver such shares to the Transfer Agent or Company to have the
restrictive legend placed back on such certificates representing such Underlying
Shares. The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 7.1. Certificates for Underlying Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust
Company System as directed by such Purchaser.

 

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7.2          Furnishing of Information; Public Information.

 

 (a)                Until the earliest of the time that no Purchaser owns
Securities, the Company covenants to obtain and maintain the registration of the
Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act even if the Company is not then subject to the
reporting requirements of the Exchange Act.

 

 (b)               At any time during the period commencing from the six (6)
month anniversary of the date hereof and ending at such time that no Purchaser
shall hold any Underlying Shares, if the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available
remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its
ability to sell the Securities, an amount in cash equal to two percent (2.0%) of
the aggregate Subscription Amount of such Purchaser’s Securities on the day of a
Public Information Failure and on every thirtieth (30th) day (pro rated for
periods totaling less than thirty days) thereafter until the earlier of (a) the
date such Public Information Failure is cured and (b) such time that no
Purchaser shall hold any Underlying Shares. The payments to which a Purchaser
shall be entitled pursuant to this Section 7.2(b) are referred to herein as
“Public Information Failure Payments.” Public Information Failure Payments shall
be paid on the earlier of (i) three (3) Business Days after the last day of the
calendar month during which such Public Information Failure Payments are
incurred and (ii) the third (3rd) Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the event the
Company fails to make Public Information Failure Payments in a timely manner,
such Public Information Failure Payments shall bear interest at the rate of 1.5%
per month (prorated for partial months) until paid in full. Nothing herein shall
limit such Purchaser’s right to pursue actual damages for the Public Information
Failure, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

 

7.3          Conversion and Exercise Procedures. Each of the form of Notice of
Exercise included in the Warrants and the form of Notice of Conversion included
in the Notes set forth the totality of the procedures required of the Purchasers
in order to exercise the Warrants or convert the Notes. Without limiting the
preceding sentences, no ink-original Notice of Exercise or Notice of Conversion
shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise or Notice of Conversion form be
required in order to exercise the Warrants or convert the Note. No additional
legal opinion, other information or instructions shall be required of the
Purchasers to exercise their Warrants or convert their Notes. The Company shall
honor exercises of the Warrants and conversions of the Notes and shall deliver
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents.

 

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7.4          Participation in Future Financing.

 

 (a)                From the date hereof until the date that is the 12 month
anniversary of the Closing Date, upon any issuance by the Company or any of its
Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration,
Indebtedness or a combination thereof (a “Subsequent Financing”), each Purchaser
shall have the right to participate in up to an amount of the Subsequent
Financing equal to 50% of the Subsequent Financing (the “Participation Maximum”)
on the same terms, conditions and price provided for in the Subsequent
Financing.

 

 (b)               At least five (5) Trading Days prior to the closing of the
Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask such Purchaser if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing Notice”). Upon the
request of a Purchaser, and only upon a request by such Purchaser, for a
Subsequent Financing Notice, the Company shall promptly, but no later than one
(1) Trading Day after such request, deliver a Subsequent Financing Notice to
such Purchaser. The Subsequent Financing Notice shall describe in reasonable
detail the proposed terms of such Subsequent Financing, the amount of proceeds
intended to be raised thereunder and the Person or Persons through or with whom
such Subsequent Financing is proposed to be effected and shall include a term
sheet or similar document relating thereto as an attachment.

 

 (c)                Any Purchaser desiring to participate in such Subsequent
Financing must provide written notice to the Company by not later than 5:30 p.m.
(New York City time) on the fifth (5th) Trading Day after all of the Purchasers
have received the Pre-Notice that such Purchaser is willing to participate in
the Subsequent Financing, the amount of such Purchaser’s participation, and
representing and warranting that such Purchaser has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent Financing
Notice. If the Company receives no such notice from a Purchaser as of such fifth
(5th) Trading Day, such Purchaser shall be deemed to have notified the Company
that it does not elect to participate.

 

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

 

22

 

  

(e)                If by 5:30 p.m. (New York City time) on the fifth (5th)
Trading Day after all of the Purchasers have received the Pre-Notice, the
Company receives responses to a Subsequent Financing Notice from Purchasers
seeking to purchase more than the aggregate amount of the Participation Maximum,
each such Purchaser shall have the right to purchase its Pro Rata Portion (as
defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio
of (x) the Subscription Amount of Securities purchased on the Closing Date by a
Purchaser participating under this Section 7.4 and (y) the sum of the aggregate
Subscription Amounts of Securities purchased on the Closing Date by all
Purchasers participating under this Section 7.4.

 

(f)                The Company must provide the Purchasers with a second
Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 7.4, if the Subsequent Financing
subject to the initial Subsequent Financing Notice is not consummated for any
reason on the terms set forth in such Subsequent Financing Notice within thirty
(30) Trading Days after the date of the initial Subsequent Financing Notice.

 

(g)               The Company and each Purchaser agree that if any Purchaser
elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision
whereby such Purchaser shall be required to agree to any restrictions on trading
as to any of the Securities purchased hereunder or be required to consent to any
amendment to or termination of, or grant any waiver, release or the like under
or in connection with, this Agreement, without the prior written consent of such
Purchaser.

 

(h)               Notwithstanding anything to the contrary in this Section 7.4
and unless otherwise agreed to by such Purchaser, the Company shall either
confirm in writing to such Purchaser that the transaction with respect to the
Subsequent Financing has been abandoned or shall publicly disclose its intention
to issue the securities in the Subsequent Financing, in either case in such a
manner such that such Purchaser will not be in possession of any material,
non-public information, by the tenth (10th) Business Day following delivery of
the Subsequent Financing Notice. If by such tenth (10th) Business Day, no public
disclosure regarding a transaction with respect to the Subsequent Financing has
been made, and no notice regarding the abandonment of such transaction has been
received by such Purchaser, such transaction shall be deemed to have been
abandoned and such Purchaser shall not be deemed to be in possession of any
material, non-public information with respect to the Company or any of its
Subsidiaries.

 

23

 

  

8.      MISCELLANEOUS.

 

8.1          Expenses. The Company will pay, or reimburse the Purchaser and hold
the Purchaser harmless against Liability for the payment of all stamp and other
taxes which may be payable in respect of the execution and delivery of this
Agreement or the purchase and delivery of the Notes, incurred by the Purchaser
in connection with the purchase and sale of the Notes hereunder.

 

8.2         Survival. Except as otherwise provided in this Agreement, all
representations, warranties, covenants and agreements contained in this
Agreement, including without limitation Section 9 hereof, shall survive the
execution and delivery of this Agreement and the Closing. No investigation by
the Purchaser shall affect the survival or enforceability of the Company’s
representations, warranties, covenants and agreements contained in this
Agreement.

 

8.3            Indemnification.

 

 (a)                The Company hereby agrees to indemnify and hold harmless the
Purchaser, his, her or its affiliates and respective officers, directors,
partners, advisors, members, shareholders, employees and agents (collectively,
the “Purchaser’ Indemnitees”) from and against any and all losses, claims,
damages, judgments, penalties, liabilities and deficiencies (collectively,
“Indemnitee Losses”), and agrees to reimburse the Purchaser’ Indemnitees for all
reasonable out-of-pocket expenses (including the reasonable fees and expenses of
legal counsel), in each case promptly as incurred by the Purchaser’ Indemnitees
and to the extent arising out of or in connection with: (i) any material
misrepresentation or material breach of any of the Company’s representations or
warranties contained in this Agreement or the annexes, schedules or exhibits
hereto; or (ii) any failure by the Company to perform any of the Company’s
covenants, agreements, undertakings or obligations set forth in this Agreement
or the annexes, schedules or exhibits hereto. The maximum aggregate liability of
the Company for claims pursuant to this Section 8.3 shall be the Subscription
Amount. Notwithstanding anything to the contrary contained herein, the Company
shall not have any liability for indemnification pursuant to this Section 8.3
until the aggregate Indemnitee Losses are in excess of 5% of the Subscription
Amount, at which point the Company shall be liable for the entire amount of
Indemnitee Losses up to the maximum aggregate liability hereunder.

 

 (b)               Promptly after receipt by any indemnitee seeking
indemnification pursuant to this Section 8.3 of written notice of any
investigation, claim, proceeding or other action in respect of which
indemnification is being sought (each, a “Claim”), the indemnitee seeking
indemnification therefor (an “Indemnified Party”) promptly shall notify the
Company (the “Indemnifying Party”) of the commencement thereof; but the omission
to so notify the Indemnifying Party shall not relieve it from any liability that
it otherwise may have to the Indemnified Party, except to the extent that the
Indemnifying Party is materially prejudiced by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all Liabilities
with respect to such Claim or judgment.

 

24

 

 

(c)                In the event an Indemnified Party shall have a claim for
indemnification hereunder that does not involve a claim or demand being asserted
by a third party, the Indemnified Party promptly shall deliver notice of such
claim to the Indemnifying Party. If the Indemnified Party disputes the claim,
such dispute shall be resolved by mutual agreement of the Indemnified Party and
the Indemnifying Party or, failing any such agreement, by order or judgment of a
court of appropriate jurisdiction.

 

8.4          Notices. All notices and other communications required or permitted
under this Agreement shall be deemed to have been duly given and made if in
writing and if served either by personal delivery to the party for whom intended
(which shall include delivery by Federal Express or similar
nationally-recognized service) or three (3) business days after being deposited,
postage prepaid, certified or registered mail, return receipt requested, in the
United States mail bearing the following address for, or such other address as
may be designated in writing hereafter by, such party:

 

(a)                if to the Company, to:

 

StationDigital Corporation

5700 Oakland Avenue, #200

St. Louis, MO 63110

Attention: Louis Rossi, CEO

Telephone: (877) 482-9585

Facsimile: (877) 482-9585

Email: lrossi@stationdigital.com

 

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

 

Darrin M. Ocasio, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Fl.

New York, NY 10006

 

(b)               If to a Purchaser or the Collateral Agent, to the address of
such Purchaser or the Collateral Agent, as applicable, set forth on the
signature pages hereto.

 

25

 

  

8.5          Waiver. No delay on the part of any party hereto with respect to
the exercise of any right, power, privilege or remedy under this Agreement shall
operate as a waiver thereof, nor shall any exercise or partial exercise of any
such right, power, privilege or remedy preclude any further exercise thereof or
the exercise of any other right, power, privilege or remedy. No modification or
waiver by any party hereto of any provision of this Agreement, or consent to any
departure by any other party therefrom, shall be effective other than in the
specific instance and for the purpose for which given.

 

8.6          Remedies. The rights, powers, privileges and remedies hereunder are
cumulative and not exclusive of any other right, power, privilege or remedy the
parties hereto would otherwise have.

 

8.7          Entire Agreement. The Transaction Documentation constitutes the
entire agreement and understanding between the Purchaser and the Company, and
supersedes all prior agreements and understandings, relating to the subject
matter hereof.

 

8.8          GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THE TRANSACTION DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF. EACH
PARTY AGREES THAT ALL LEGAL PROCEEDINGS CONCERNING THE INTERPRETATION,
ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY ANY OF THE
TRANSACTION DOCUMENTS (WHETHER BROUGHT AGAINST A PARTY HERETO OR ITS RESPECTIVE
AFFILIATES, DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE
COMMENCED IN THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
COUNTY OF NEW YORK (THE “NEW YORK COURTS”). EACH PARTY HERETO HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE NEW YORK COURTS FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH NEW YORK COURTS,
OR SUCH NEW YORK COURTS ARE IMPROPER OR INCONVENIENT VENUE FOR SUCH PROCEEDING.
EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO
PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF
DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THE
TRANSACTION DOCUMENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL
BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRANSACTION DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. IF EITHER PARTY SHALL
COMMENCE AN ACTION OR PROCEEDING TO ENFORCE ANY PROVISIONS OF THE TRANSACTION
DOCUMENTS, THEN THE PREVAILING PARTY IN SUCH ACTION OR PROCEEDING SHALL BE
REIMBURSED BY THE OTHER PARTY FOR ITS REASONABLE ATTORNEYS’ FEES AND OTHER
REASONABLE COSTS AND EXPENSES INCURRED IN THE INVESTIGATION, PREPARATION AND
PROSECUTION OF SUCH ACTION OR PROCEEDING.

 

26

 

 

8.9           Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument. Facsimile signatures shall bind the parties hereto
to the same extent as original signatures.

 

8.10         Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement and without affecting
the validity or enforceability of such provision in any other jurisdiction.

 

8.11         Cross References. References in this Agreement to any section are,
unless otherwise specified, to such section of this Agreement.

 

8.12         Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.

 

8.13         Exhibits and Schedules Incorporated. The exhibits and schedules to
this Agreement are incorporated into and constitute an integral part of this
Agreement.

 

8.14         Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement will be
effective unless such modification, amendment or waiver is approved in writing
by both parties hereto. The failure of any party to enforce any of the
provisions of this Agreement will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement.

 

8.15         Injunctive Relief. In the event of a breach or threatened breach by
any party of any of its representations, warranties, covenants or other
agreements hereunder, any other party shall be entitled to an injunction or
similar equitable relief restraining such party from committing or continuing
any such breach or threatened breach or granting specific performance of any
action required to be performed by such party under any such provision, without
the necessity of proving any actual damages and without the necessity of posting
any bond or other security.

 

27

 

 

8.16         Binding Effect. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties (including
transferees of the Notes). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Any attempted assignment or delegation by a party hereto not
in accordance with this Section 8.16 shall be void.

 

8.17         Attorneys’ Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or any Transaction Document,
the prevailing party shall be entitled to reasonable attorneys’ fees, costs and
disbursements in addition to any other relief to which such party may be
entitled.

 

8.18         Construction. The parties hereto agree that this Agreement is the
product of negotiations between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in, and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentem. As used in this Agreement, the word “including” shall mean
“including without limitation” and the masculine gender shall include the
feminine and the neuter gender.

 

8.19         Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under this Agreement. Nothing contained herein, and no
action taken by any Purchaser pursuant thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. Each Purchaser has been represented by
its own separate legal counsel in their review and negotiation of this Agreement
and the other Transaction Documents.

 

8.20         Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Warrant Shares to the Purchasers. Steel Pier Capital Advisors,
LLC shall be reimbursed its expenses in having the Transaction Documents
prepared on behalf of the Company and for its obligations under the Security
Agreement in an amount not to exceed $25,000.00.

 

28

 

 

 

8.21         WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

9.      THE COLLATERAL AGENT.

 

9.1           Appointment of Collateral Agent. Each Purchaser hereby irrevocably
appoints the Collateral Agent to act on such Purchaser’s behalf as its
collateral agent under the Security Agreement and its collateral agent with
respect to the Collateral for the benefit of such Purchaser, to take such
actions on behalf of such Purchaser and exercise such powers as are expressly
delegated to the Collateral Agent by the terms of this Agreement and the other
Transaction Documents, together with such other actions and powers as are
reasonably incidental thereto. The Collateral Agent hereby confirms its
acceptance of this appointment and agrees to act as the collateral agent for
each Purchaser with respect to the Collateral, on behalf and for the benefit of
such Purchaser, in accordance with the terms of this Agreement. Each Purchaser
hereby acknowledges and agrees that the Collateral Agent shall be appointed, and
shall act, as collateral agent with respect to the Collateral for the benefit of
other purchasers under documentation substantially similar to the Transaction
Documents and the Collateral Agent.

 

9.2           Collateral Agent May Perform. If the Company fails to perform any
agreement contained in the Security Agreement, the Collateral Agent, acting on
behalf of each Secured Party and at such Secured Party’s written direction, may,
but without any obligation to do so and without notice, itself perform, or cause
performance of, such agreement, and all expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Company under both
Section 6.07 and Section 6.08 of the Security Agreement.

 

9.3           The Collateral Agent’s Duties under the Security Agreement.

 

 (a)                The powers conferred on the Collateral Agent hereunder are
solely to protect the Secured Parties’ interests in the Collateral. Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder for the benefit of the Secured Parties,
the Collateral Agent shall have no duty as to any Collateral, as to ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not any Secured
Party has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which the Collateral Agent accords its own property.

 

29

 

  

 (b)               The Collateral Agent’s duties and responsibilities hereunder
shall be determined solely by the express provisions of this Agreement, and no
other further duties or responsibilities shall be implied. The Collateral Agent
makes no representation and has no responsibility as to the validity of this
Agreement or of any other instrument referred to herein, or the creation or
perfection of any security interest. The Collateral Agent shall not be liable
for any error of judgment, or any act done or omitted by it in good faith, or
for any mistake of fact or law, or for anything which it may do or refrain from
doing in connection therewith, except its gross negligence or willful misconduct
as determined by a court of competent jurisdiction in a final and non-appealable
judgment.

 

 (c)                In no event shall the Collateral Agent incur any liability
for not performing any act or fulfilling any obligation hereunder by reason of
any occurrence beyond its control (including, without limitation, any provision
of any present or future law or regulation or any act of any governmental
authority, any act of God, war or terrorism, or the unavailability of the
Federal Reserve Bank wire services or any electronic communication facility).

 

 (d)               The Company and each Purchaser shall deliver to the
Collateral Agent on or before the date hereof an authority and incumbency
certificate, or a delegation of authority, setting forth the names, specimen
signatures and telephone contacts of each Person authorized to provide
directions to the Collateral Agent and promptly provide any changes thereto from
time to time thereafter by delivering to the Collateral Agent a replacement of
such certificate substantially in such form as is reasonably acceptable to the
Collateral Agent. The Collateral Agent shall be entitled to rely conclusively on
such certificate until it receives such a replacement certificate. The parties
hereto agree that the above constitutes a commercially reasonable security
procedure and further agree not to comply with any instruction or direction
(other than those contained herein or delivered in accordance with this
Agreement) from any other Person.

 

9.4           Delegation of Duties. The Collateral Agent, acting at the written
direction of each Purchaser, may execute any of its respective duties and
exercise its rights and powers under this Agreement or any other Transaction
Document by or through any one or more agents, sub-agents or attorneys-in-fact,
at the sole cost and expense of the Company, as appointed by the Collateral
Agent and shall be entitled to advice of counsel or other advisors concerning
all matters pertaining to its duties and rights hereunder. The exculpatory
provisions of this Section 9 shall apply to any such agent, sub-agent or
attorneys-in-fact. The Collateral Agent shall not be responsible for the
negligence or misconduct of any such agent, sub-agent or attorney-in-fact except
to the extent that a court of competent jurisdiction determines in a final and
non-appealable judgment that such agent, sub-agent or attorney-in-fact acted
with gross negligence or willful misconduct.

 

9.5           Collateral Agent’s Performance.

 

 (a)                The Collateral Agent shall:

 

 (i)               promptly inform each Purchaser of the contents of any written
notice or document that, in its capacity as the Collateral Agent, it receives
from or delivers to the Company or any governmental authority;

 

30

 

 

 (ii)            except as otherwise expressly provided in any Transaction
Document, perform its duties in accordance with any written instructions given
to it by a Purchaser, provided that it shall not be required to take any action
that exposes it to personal liability or expense, or for which indemnification
deemed sufficient by it in its reasonable discretion has not been provided, or
that is contrary to the Transaction Documents or any applicable law; and

 

 (iii)          if so instructed by any Purchaser in writing, pursuant to the
provisions of clause (ii) above, refrain from exercising any right, power,
authority or discretion vested in it as the Collateral Agent hereunder or under
any other Transaction Document.

 

(b)              Except as otherwise expressly provided in this Agreement, the
Collateral Agent shall not take any actions other than upon the written
instruction of each Purchaser.

 

9.6           Reliance by Collateral Agent; Right to Request Instruction.

 

 (a)                Notwithstanding anything to the contrary in this Agreement
(except in the case of gross negligence or willful misconduct on the part of the
Collateral Agent as determined by a court of competent jurisdiction in a final
and non-appealable judgment), the Collateral Agent will be entitled to rely
upon, and shall incur no liability and shall be fully protected in relying upon,
any certificate, notice or other document (including any facsimile, telex or
other electronic communication) reasonably believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the Person or Persons
purporting to issue such certificate, notice or other document, and upon advice
and statement of legal counsel, independent accountants and other experts
selected by the Collateral Agent with reasonable care. As to any matters not
expressly provided for by this Agreement, or the Security Agreement, the
Collateral Agent will not be required to take any action or exercise any
discretion. Notwithstanding anything else herein to the contrary, whenever
reference is made in any Transaction Document to any discretionary action by,
consent, designation, specifications, requirement or approval of, notice,
request or other communications from or other direction given or action to be
undertaken or to be (or not to be) suffered or omitted by the Collateral Agent
or to any election, decision, opinion, acceptance, use of judgment, expression
of satisfaction or other exercise of discretion, rights or remedies to be made
(or not to be made) by the Collateral Agent, it is understood that in all cases
the Collateral Agent will have the right at any time to seek instructions from
each Purchaser, and will, in all such cases, have no liability in acting, or in
refraining from acting, hereunder in accordance with the written instruction,
advice or concurrence of the Purchasers, as it deems appropriate. This provision
is intended solely for the benefit of the Collateral Agent and its successors
and permitted assigns and it not intended to and will not entitle the other
parties thereto to any defense, claim or counterclaim, or confer any rights or
benefits on any of them.

 

 (b)               The Collateral Agent shall not be liable (i) with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the written direction of each Purchaser relating to the time, method and place
of conducting any proceeding for any remedy available to such Purchaser, or
exercising any trust or power conferred upon such Purchaser, under this
Agreement or any other Transaction Document, or (ii) for any loss of profits,
consequential, incidental, punitive, exemplary or indirect damages.

 

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 (c)                The Collateral Agent shall not be deemed to have knowledge
of the existence of any default or event of default under any Transaction
Document until such time as it has received notification of the same from each
Purchaser or the Company.

 

 (d)               Except as provided in Section 9.7, no provision of this
Agreement shall require the Collateral Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

 

9.7           Resignation of the Collateral Agent.

 

 (a)                Subject to the appointment and acceptance of a successor
Collateral Agent as provided below, the Collateral Agent may resign at any time
by giving at least ninety (90) days’ prior written notice thereof to each
Purchaser and the Company. Upon any such resignation, each Purchaser will have
the right and responsibility to appoint a successor Collateral Agent, which
successor Collateral Agent shall (unless any default or event of default under
any Transaction Document has occurred and is continuing) be reasonably
acceptable to the Company. If no successor Collateral Agent has been appointed
by the Purchasers and has accepted such appointment within ninety (90) days
after the retiring Collateral Agent’s giving of written notice of resignation,
then such retiring Collateral Agent may apply to any court of competent
jurisdiction to appoint a successor Collateral Agent to act until such time, if
any, as a successor Collateral Agent is otherwise appointed in accordance with
this Section 9.7. Until the appointment of a successor Collateral Agent by such
court, such retiring Collateral Agent shall continue to act as Collateral Agent
pursuant to the terms of this Agreement and the other Transaction Documents. Any
successor Collateral Agent appointed by such court shall immediately and without
further act be superseded by any successor Collateral Agent appointed by the
Purchasers in accordance with this Section 9.7. Upon its acceptance of
appointment as Collateral Agent hereunder, (i) a successor Collateral Agent will
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent and the retiring Collateral Agent
will be discharged from its duties and obligations hereunder and each relevant
Transaction Document and (ii) the retiring Collateral Agent will promptly
transfer all of the Collateral in its possession or control held in the name of
the retiring Collateral Agent for the benefit of each Purchaser and will execute
and deliver such notices, instructions and assignments as may be necessary or
desirable to transfer the rights of the Collateral Agent for the benefit of each
Purchaser with respect to such Collateral to the successor Collateral Agent for
the benefit of each Purchaser. After the retiring Collateral Agent’s resignation
hereunder as Collateral Agent, the provisions of this Section 9 of this
Agreement and Section 6.08 of the Security Agreement will continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Collateral Agent.

 

 (b)               If the Collateral Agent resigns pursuant to this Section 9.7,
the resigning Collateral Agent (at its own cost and expense), shall make
available to the successor Collateral Agent such records, documents and
information in the resigning Collateral Agent’s possession and provide such
assistance as the successor Collateral Agent may reasonably request in
connection with its appointment as the successor Collateral Agent. For the
avoidance of doubt, other than the costs and expenses set forth in the preceding
sentence, all costs and expenses associated with the appointment of a successor
Collateral Agent shall be for the account of the Company in accordance with
Section 6.07 and Section 6.08 of the Security Agreement.

 

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9.8           Absence of Fiduciary Relationship. Each of the Collateral Agent
and the Purchasers undertakes to perform or to observe only such of its
agreements and obligations as are specifically set forth in this Agreement or
any other Transaction Document. No implied agreements, covenants or obligations
with respect to the Company or any of its Affiliates or any Transaction Document
to which the Company or any of its Affiliates is a party shall be read into this
Agreement against the Collateral Agent or any Purchaser. None of the Collateral
Agent or any Purchaser is a fiduciary of and shall not owe or be deemed to owe
any fiduciary duty to the Company or any of the Company’s Affiliates.

 

9.9            Additional Actions. From time to time, the Company shall execute
and deliver to each Purchaser and the Collateral Agent such additional
documents, and take such other actions, as such Purchaser or the Collateral
Agent may reasonably require to carry out the purposes of this Agreement and the
other Transaction Documents or to preserve and protect such Purchaser’s rights
or the rights of the Collateral Agent, for the benefit of the Secured Parties,
as contemplated herein.

 

9.10         Additional Disclosures. As of the date hereof the Collateral Agent
is the holder of a $500,000 Secured Promissory Note issued by the Company
pursuant to the terms of the Amended and Restated Securities Purchase Agreement
dated as of August 26, 2014.  In addition, the Collateral Agent also owns less
than ten percent (10%) of the Company’s equity securities as of the date
hereof.  By executing this Agreement, each Purchaser acknowledges that it has
read this Section 9.10 and that it has considered, with legal counsel, any
potential conflicts of interest which may arise as a result of an investor
serving as Collateral Agent prior to making the decision to invest in the
Securities. 

 

 

 

[Signature Page to StationDigital Corporation Securities Purchase Agreement
Follows]

 

33

 

 

 

[Company Signature Page to StationDigital Corporation Securities Purchase
Agreement]

 

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

 

STATIONDIGITAL CORPORATION

 

 

 

By:__/s/ Louis Rossi_______________________

Name: Louis Rossi

Title: Chief Executive Officer

 

 

 

[Purchaser Signature Pages to StationDigital Corporation Securities Purchase
Agreement Follow]

 

34

 

 

 

[Purchaser Signature Page to StationDigital Corporation Securities Purchase
Agreement]

 

 

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

 

Name of Purchaser:

 

__WS 2006 Irrevocable Trust___________________

 

Signature of Authorized Signatory of Purchaser:

 

_/s/ Elizabeth A. Rover Bailey__________________

 

Name of Authorized Signatory:

 

Elizabeth A. Rover Bailey______________________

 

Title of Authorized Signatory:

 

_Trustee____________________________________

 

Email Address of Purchaser:

 

___________________________________________

 

Facsimile Number of Purchaser:

 

___________________________________________

 

Address for Notice of Purchaser:

 

___________________________________________

 

 

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

 

___________________________________________

 

Subscription Amount: ___$500,000______________________________________

 

SSN/EIN Number: [PLEASE PROVIDE THIS UNDER SEPARATE COVER]

 

 

 

 

 

35

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