Exhibit 10.1

 

PURCHASE AGREEMENT

 

 

THIS PURCHASE AGREEMENT (“Agreement”) is made as of the 24th day of July, 2015
by and among hopTo Inc., a Delaware corporation (the “Company”), and the
Investors set forth on the signature pages affixed hereto (each an “Investor”
and collectively the “Investors”).

 

Recitals

 

A.     The Company and the Investors are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as promulgated by the U.S.
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
as amended; and

 

B.     The Investors wish to purchase, severally and not jointly, from the
Company, and the Company wishes to sell and issue to the Investors, upon the
terms and conditions stated in this Agreement, an aggregate of 28,863,995 shares
(the “Shares”) of the Company’s Common Stock, par value $0.0001 per share
(together with any securities into which such shares may be reclassified,
whether by merger, charter amendment or otherwise, the “Common Stock”), at
purchase price of $0.08074 per Share (the “Per Share Price”), for an aggregate
purchase price of Two Million Three Hundred Thirty Thousand Four Hundred and
Seventy-Nine Dollars ($2,330,479); and

 

C.     Contemporaneous with the sale of the Common Stock, the parties hereto
will execute and deliver a Registration Rights Agreement, in the form attached
hereto as Exhibit A (the “Registration Rights Agreement”), pursuant to which the
Company will agree to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder,
and applicable state securities laws.

 

In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.     Definitions. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings set forth below:

 

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common Control with, such Person.

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

 

 
 

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“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,
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

 

“Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

 

“Confidential Information” means trade secrets, confidential information and
know-how (including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).

 

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Effective Date” means the date on which the initial Registration Statement is
declared effective by the SEC.

 

“Effectiveness Deadline” means the date on which the initial Registration
Statement is required to be declared effective by the SEC under the terms of the
Registration Rights Agreement.

 

“Insider” means each director or executive officer (as defined in Rule 405 under
the 1933 Act) of the Company, any other officer of the Company participating in
the offering, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, and any
promoter connected with the Company in any capacity on the date hereof.

 

“Intellectual Property” means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos, slogans and Internet domain names,
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).

 

“Material Adverse Effect” means a present event or condition which could
reasonably be expected to have a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.

 

 
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“Material Contract” means any contract, instrument or other agreement to which
the Company or any Subsidiary is a party or by which it is bound which is
material to the business of the Company and its Subsidiaries, taken as a whole,
including those that have been filed or were required to have been filed as an
exhibit to the SEC Filings pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

 

“Proposal” has the meaning set forth in Section 7.9.

 

“Registration Statement” has the meaning set forth in the Registration Rights
Agreement.

 

“Required Investors” means (i) each Significant Investor (as long as such
Significant Investor continues to hold Shares) and (ii) (A) prior to Closing the
Investors who, together with their Affiliates, have agreed to purchase a
majority of the Shares to be sold hereunder and (B) from and after the Closing
the Investors beneficially owning (calculated in accordance with Rule 13d-3
under the 1934 Act) a majority of the Shares.

 

“SEC Filings” has the meaning set forth in Section 4.6.

 

“Significant Investor” means any Investor who, together with its Affiliates,
purchases at least 6,192,717 Shares pursuant to this Agreement.

 

“SSF Investors” means the Investors that are Affiliated with AWM Investment
Company.

 

“Subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.

 

“Transaction Documents” means this Agreement and the Registration Rights
Agreement.

 

“1933 Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

 

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

 

 
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2.     Purchase and Sale of the Shares. Subject to the terms and conditions of
this Agreement, on the Closing Date, each Investor shall severally, and not
jointly, purchase, and the Company shall sell and issue to each Investor, the
number of Shares set forth opposite such Investor’s name on the signature pages
attached hereto in exchange for a cash payment equal to the number of Shares to
be so purchased by such Investor multiplied by Per Share Price as specified in
Section 3 below.

 

3.     Closing, Delivery Mechanics for SSF Investors and Other Investors. Unless
other arrangements have been made with a particular Investor, upon confirmation
that the other conditions to closing specified herein have been satisfied or
duly waived by the Required Investors, the Company shall deliver to Lowenstein
Sandler LLP (or such other Person designated in writing by an Investor with
respect to the Shares to be purchased by such Investor), in trust, a certificate
or certificates, registered in such name or names as an Investor may designate,
representing the Shares to be purchased by such Investor, with instructions that
such certificates are to be held for release to such Investor only upon payment
in full of the aggregate purchase price therefor to the Company by such
Investor. Unless other arrangements have been made with a particular Investor,
upon such receipt by Lowenstein Sandler LLP (or such other Person designated in
writing by an Investor with respect to the Shares to be purchased by such
Investor) of the certificates, each Investor shall promptly, but no more than
one Business Day thereafter, cause a wire transfer in same day funds to be sent
to the account of the Company as instructed in writing by the Company, in an
amount representing the number of Shares set forth opposite such Investor’s name
on the signature pages attached hereto multiplied by Per Share Price. On the
date (the “Closing Date”) the Company receives the aggregate purchase price for
the Shares to be purchased by each Investor, the certificates evidencing the
Shares shall be released to the Investors (the “Closing”). The Closing of the
purchase and sale of the Shares shall take place at the offices of Lowenstein
Sandler LLP, 1251 Avenue of the Americas, 18th Floor, New York, New York 10020,
or at such other location and on such other date as the Company and the
Investors shall mutually agree.

 

Each Investor other than the SSF Investors hereby notifies the Company of the
following other arrangements: Lowenstein Sandler LLP is not its agent to receive
certificates for Shares and such Investor does not need to receive the
certificates for its Shares before such Investor causes its wire transfer to be
made in same day funds on or before the Closing Date; rather, the Company is
instructed to deliver certificates promptly after the Closing Date directly to
the Investor at the Address For Notice for such Investor on the signature page
hereto. If the Closing does not occur, the Company will promptly return to each
Investor the funds it received from such Investor.

 

4.     Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in the
schedules delivered herewith (collectively, the “Disclosure Schedules”):

 

4.1      Organization, Good Standing and Qualification. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and to own or lease its properties. Each of the Company and its
Subsidiaries is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property makes such qualification or leasing necessary
unless the failure to so qualify or to be in good standing has not had and could
not reasonably be expected to have a Material Adverse Effect. The Company’s
Subsidiaries are listed on Exhibit 21.1 to the 10-K (as defined in Section 4.6
herein).

 

 
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4.2     Authorization. The Company has full power and authority and has taken
all requisite action on the part of the Company, its officers, directors and
stockholders necessary for (i) the authorization, execution and delivery of the
Transaction Documents, (ii) the authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Shares. The
Transaction Documents have been duly authorized, executed and delivered (or,
upon the execution and delivery thereof by the Company, will be duly authorized,
executed and delivered) by the Company and constitute, or upon the execution and
delivery thereof by the Company will constitute, the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally and to general equitable principles.

 

4.3     Capitalization. Schedule 4.3 sets forth as of the date hereof (a) the
authorized capital stock of the Company; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital stock issuable
pursuant to the Company’s stock plans; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to securities exercisable for,
or convertible into or exchangeable for any shares of capital stock of the
Company. All of the issued and outstanding shares of the Company’s capital stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of pre-emptive rights and were issued in compliance with applicable
state and federal securities law and any rights of third parties. Except as
described on Schedule 4.3, all of the issued and outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights, were issued in
compliance with applicable state and federal securities law and any rights of
third parties and are owned by the Company, beneficially and of record, subject
to no lien, encumbrance or other adverse claim. Except as described on Schedule
4.3, no Person is entitled to pre-emptive or similar statutory or contractual
rights with respect to any securities of the Company. Except as described on
Schedule 4.3, there are no outstanding warrants, options, convertible securities
or other rights, agreements or arrangements of any character under which the
Company or any of its Subsidiaries is or may be obligated to issue any equity
securities of any kind and except as contemplated by this Agreement, neither the
Company nor any of its Subsidiaries is currently in negotiations for the
issuance of any equity securities of any kind. Except as described on Schedule
4.3 and except for the Registration Rights Agreement, there are no voting
agreements, buy-sell agreements, option or right of first purchase agreements or
other agreements of any kind among the Company and any of the securityholders of
the Company relating to the securities of the Company held by them. Except as
described on Schedule 4.3 and except as provided in the Registration Rights
Agreement, no Person has the right to require the Company to register any
securities of the Company under the 1933 Act, whether on a demand basis or in
connection with the registration of securities of the Company for its own
account or for the account of any other Person.

 

 
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Except as described on Schedule 4.3, the issuance and sale of the Shares
hereunder will not obligate the Company to issue shares of Common Stock or other
securities to any other Person (other than the Investors) and will not result in
the adjustment of the exercise, conversion, exchange or reset price of any
outstanding security.

 

Except as described on Schedule 4.3, the Company does not have outstanding
stockholder purchase rights or “poison pill” or any similar arrangement in
effect giving any Person the right to purchase any equity interest in the
Company upon the occurrence of certain events.

 

4.4     Valid Issuance. The Shares have been duly and validly authorized and,
when issued and paid for pursuant to this Agreement, will be validly issued,
fully paid and nonassessable, and shall be free and clear of all encumbrances
and restrictions (other than those created by the Investors), except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws.

 

4.5     Consents. The execution, delivery and performance by the Company of the
Transaction Documents and the offer, issuance and sale of the Shares require no
consent of, action by or in respect of, or filing with, any Person, governmental
body, agency, or official other than filings that have been made pursuant to
applicable state securities laws and post-sale filings pursuant to applicable
state and federal securities laws which the Company undertakes to file within
the applicable time periods. Subject to the accuracy of the representations and
warranties of each Investor set forth in Section 5 hereof, the Company has taken
all action necessary to exempt (i) the issuance and sale of the Shares and (ii)
the other transactions contemplated by the Transaction Documents from the
provisions of any stockholder rights plan or other “poison pill” arrangement,
any anti-takeover, business combination or control share law or statute binding
on the Company or to which the Company or any of its assets and properties may
be subject and any provision of the Company’s Certificate of Incorporation or
Bylaws that is or could reasonably be expected to become applicable to the
Investors as a result of the transactions contemplated hereby, including without
limitation, the issuance of the Shares and the ownership, disposition or voting
of the Shares by the Investors or the exercise of any right granted to the
Investors pursuant to this Agreement or the other Transaction Documents.

 

4.6     Delivery of SEC Filings; Business. The Company has made available to the
Investors through the EDGAR system, true and complete copies of the Company’s
most recent Annual Report on Form 10-K for the fiscal year ended December 31,
2014 (the “10-K”), and all other reports filed by the Company pursuant to the
1934 Act since the filing of the 10-K and prior to the date hereof
(collectively, the “SEC Filings”). The SEC Filings are the only filings required
of the Company pursuant to the 1934 Act for such period. The Company and its
Subsidiaries are engaged in all material respects only in the business described
in the SEC Filings and the SEC Filings contain a complete and accurate
description, to the extent required to be set forth in such SEC Filings at the
time they were filed, in all material respects of the business of the Company
and its Subsidiaries, taken as a whole. Since the filing of each of the SEC
Filings, no event has occurred that would require an amendment or supplement to
any such SEC Filing and as to which such an amendment or supplement has not been
filed prior to the date hereof.

 

 
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4.7     Use of Proceeds. The net proceeds of the sale of the Shares hereunder
shall be used by the Company for working capital and general corporate purposes.

 

4.8     No Material Adverse Change. Since December 31, 2014, except as
identified and described in the SEC Filings or as described on Schedule 4.8,
there has not been:

 

(i)     any change in the consolidated assets, liabilities, financial condition
or operating results of the Company from that reflected in the financial
statements included in the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2015, except for changes in the ordinary course of
business which have not had and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate;

 

(ii)     any declaration or payment of any dividend, or any authorization or
payment of any distribution, on any of the capital stock of the Company, or any
redemption or repurchase of any securities of the Company;

 

(iii)     any material damage, destruction or loss, whether or not covered by
insurance to any assets or properties of the Company or its Subsidiaries;

 

(iv)     any waiver, not in the ordinary course of business, by the Company or
any Subsidiary of a material right or of a material debt owed to it;

 

(v)     any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company or a Subsidiary, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company and its
Subsidiaries taken as a whole (as such business is presently conducted and as it
is proposed to be conducted);

 

(vi)     any change or amendment to the Company's Certificate of Incorporation
or Bylaws, or material change to any material contract or arrangement by which
the Company or any Subsidiary is bound or to which any of their respective
assets or properties is subject;

 

(vii)     any material labor difficulties or labor union organizing activities
with respect to employees of the Company or any Subsidiary;

 

(viii)     any material transaction entered into by the Company or a Subsidiary
other than in the ordinary course of business;

 

(ix)     the loss of the services of any executive officer, other key employee,
or material change in the composition or duties of the senior management of the
Company or any Subsidiary;

 

 
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(x)     the loss or threatened loss of any customer which has had or could
reasonably be expected to have a Material Adverse Effect; or

 

(xi)     any other event or condition of any character that has had or could
reasonably be expected to have a Material Adverse Effect.

 

4.9     SEC Filings.

 

(a)     At the time of filing thereof, the SEC Filings complied as to form in
all material respects with the requirements of the 1934 Act and did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.

 

(b)     Each registration statement and any amendment thereto filed by the
Company since January 1, 2012 pursuant to the 1933 Act and the rules and
regulations thereunder, as of the date such statement or amendment became
effective, complied as to form in all material respects with the 1933 Act and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein not misleading; and each prospectus filed pursuant to
Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of
any sale of securities pursuant thereto did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

 

(c)     Neither the Company nor any Subsidiary is a party to, or bound by the
terms of, any contract, instrument or other agreement which is material to the
business of the Company and its Subsidiaries, taken as a whole, other than those
that have been filed as exhibits to the SEC Filings pursuant to Item 601(b)(4)
or Item 601(b)(10) of Regulation S-K.

 

4.10     No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Shares will not (i) conflict with or result in a breach or violation
of (a) any of the terms and provisions of, or constitute a default under the
Company’s Certificate of Incorporation or the Company’s Bylaws, both as in
effect on the date hereof (true and complete copies of which have been made
available to the Investors through the EDGAR system), or (b) any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company, any Subsidiary or any of their
respective assets or properties, except for such conflicts, breaches or
violations as have not had and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate, or (ii) conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, result in the creation of any lien,
encumbrance or other adverse claim upon any of the properties or assets of the
Company or any Subsidiary or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any Material Contract, except for such as have not had and could
not reasonably be expected to have a Material Adverse Effect, individually or in
the aggregate.

 

 
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4.11     Tax Matters. The Company and each Subsidiary has timely prepared and
filed all tax returns required to have been filed by the Company or such
Subsidiary with all appropriate governmental agencies and timely paid all taxes
shown thereon or otherwise owed by it, other than taxes being contested in good
faith and for which adequate reserves have been made on the Company’s financial
statements included in the SEC Filings. The charges, accruals and reserves on
the books of the Company in respect of taxes for all fiscal periods are adequate
in all material respects, and there are no material unpaid assessments against
the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the
assessment of any additional taxes, penalties or interest for any fiscal period
or audits by any federal, state or local taxing authority except for any
assessment which is not material to the Company and its Subsidiaries, taken as a
whole. All taxes and other assessments and levies that the Company or any
Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due, other than taxes being contested in good faith and for which adequate
reserves have been made on the Company’s financial statements included in the
SEC Filings. There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or any Subsidiary or any of their
respective assets or property. Except as described on Schedule 4.11, there are
no outstanding tax sharing agreements or other such arrangements between the
Company and any Subsidiary or other corporation or entity.

 

4.12     Title to Properties. Except as disclosed in the SEC Filings, the
Company and each Subsidiary has good and marketable title to all real properties
and all other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by them; and except as disclosed in the SEC Filings, the Company and each
Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.

 

4.13     Certificates, Authorities and Permits. The Company and each Subsidiary
possess adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now operated
by it, except where the failure to so possess has not had and could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate, and neither the Company nor any Subsidiary has received any written
notice (nor has any executive officer of the Company received oral notice) of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or such
Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

 

4.14     Labor Matters.

 

(a)     Except as set forth on Schedule 4.14, the Company is not a party to or
bound by any collective bargaining agreements or other agreements with labor
organizations. The Company has not violated in any material respect any laws,
regulations, orders or contract terms, affecting the collective bargaining
rights of employees, labor organizations or any laws, regulations or orders
affecting employment discrimination, equal opportunity employment, or employees’
health, safety, welfare, wages and hours.

 

 
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(b)     (i) There are no labor disputes existing, or to the Company's Knowledge,
threatened, involving strikes, slow-downs, work stoppages, job actions,
disputes, lockouts or any other disruptions of or by the Company's employees,
(ii) there are no unfair labor practices or petitions for election pending or,
to the Company's Knowledge, threatened before the National Labor Relations Board
or any other federal, state or local labor commission relating to the Company's
employees, (iii) no demand for recognition or certification heretofore made by
any labor organization or group of employees is pending with respect to the
Company and (iv) to the Company's Knowledge, the Company enjoys good labor and
employee relations with its employees and labor organizations.

 

(c)     The Company is, and at all times has been, in compliance with all
applicable laws respecting employment (including laws relating to classification
of employees and independent contractors) and employment practices, terms and
conditions of employment, wages and hours, and immigration and naturalization,
except for such instances of non-compliance as have not had and could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate. There are no claims pending against the Company before the Equal
Employment Opportunity Commission or any other administrative body or in any
court asserting any violation of Title VII of the Civil Rights Act of 1964, the
Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal,
state or local Law, statute or ordinance barring discrimination in employment.

 

(d)     Except as disclosed in the SEC Filings or as described on Schedule 4.14,
the Company is not a party to, or bound by, any employment or other contract or
agreement that contains any severance, termination pay or change of control
liability or obligation, including, without limitation, any “excess parachute
payment,” as defined in Section 280G(b) of the Internal Revenue Code.

 

(e)     To the Company’s Knowledge, each of the Company's employees is a Person
who is either (i) a United States citizen, (ii) a permanent resident entitled to
work in the United States or (iii) employed pursuant to a valid visa. To the
Company's Knowledge, the Company has no liability for the improper
classification by the Company of such employees as independent contractors or
leased employees prior to the Closing.

 

4.15     Intellectual Property.

 

(a)     All Intellectual Property of the Company and its Subsidiaries which is
necessary for the conduct of its respective business as currently conducted or
as currently proposed to be conducted as described in the SEC Filings is
currently in compliance in all material respects with all legal requirements
(including timely filings, proofs and payments of fees) and, to the Company’s
Knowledge, is valid and enforceable. Except as described in the SEC Filings (to
the extent required to be disclosed therein), no Intellectual Property of the
Company or its Subsidiaries which is necessary for the conduct of Company’s and
each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted has been or is now involved in any
cancellation, dispute or litigation, and, to the Company’s Knowledge, no such
action is threatened. Except as described in the SEC Filings (to the extent
required to be disclosed therein), no patent of the Company or its Subsidiaries
has been or is now involved in any interference, reissue, re-examination or
opposition proceeding.

 

 
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(b)     All of the licenses and sublicenses and consent, royalty or other
agreements concerning Intellectual Property which are necessary for the conduct
of the Company’s and each of its Subsidiaries’ respective businesses as
currently conducted or as currently proposed to be conducted to which the
Company or any Subsidiary is a party or by which any of their assets are bound
(other than  generally commercially available, non-custom, off-the-shelf
software application programs having a retail acquisition price of less than
$20,000 per license) (collectively, “License Agreements”) are valid and binding
obligations of the Company or its Subsidiaries that are parties thereto and, to
the Company’s Knowledge, the other parties thereto, enforceable in accordance
with their terms, except to the extent that enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights generally, and
there exists no event or condition which will result in a violation or breach of
or constitute (with or without due notice or lapse of time or both) a default by
the Company or any of its Subsidiaries under any such License Agreement, except
for such violations, breaches and defaults as have not had and could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate.

 

(c)     The Company and its Subsidiaries own or have the valid right to use all
of the Intellectual Property that is necessary for the conduct of the Company’s
and each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted as described in the SEC Filings and for the
ownership, maintenance and operation of the Company’s and its Subsidiaries’
properties and assets, free and clear of all liens, encumbrances, adverse claims
or obligations to license all such owned Intellectual Property and Confidential
Information, other than licenses entered into in the ordinary course of the
Company’s and its Subsidiaries’ businesses. The Company and its Subsidiaries
have a valid and enforceable right to use all third party Intellectual Property
and Confidential Information used or held for use in the respective businesses
of the Company and its Subsidiaries.

 

(d)     To the Company’s Knowledge, the conduct of the Company’s and its
Subsidiaries’ businesses as currently conducted does not infringe or otherwise
impair or conflict with (collectively, “Infringe”) any Intellectual Property
rights of any third party or any confidentiality obligation owed to a third
party, and, to the Company’s Knowledge, the Intellectual Property and
Confidential Information of the Company and its Subsidiaries which are necessary
for the conduct of Company’s and each of its Subsidiaries’ respective businesses
as currently conducted or as currently proposed to be conducted as described in
the SEC Filings are not being Infringed by any third party. There is no
litigation or order pending or outstanding or, to the Company’s Knowledge,
threatened or imminent, that seeks to limit or challenge or that concerns the
ownership, use, validity or enforceability of any Intellectual Property or
Confidential Information of the Company and its Subsidiaries and the Company’s
and its Subsidiaries’ use of any Intellectual Property or Confidential
Information owned by a third party, and, to the Company’s Knowledge, there is no
valid basis for the same.

 

 
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(e)     The consummation of the transactions contemplated hereby and by the
other Transaction Documents will not result in the alteration, loss, impairment
of or restriction on the Company’s or any of its Subsidiaries’ ownership or
right to use any of the Intellectual Property or Confidential Information which
is necessary for the conduct of Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted as described in the SEC Filings.

 

(f)     The Company and its Subsidiaries have taken reasonable steps to protect
the Company’s and its Subsidiaries’ rights in their Intellectual Property and
Confidential Information. Each employee, consultant and contractor who has had
access to Confidential Information which is necessary for the conduct of
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted as described in the SEC
Filings has executed an agreement to maintain the confidentiality of such
Confidential Information and has executed appropriate agreements that are
substantially consistent with the Company’s standard forms thereof. Except under
confidentiality obligations, there has been no material disclosure of any of the
Company’s or its Subsidiaries’ Confidential Information to any third party.

 

4.16     Environmental Matters. Neither the Company nor any Subsidiary is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, or is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate; and there is no pending or, to the Company’s Knowledge, threatened
investigation that might lead to such a claim.

 

4.17     Litigation. Except as described on Schedule 4.17, there are no pending
actions, suits or proceedings against or affecting the Company, its Subsidiaries
or any of its or their properties; and to the Company’s Knowledge, no such
actions, suits or proceedings are threatened or contemplated. Neither the
Company nor any Subsidiary, nor any current director or executive officer
thereof, is or since January 1, 2010 has been the subject of any action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the
Company’s Knowledge, there is not pending or contemplated, any investigation by
the SEC involving the Company or any current or former director or officer of
the Company. The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the 1933 Act or the 1934 Act.

 

 
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4.18     Financial Statements. The financial statements included in each SEC
Filing comply in all material respects with applicable accounting requirements
and the rules and regulations of the SEC with respect thereto as in effect at
the time of filing (or to the extent corrected by a subsequent restatement) and
present fairly, in all material respects, the consolidated financial position of
the Company and its Subsidiaries as of the dates shown and their consolidated
results of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis (“GAAP”) (except as
may be disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the 1934 Act). Except as
set forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof or as described on Schedule 4.18, neither the
Company nor any of its Subsidiaries has incurred any liabilities, contingent or
otherwise, except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.

 

4.19     Insurance Coverage. The Company and each Subsidiary maintains in full
force and effect insurance coverage that the Company reasonably believes is
customary for comparably situated companies for the business being conducted and
properties owned or leased by the Company and each Subsidiary, and the Company
reasonably believes such insurance coverage to be adequate against all
liabilities, claims and risks against which it is customary for comparably
situated companies to insure.

 

4.20     Compliance with Certain Requirements. The Common Stock is registered
pursuant to Section 12(g) of the 1934 Act and is quoted on OTCQB maintained by
OTC Markets Group Inc. (the “OTCQB”), and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the 1934 Act or removal from quotation of the Common
Stock from the OTCQB, nor has the Company received any notification that the
SEC, the Financial Industry Regulatory Authority, Inc. (“FINRA”) or the OTCQB is
contemplating terminating such registration or quotation.

 

4.21     Brokers and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of the Company, other than as
described in Schedule 4.21.

 

4.22     No General Solicitation. Neither the Company nor any Person authorized
to act on its behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Shares.

 

4.23     No Integrated Offering. Neither the Company nor any of its Affiliates,
nor any Person authorized to act on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(a)(2) for the exemption from registration
for the transactions contemplated hereby or would require registration of the
Shares under the 1933 Act.

 

 
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4.24     Rule 506 Compliance. To the Company's knowledge, neither the Company
nor any Insider is subject to any of the “Bad Actor” disqualifications described
in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2)(i) or (d)(3) of
the 1933 Act. The Company is not disqualified from relying on Rule 506 of
Regulation D under the 1933 Act (“Rule 506”) for any of the reasons stated in
Rule 506(d) in connection with the issuance and sale of the Shares to the
Investors pursuant to this Agreement. The Company has exercised reasonable care,
including without limitation, conducting a factual inquiry that is appropriate
in light of the circumstances, into whether any such disqualification under Rule
506(d) exists. The Company has furnished to each Investor, a reasonable time
prior to the date hereof, a description in writing of any matters relating to
the Company and the Insiders that would have triggered disqualification under
Rule 506(d) but which occurred before September 23, 2013, in each case, in
compliance with the disclosure requirements of Rule 506(e). The Company has
exercised reasonable care, including without limitation, conducting a factual
inquiry that is appropriate in light of the circumstances, into whether any such
disqualification under Rule 506(d) would have existed and whether any disclosure
is required to be made to Investor under Rule 506(e). Any outstanding securities
of the Company (of any kind or nature) that were issued in reliance on Rule 506
at any time on or after September 23, 2013 have been issued in compliance with
Rule 506(d) and (e).

 

4.25     Private Placement. Subject to the accuracy of the Investors’
representations and warranties set forth in Section 5 hereof, and in reliance
thereon, the offer and sale of the Shares to the Investors as contemplated
hereby is exempt from the registration requirements of the 1933 Act.

 

4.26     Shell Company Status. The Company has previously been an issuer
identified in Rule 144(i)(1). The Company meets the requirements specified in
Rule 144(i)(2) and more than one year has elapsed since the Company filed Form
10 information (as such term is defined in Rule 144(i)(3)) with the SEC.

 

4.27     Questionable Payments. Neither the Company nor any of its Subsidiaries
nor, to the Company’s Knowledge, any of their respective current or former
stockholders, directors, officers, employees, agents or other Persons acting on
behalf of the Company or any Subsidiary, has on behalf of the Company or any
Subsidiary or in connection with their respective businesses: (a) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.

 

 
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4.28     Transactions with Affiliates. Except as disclosed in the SEC Filings or
as disclosed on Schedule 4.28, none of the officers or directors of the Company
and, to the Company’s Knowledge, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary (other
than as holders of stock options and/or warrants, and for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the Company’s Knowledge, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

 

4.29     Internal Controls. The Company is in material compliance with the
provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the
Company. 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 and liabilities is compared with the existing assets
and liabilities at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and
procedures (as defined in 1934 Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including the Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s most recently filed
periodic report under the 1934 Act, as the case may be, is being prepared. The
Company has established internal control over financial reporting (as defined in
1934 Act Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP. The
Company's certifying officers have evaluated the effectiveness of the Company's
disclosure controls and procedures as of the end of the period covered by the
most recently filed periodic report under the 1934 Act (such date, the
“Disclosure Controls Evaluation Date”). The Company presented in its most
recently filed periodic report under the 1934 Act the conclusions of the
certifying officers about the effectiveness of such disclosure controls and
procedures based on their evaluations as of the Disclosure Controls Evaluation
Date. The Company's certifying officers have evaluated the effectiveness of the
Company's internal control over financial reporting as of the end of the
Company’s most recent fiscal year (such date, the “Internal Control Evaluation
Date”). The Company presented in its most recently filed annual report under the
1934 Act the conclusions of the certifying officers about the effectiveness of
such internal control over financial reporting based on their evaluations as of
the Internal Control Evaluation Date. The Company presented in its most recently
filed periodic report under the 1934 Act the conclusions of the certifying
officers about any changes in the Company’s internal control over financial
reporting that occurred during the Company’s most recent fiscal quarter
preceding the Disclosure Controls Evaluation Date that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control
over financial reporting. Since the Disclosure Controls Evaluation Date, there
has been no significant change in the Company's disclosure controls and
procedures, its internal control over financial reporting or, to the Company's
Knowledge, in other factors that could significantly affect the Company's
disclosure controls and procedures or its internal control over financial
reporting. The Company maintains and will continue to maintain a standard system
of accounting established and administered in accordance with GAAP and the
applicable requirements of the 1934 Act.

 

 
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4.30     Disclosures. Except as provided in the next sentence, neither the
Company nor any Person authorized to act on its behalf has provided the
Investors or their agents or counsel with any information that constitutes or
might constitute material, non-public information, other than the terms of the
transactions contemplated hereby. Certain Investors have entered into written
non-disclosure agreements with the Company pursuant to which they have received
certain additional information regarding the Company which may constitute
material non-public information. The written materials delivered to the
Investors by or on behalf of the Company in connection with the transactions
contemplated by the Transaction Documents, taken as a whole, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.

 

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

 

4.32.     No Fiduciary. The Company acknowledges that none of the Investors is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement, the other Transaction Documents and
the transactions contemplated hereby and thereby, and any advice or other
guidance provided by any Investor or any of its representatives and agents with
respect to this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Investor’s entry
into such transactions. The Company’s decision to enter into this Agreement and
the other Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives and agents.

 

5.     Representations and Warranties of the Investors. Each of the Investors
hereby severally, and not jointly, represents and warrants to the Company that:

 

5.1     Organization and Existence. Such Investor, if not a natural Person, is a
validly existing corporation, limited partnership or limited liability company
and has all requisite corporate, partnership or limited liability company power
and authority to invest in the Shares pursuant to this Agreement. Such Investor,
if a natural Person, has legal capacity to contract pursuant to this Agreement
and does not require the consent of his or her spouse to so contract.

 

5.2     Authorization. The execution, delivery and performance by such Investor
of the Transaction Documents to which such Investor is a party have been duly
authorized and each will constitute the valid and legally binding obligation of
such Investor, enforceable against such Investor in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally and to general equity principles.

 

 
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5.3     Purchase Entirely for Own Account. The Shares to be received by such
Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the 1933 Act, and such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of such Shares in
compliance with applicable federal and state securities laws. Nothing contained
herein shall be deemed a representation or warranty by such Investor to hold the
Shares for any period of time. Such Investor is not a broker-dealer registered
with the SEC under the 1934 Act or an entity engaged in a business that would
require it to be so registered.

 

5.4     Investment Experience. Such Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Shares and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated hereby.

 

5.5     Disclosure of Information. Such Investor has had an opportunity to
receive all information related to the Company requested by it and to ask
questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the Shares. Such
Investor acknowledges receipt of copies of the SEC Filings. Neither such
inquiries nor any other due diligence investigation conducted by such Investor
shall modify, limit or otherwise affect such Investor’s right to rely on the
Company’s representations and warranties contained in this Agreement.

 

5.6     Restricted Securities. Such Investor understands that the Shares are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances, including additional limitations applicable to
former shell companies such as the Company.

 

5.7     Legends. It is understood that, except as provided below, certificates
evidencing the Shares may bear the following or any similar legend:

 

(a)     “The securities represented hereby have 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, and, accordingly, may not be transferred unless (i) such securities
have been registered for sale pursuant to the Securities Act of 1933, as
amended, (ii) such securities may be sold pursuant to Rule 144, or (iii) the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the Securities Act
of 1933, as amended.”

 

 
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(b)     If required by the authorities of any state in connection with the
issuance of sale of the Shares, the legend required by such state authority.

 

5.8     Investor Status. At the time such Investor was offered the Shares, it
was, and at the date hereof it is, an “accredited investor” as defined in Rule
501(a) under the 1933 Act. Such Investor is not a registered broker dealer
registered under Section 15(a) of the Exchange Act, or a member of FINRA or an
entity engaged in the business of being a broker dealer. Except as otherwise
disclosed in writing to the Company on or prior to the date of this Agreement,
such Investor is not affiliated with any broker dealer registered under Section
15(a) of the 1934 Act, or a member of FINRA or an entity engaged in the business
of being a broker dealer. Such Investor maintains his or her principal residence
(in the case of an individual) or its principal executive office (in the case of
an entity) at the location specified on its signature page hereto.

 

5.9     No General Solicitation. Such Investor did not learn of the investment
in the Shares as a result of any general solicitation or general advertising.

 

5.10     Brokers and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of such Investor.

 

5.11     Prohibited Transactions. Since the earlier of (a) such time as such
Investor was first contacted by the Company or any other Person acting on behalf
of the Company regarding the transactions contemplated hereby or (b) thirty (30)
days prior to the date hereof, neither such Investor nor any Affiliate of such
Investor which (x) had knowledge of the transactions contemplated hereby, (y)
has or shares discretion relating to such Investor’s investments or trading or
information concerning such Investor’s investments, including in respect of the
Shares, or (z) is subject to such Investor’s review or input concerning such
Affiliate’s investments or trading (collectively, “Trading Affiliates”) has,
directly or indirectly, effected or agreed to effect any short sale, whether or
not against the box, established any “put equivalent position” (as defined in
Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted any
other right (including, without limitation, any put or call option) with respect
to the Common Stock or with respect to any security that includes, relates to or
derived any significant part of its value from the Common Stock or otherwise
sought to hedge its position in the Shares (each, a “Prohibited Transaction”).
Prior to the earliest to occur of (i) the termination of this Agreement, (ii)
the Effective Date or (iii) the Effectiveness Deadline, such Investor shall not,
and shall cause its Trading Affiliates not to, engage, directly or indirectly,
in a Prohibited Transaction. Such Investor acknowledges that the
representations, warranties and covenants contained in this Section 5.11 are
being made for the benefit of the Investors as well as the Company and that each
of the other Investors shall have an independent right to assert any claims
against such Investor arising out of any breach or violation of the provisions
of this Section 5.11.

 

 
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6. Conditions to Closing.

 

6.1     Conditions to the Investors’ Obligations. The obligation of each
Investor to purchase the Shares at the Closing is subject to the satisfaction,
on or prior to the Closing Date, of the following conditions, any of which may
be waived by such Investor (as to itself only):

 

(a)     The representations and warranties made by the Company in Section 4
hereof qualified as to materiality shall be true and correct at all times from
the date hereof and prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct as of such
earlier date, and, the representations and warranties made by the Company in
Section 4 hereof not qualified as to materiality shall be true and correct in
all material respects at all times from the date hereof and prior to and on the
Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct in all material respects as of such earlier date. The
Company shall have performed in all material respects all obligations and
covenants herein required to be performed by it on or prior to the Closing Date.

 

(b)     The Company shall have obtained any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Shares and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.

 

(c)     The Company shall have executed and delivered the Registration Rights
Agreement.

 

(d)     The Company shall have entered into one or more subscription agreements
with one or more of its directors and/or executive officers pursuant to which
such Persons have agreed on or prior to the Closing to purchase at least an
aggregate of $220,000 of Shares at the Per Share Price and containing other
terms and conditions reasonably satisfactory to the Required Investors (the
“Other Agreements”).

 

(e)     On or prior to the Closing, the Company shall have received gross
proceeds from the sale of the Shares as contemplated hereby and under the Other
Agreements of at least Two Million Five Hundred Thousand Dollars ($2,500,000).

 

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

 

(g)     The Company shall have delivered a Certificate, executed on behalf of
the Company by its Chief Executive Officer or its Chief Financial Officer, dated
as of the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b), (d), (e), (f) and (j) of this Section 6.1.

 

 
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(h)     The Company shall have delivered a Certificate, executed on behalf of
the Company by its Secretary, dated as of the Closing Date, certifying the
resolutions adopted by the Board of Directors of the Company, or a duly
appointed committee thereof, approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the Shares,
certifying the current versions of the Certificate of Incorporation and Bylaws
of the Company and certifying as to the signatures and authority of persons
signing the Transaction Documents and related documents on behalf of the
Company.

 

(i)     The Investors shall have received an opinion from Manatt, Phelps &
Phillips, LLP, the Company's counsel, dated as of the Closing Date, in form and
substance reasonably acceptable to the Investors and addressing such legal
matters as the Investors may reasonably request.

 

(j)     No stop order or suspension of trading shall have been imposed by FINRA,
the OTCQB, the SEC or any other governmental or regulatory body with respect to
public trading in the Common Stock.

 

6.2     Conditions to Obligations of the Company. The Company's obligation to
sell and issue the Shares at the Closing is subject to the satisfaction on or
prior to the Closing Date of the following conditions, any of which may be
waived by the Company:

 

(a)     The representations and warranties made by the Investors in Section 5
hereof, other than the representations and warranties contained in Sections 5.3,
5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investment
Representations shall be true and correct in all respects when made, and shall
be true and correct in all respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investors shall have
performed in all material respects all obligations and covenants herein required
to be performed by them on or prior to the Closing Date.

 

(b)     The Investors shall have executed and delivered the Registration Rights
Agreement.

 

(c)     Each Investor shall have delivered its pro rata portion of the aggregate
purchase price for the Shares to the Company.

 

6.3     Termination of Obligations to Effect Closing; Effects.

 

(a)     The obligations of the Company, on the one hand, and the Investors, on
the other hand, to effect the Closing shall terminate as follows:

 

(i)     Upon the mutual written consent of the Company and the Required
Investors;

 

 
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(ii)     By the Company if any of the conditions set forth in Section 6.2 shall
have become incapable of fulfillment, and shall not have been waived by the
Company;

 

(iii)     By an Investor (with respect to itself only) if any of the conditions
set forth in Section 6.1 shall have become incapable of fulfillment, and shall
not have been waived by the Investor; or

 

(iv)     By either the Company or any Investor (with respect to itself only) if
the Closing has not occurred on or prior to July 31, 2015;

 

provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.

 

(b)     In the event of termination by the Company or any Investor of its
obligations to effect the Closing pursuant to this Section 6.3, written notice
thereof shall forthwith be given by the Company to the other Investors and the
other Investors shall have the right to terminate their obligations to effect
the Closing upon written notice to the Company and the other Investors. Nothing
in this Section 6.3 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or the
other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement
or the other Transaction Documents.

 

7.     Covenants and Agreements of the Company.

 

7.1     [Reserved]

 

7.2     Reports. The Company will furnish to the Investors and/or their
assignees such information relating to the Company and its Subsidiaries as from
time to time may reasonably be requested by the Investors and/or their
assignees; provided, however, that the Company shall not disclose material
nonpublic information to the Investors, or to advisors to or representatives of
the Investors, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and provides
the Investors, such advisors and representatives with the opportunity to accept
or refuse to accept such material nonpublic information for review and any
Investor wishing to obtain such information enters into an appropriate
confidentiality agreement with the Company with respect thereto.

 

7.3     No Conflicting Agreements. The Company will not take any action, enter
into any agreement or make any commitment that would conflict or interfere in
any material respect with the Company’s obligations to the Investors under the
Transaction Documents.

 

7.4     [Reserved]

 

 
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7.5     Compliance with Laws. The Company will comply in all material respects
with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.

 

7.6     Listing of Common Stock and Related Matters. If the Company applies to
have its Common Stock or other securities traded on any national stock exchange
or market, it shall include in such application the Shares and will take such
other action as is necessary to cause such Common Stock to be so listed.
Thereafter, the Company will use commercially reasonable efforts to continue the
listing and trading of its Common Stock on such exchange or market and, in
accordance, therewith, will use commercially reasonable efforts to comply in all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of such exchange or market, as applicable.

 

7.7     Termination of Covenants. The provisions of Sections 7.2 through 7.5
shall terminate and be of no further force and effect on the date on which the
Company’s obligations under the Registration Rights Agreement to register or
maintain the effectiveness of any registration covering the Registrable
Securities (as such term is defined in the Registration Rights Agreement) shall
terminate.

 

7.8     Removal of Legends. In connection with any sale or disposition of the
Shares by an Investor pursuant to a Registration Statement, Rule 144 or to any
other exemption under the 1933 Act such that the purchaser acquires freely
tradable shares and upon compliance by the Investor with the requirements of
this Agreement, the Company shall cause the transfer agent for the Common Stock
(the “Transfer Agent”) to issue replacement certificates representing the Shares
sold or disposed of without restrictive legends. Upon the earlier of (i)
registration for resale pursuant to the Registration Rights Agreement or (ii)
six months after the Closing Date, the Company shall (A) deliver to the Transfer
Agent irrevocable instructions that the Transfer Agent shall reissue a
certificate representing shares of Common Stock without legends upon receipt by
such Transfer Agent of the legended certificates for such shares, together with
either (1) a customary representation by the Investor that the shares of Common
Stock represented thereby have been sold or transferred in accordance with Rule
144 or (2) a statement by the Investor that such Investor will sell the shares
of Common Stock represented thereby in accordance with the Plan of Distribution
contained in the Registration Statement, and (B) cause its counsel to deliver to
the Transfer Agent one or more blanket opinions to the effect that the removal
of such legends in such circumstances may be effected under the 1933 Act. From
and after the earlier of such dates, upon an Investor’s written request, the
Company shall promptly cause certificates evidencing the Investor’s Shares to be
replaced with certificates which do not bear such restrictive legends. When the
Company is required to cause an unlegended certificate to replace a previously
issued legended certificate, if: (1) the unlegended certificate is not delivered
to an Investor within three (3) Business Days of submission by that Investor of
a legended certificate and supporting documentation to the Transfer Agent as
provided above and (2) prior to the time such unlegended certificate is received
by the Investor, the Investor, or any third party on behalf of such Investor or
for the Investor’s account, purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Investor of Shares represented by such certificate (a “Buy-In”), then the
Company shall pay in cash to the Investor (for costs incurred either directly by
such Investor or on behalf of a third party) the amount by which the total
purchase price paid for Common Stock as a result of the Buy-In (including
brokerage commissions, if any) exceeds the proceeds received by such Investor as
a result of the sale to which such Buy-In relates. The Investor shall provide
the Company written notice indicating the amounts payable to the Investor in
respect of the Buy-In.

 

 
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7.9     Reverse Split. Promptly following the Closing, the Company shall use its
commercially reasonable efforts to seek stockholder approval for a reverse split
of the Common Stock (the “Reverse Split”) at the immediately succeeding annual
meeting of stockholders. The terms of the Reverse Split shall be determined by
the Company’s Board of Directors in the good faith exercise of its business
judgment. Subject to its fiduciary obligations under applicable law (as
determined in good faith by the Company’s Board of Directors after consultation
with the Company’s outside counsel), the Company's Board of Directors shall
recommend to the Company's stockholders that the stockholders vote in favor of
the Reverse Split (the “Company Board Recommendation”) and take all commercially
reasonable action (including, without limitation, the hiring of a proxy
solicitation firm of nationally recognized standing) to solicit the approval of
the stockholders for the Reverse Split unless the Board of Directors shall have
modified, amended or withdrawn the Company Board Recommendation pursuant to the
provisions of the immediately succeeding sentence. The Company covenants that
the Board of Directors of the Company shall not modify, amend or withdraw the
Company Board Recommendation unless the Board of Directors (after consultation
with the Company’s outside counsel) shall determine in the good faith exercise
of its business judgment that maintaining the Company Board Recommendation would
violate its fiduciary duty to the Company’s stockholders. Whether or not the
Company's Board of Directors modifies, amends or withdraws the Company Board
Recommendation pursuant to the immediately preceding sentence, the Company shall
in accordance with Section 146 of the Delaware General Corporation Law and the
provisions of its Certificate of Incorporation and Bylaws, (i) take all action
necessary to convene the annual meeting to consider and vote upon the approval
of the Reverse Split and (ii) submit the Reverse Split to the stockholders of
the Company for their approval at the annual meeting. Promptly following
approval of Reverse Split by the stockholders at the annual meeting, but not
more than five (5) Business Days thereafter, the Company shall effect the
Reverse Split.

 

7.10     Subsequent Equity Sales; Registration Statements.

 

(a)     From the date hereof until ninety (90) days after the Closing Date,
without the consent of the Required Investors, neither the Company nor any
Subsidiary shall issue shares of Common Stock or Common Stock Equivalents.
Notwithstanding the foregoing, the provisions of this Section 7.10(a) shall not
apply to (i) the issuance of the Shares, (ii) the issuance of shares of Common
Stock pursuant to the Other Agreements, (iii) the issuance of Common Stock or
Common Stock Equivalents upon the conversion or exercise of any securities of
the Company or a Subsidiary outstanding on the date hereof, provided that the
terms of such security are not amended after the date hereof to decrease the
exercise price or increase the Common Stock or Common Stock Equivalents
receivable upon the exercise, conversion or exchange thereof, (iv) Common stock
or Common Stock Equivalents issued as consideration for an acquisition or in a
strategic transaction 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 equityholders 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, for the purposes of this
clause (iv), 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 (a “Strategic Transaction”), or (v) the
issuance of any Common Stock or Common Stock Equivalents pursuant to any Company
equity incentive plan approved by the Company’s stockholders and in place as of
the date hereof.

 

 
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(b)     From the date hereof until the earlier of (i) three years from the
Closing Date or (ii) such time as no Investor holds any of the Shares, the
Company shall be prohibited from effecting or entering into an agreement to
effect any “Variable Rate Transaction” without the consent of the Required
Investors which may be withheld, delayed or conditioned by them in their sole
discretion. The term “Variable Rate Transaction” shall mean a transaction in
which the Company issues or sells (i) any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to
receive additional shares of Common Stock either (A) at a conversion, exercise
or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time after
the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may sell securities at a future determined price. For the
avoidance of doubt, the issuance of a security which is subject to customary
anti-dilution protections, where the conversion, exercise or exchange price is
subject to adjustment as a result of stock splits, reverse stock splits and
other similar recapitalization or reclassification events, shall not be deemed
to be a “Variable Rate Transaction.”

 

(c)     The Company shall not, and shall use its commercially reasonable efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the 1933 Act) that will be integrated with the offer or
sale of the Shares in a manner that would require the registration under the
1933 Act of the sale of the Shares to the Investors, or that will be integrated
with the offer or sale of the Shares for purposes of the rules and regulations
of any trading market such that it would require stockholder approval prior to
the closing of such other transaction unless stockholder approval is obtained
before the closing of such subsequent transaction.

 

(d)     The Company shall not, from the date hereof until ninety (90) days after
the Effective Date, prepare and file with the SEC a registration statement
relating to an offering for its own account or the account of others under the
1933 Act of any of its equity securities, other than (i) a Registration
Statement pursuant to the Registration Rights Agreement, (ii) any registration
statement or post-effective amendment to a registration statement (or supplement
thereto) relating to the Company’s employee benefit plans registered on Form S-8
or, in connection with an acquisition, on Form S-4, or (iii) a registration
statement registering for sale or resale the Common Stock and/or Common Stock
Equivalents issued in a Strategic Transaction.

 

 
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7.11     Equal Treatment of Investors. No consideration shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision
of any of the Transaction Documents unless the same consideration is also
offered to all of the parties to the Transaction Documents. For clarification
purposes, this provision constitutes a separate right granted to each Investor
by the Company and negotiated separately by each Investor, and is intended for
the Company to treat the Investors as a class and shall not in any way be
construed as the Investors acting in concert or as a group with respect to the
purchase, disposition or voting of Shares or otherwise.

 

8.     Survival and Indemnification.

 

8.1     Survival. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement.

 

8.2     Indemnification. The Company agrees to indemnify and hold harmless each
Investor and its Affiliates and their respective directors, officers, trustees,
partners, members, managers, employees and agents, and their respective
successors and assigns, from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorney fees
and disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”) to which such
Person may become subject as a result of any breach of representation, warranty,
covenant or agreement made by or to be performed on the part of the Company
under the Transaction Documents, and will reimburse any such Person for all such
amounts as they are incurred by such Person.

 

8.3     Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims that
makes it inadvisable or improper under applicable legal ethics rules for one
counsel to represent both the indemnifying party and such person (in which case,
if the person notifies the indemnifying party in writing that such person elects
to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such person); and provided, further, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.

 

 
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9.     Miscellaneous.

 

9.1     Successors and Assigns. This Agreement may not be assigned by a party
hereto without the prior written consent of the Company or the Investors, as
applicable, provided, however, that an Investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some or all of its Shares in a transaction complying with
applicable securities laws without the prior written consent of the Company or
the other Investors. Promptly following such assignment the assignor shall
provide written notice of such assignment to the Company. The provisions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Without limiting the generality
of the foregoing, in the event that the Company is a party to a merger,
consolidation, share exchange or similar business combination transaction in
which the Common Stock is converted into the equity securities of another
Person, from and after the effective time of such transaction, such Person
shall, by virtue of such transaction, be deemed to have assumed the obligations
of the Company hereunder, the term “Company” shall be deemed to refer to such
Person and the term “Shares” shall be deemed to refer to the securities received
by the Investors in connection with such transaction. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

 

9.2     Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
delivered by facsimile or other form of electronic transmission, which shall be
deemed an original.

 

9.3     Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

 
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9.4     Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given as hereinafter described (i) if given by personal delivery, then such
notice shall be deemed given upon such delivery, (ii) if given by telex or
telecopier, then such notice shall be deemed given upon receipt of confirmation
of complete transmittal, (iii) if given by mail, then such notice shall be
deemed given upon the earlier of (A) receipt of such notice by the recipient or
(B) three days after such notice is deposited in first class mail, postage
prepaid, and (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one Business Day after delivery
to such carrier. All notices shall be addressed to the party to be notified at
the address as follows, or at such other address as such party may designate by
ten days’ advance written notice to the other party:

 

If to the Company:

 

hopTo Inc.

1919 S. Bascom Avenue Suite 600

Campbell, California 95008

Attention: Eldad Eilam, Chief Executive Officer and

                  Jean-Louis Casabonne, Chief Financial Officer

Fax: (408) 626-9722

 

With a copy to:

 

Manatt, Phelps & Phillips, LLP

11355 W. Olympic Blvd

Los Angeles, CA 90064

Attention: Ben Orlanski and Katherine Blair

Fax: (310) 914-5470

 

If to the Investors:

 

to the addresses set forth on the signature pages hereto.

 

9.5     Expenses. The parties hereto shall pay their own costs and expenses in
connection herewith, except that the Company shall pay the reasonable fees and
expenses of Lowenstein Sandler LLP not to exceed $30,000, regardless of whether
the transactions contemplated hereby are consummated; it being understood that
Lowenstein Sandler LLP has only rendered legal advice to the SSF Investors and
not to the Company or any other Investor in connection with the transactions
contemplated hereby, and that each of the Company and each Investor has relied
for such matters on the advice of its own respective counsel. Such expenses
shall be paid at the Closing or, if the Closing does not occur, within five (5)
Business Days of the termination of this Agreement. The Company shall reimburse
the Investors upon demand for all reasonable out-of-pocket expenses incurred by
the Investors, including without limitation reimbursement of attorneys’ fees and
disbursements, in connection with any amendment, modification or waiver of this
Agreement or the other Transaction Documents. In the event that legal
proceedings are commenced by any party to this Agreement against another party
to this Agreement in connection with this Agreement or the other Transaction
Documents, the party or parties which do not prevail in such proceedings shall
severally, but not jointly, pay their pro rata share of the reasonable
attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred
by the prevailing party in such proceedings.

 

 
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9.6     Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Required Investors. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Shares purchased under this Agreement at the time outstanding,
each future holder of all such Shares, and the Company.

 

9.7     Publicity. Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Company
or the Investors without the prior consent of the Company (in the case of a
release or announcement by the Investors) or the Investors (in the case of a
release or announcement by the Company) (which consents shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the applicable rules or regulations of any securities exchange or
securities market, in which case the Company or the Investors, as the case may
be, shall allow the Investors or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance. By 8:30 a.m. (New York City
time) on the trading day immediately following the execution and delivery of
this Agreement, the Company shall issue a press release disclosing the execution
of this Agreement and describing the transactions contemplated hereby and by the
other Transaction Documents. The Company also shall timely file a Current Report
on Form 8-K attaching the press release described in the foregoing sentence as
well as copies of the Transaction Documents. In addition, the Company will make
such other filings and notices in the manner and time required by the SEC, FINRA
or the OTCQB.

 

9.8     Severability. Any provision of this Agreement that 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 hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

 

9.9     Entire Agreement. This Agreement, including the Exhibits and the
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.

 

9.10     Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

 

9.11     Construction. The parties agree that they and/or their respective
counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments thereto.

 

 
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9.12     Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A
TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

 

9.13     Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Shares pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.

[signature page follows]

 

 
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

The Company:

HOPTO INC.  

 

   

 

 

 

   

 

 

 

   

 

 

 

By:  

/s/ Jean-Louis Casabonne

 

 

Name:

Jean-Louis Casabonne

    Title: CFO  

 

 
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The Investors    

 

 

 

By:      

 

Name:       Title:    

 

Aggregate Purchase Price: $

Number of Shares:

 

Address for Notice:

 

 

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