Exhibit 10.1

 

[***] Certain information in this document has been excluded pursuant to
Regulation S-K, Item 601(b)(10). Such excluded information is not material and
would likely cause competitive harm to the registrant if publicly disclosed.

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of July 2,
2020 (the “Effective Date”), between LiveXLive Media, Inc., a Delaware
corporation (the “Company”), and No Street Capital LLC, a Delaware limited
liability company (including its successors and assigns, the “Purchaser”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to Purchaser, and Purchaser, desires to purchase from the
Company, securities of the Company as more fully described in this Agreement.

 

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

 

Article I.
DEFINITIONS

 

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement:
(a) capitalized terms that are not otherwise defined herein have the meanings
given to such terms in the Note (as defined herein), and (b) the following terms
have the meanings set forth in this Section 1.1:

 

“Account Control Agreement(s)” means any agreement entered into by and among
Purchaser, Company or any Subsidiary and a third party bank or other institution
(including a securities intermediary) in which Company or any Subsidiary
maintains a deposit account or an account holding investment property and which
grants Purchaser a perfected security interest in the subject account or
accounts.

 

“Action” shall have the meaning assigned to such term in Section 3.1(j).

 

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

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

 

 

 

“Capital Stock” of any Person means any and all shares of, interests in, rights
to purchase, warrants or options for, participations in, or other equivalents
of, in each case however designated, the equity of such Person, but excluding
any debt securities convertible into such equity.

 

“CFC” means a Person that is a controlled foreign corporation under Section 957
of the Internal Revenue Code of 1986.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchaser’s obligations to pay the Purchase
Price, and (ii) the Company’s obligations to deliver the Securities have been
satisfied or waived.

 

“Closing Material Change” shall mean any event, circumstance, change
or effect occurring in whole or in part after the Effective Date and prior to
the Closing Date that the Purchaser reasonably determines in good faith,
individually or in the aggregate, is materially adverse or reasonably likely to
be materially adverse to (a) the business, condition (financial or otherwise),
assets, liabilities, results or (short-term or long-term) prospects of the
Company and the Subsidiaries, taken as a whole, or (b) the ability of the
Company to consummate the transactions contemplated by this Agreement.

 

“Collateral” shall have the meaning assigned to such term in the Security
Agreement.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the Common Stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

“Common Stock Equivalents” shall have the meaning assigned to such term in the
Note.

 

“Company Counsel” shall have the meaning assigned to such term in the Note.

 

“Disclosure Schedules” means the Disclosure Schedules delivered by the Company
concurrently with the execution and delivery of this Agreement.

 

“Disqualification Event” shall have the meaning assigned to such term in Section
3.1(bb).

 

“Domestic Subsidiary” means any Subsidiary that is incorporated or organized
under the laws of any state of the United States or the District of Columbia,
other than any such Subsidiary owned directly or indirectly by a Foreign
Subsidiary.

 

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“Equity Interests” means, with respect to any Person, all of the shares of
Capital Stock of (or other ownership or profit interests in) such Person, all
Common Stock Equivalents, all of the warrants, options or other rights for the
purchase or acquisition from such Person of shares of Capital Stock of (or other
ownership or profit interests in) such Person, all of the securities convertible
into or exchangeable for shares of Capital Stock of (or other ownership or
profit interests in) such Person or warrants, rights or options for the purchase
or acquisition from such Person of such shares (or such other interests), and
all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests are
outstanding on any date of determination.

 

“Escrow Agreement” means that certain Escrow Agreement among Purchaser, the
Company and Keating Muething & Klekamp PLL dated of even date herewith.

 

“Evaluation Date” shall have the meaning assigned to such term in Section
3.1(dd).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

 

“FSHCO” means any entity with no material assets or business activities other
than ownership of equity interests in one or more Foreign Subsidiaries that are
CFCs.

 

“GAAP” shall have the meaning assigned to such term in Section 3.1(h).

 

“Governmental Authority” shall have the meaning assigned to such term in the
Note.

 

“Indebtedness” shall have the meaning assigned to such term in the Note.

 

“Intellectual Property Rights” shall have the meaning assigned to such term in
Section 3.1(n).

 

“Issuer Covered Person” shall have the meaning assigned to such term in Section
3.1(bb).

 

“Lien” shall have the meaning assigned to such term in the Note.

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

 

“Maximum Rate” shall have the meaning assigned to such term in Section 5.16.

 

“Money Laundering Laws” shall have the meaning assigned to such term in Section
3.1(aa).

 

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“Note” means the 8.5% Subordinated Secured Convertible Note due as of the 2 year
anniversary of the Closing Date, subject to the terms therein, issued by the
Company to the Purchaser hereunder, in the form of Exhibit A attached hereto.

 

“Note Shares” shall have the meaning assigned to such term in the Note.

 

“OFAC” shall have the meaning assigned to such term in Section 3.1(aa).

 

“Permits” means all permits, licenses, registrations, certificates, orders,
approvals, authorizations, consents, waivers, franchises, variances and similar
rights issued by or obtained from any Governmental Authority.

 

“Permitted Lien” means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not
yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Company) have been
established in accordance with GAAP, (b) Liens imposed by law which were
incurred in the ordinary course of the Company’s business, such as carriers’,
warehousemen’s, materialmen’s and mechanics’ Liens, statutory landlords’ Liens,
and other similar Liens arising in the ordinary course of the Company’s
business, and which (x) do not individually or in the aggregate materially
detract from the value of the property or assets subject to such Lien or
materially impair the use thereof in the operation of the business of the
Company and its consolidated Subsidiaries or (y) are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the property or
asset subject to such Lien, (c) Liens in favor of the Holder and the Senior
Lender, (d) Liens for reasonable and customary banking fees granted to banks or
other financial institutions in the ordinary course of business in connection
with, and which solely encumber, deposit, disbursement or concentration accounts
(other than in connection with borrowed money) maintained with such banks or
financial institutions that do not exceed $50,000 in the aggregate, (e) Liens in
connection with Indebtedness incurred by lease obligations and purchase money
indebtedness, incurred in connection with the acquisition of capital assets and
lease obligations with respect to newly acquired or leased assets, provided that
such lease obligations and purchase money indebtedness are only recourse to the
assets being acquired or leased, (f) Liens consisting of deposits or pledges
made in the ordinary course of business in connection with workers’
compensation, unemployment, social security and similar laws, (g) Liens in favor
of any existing lenders in connection with any Subsidiary acquired after the
Effective Date, provided that such Lien only encumbers the assets of such after
acquired Subsidiary and (h) Liens existing on the Effective Date which are
disclosed on Schedule A.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Principal Market” shall have the meaning assigned to such term in the Note.

 

4

 

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

“Public Information Failure” shall have the meaning assigned to such term in
Section 4.1(b).

 

“Public Information Failure Payment” shall have the meaning assigned to such
term in Section 4.1(b).

 

“Purchase Price” means $15,000,000.

 

“Purchaser Party” shall have the meaning assigned to such term in Section 4.9.

 

“Registration Rights Agreement” shall mean that Registration Rights Agreement,
dated as of the Closing Date, in form and substance satisfactory to Purchaser in
its sole discretion.

 

“Required Approvals” shall have the meaning assigned to such term in Section
3.1(e).

 

“Required Minimum” means 3,000,000 shares of Common Stock.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“SEC Reports” shall have the meaning assigned to such term in Section 3.1(h).

 

“Securities” means the Subscription Shares, the Note and the Note Shares.

 

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

 

“Security Agreement” means the Security Agreement, dated as of the Closing Date,
among the Company, the Subsidiary Guarantors, and the Purchaser in a form
acceptable to Purchaser in its sole discretion.

 

“Security Documents” means the Security Agreement, the Account Control
Agreement(s), and any other documents and filing required thereunder in order to
grant the Purchaser a security interest in the assets of the Company as provided
in the Security Agreement, including all UCC-1 filing receipts.

 

“Senior Lender” means JGB Capital LP and its affiliates party to that certain
Securities Purchase Agreement dated June 29, 2018 with the Company, as amended,
and their assigns.

 

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“Subordination Agreement” means that Subordination Agreement, dated as of the
Closing Date, among the Senior Lender (or such other party satisfactory to
Purchaser in its sole discretion), the Company and the Purchaser in form and
substance satisfactory to Purchaser in its sole discretion.

 

“Subscription Shares” shall have the meaning assigned to such term in Section
2.1.

 

“Subsidiary” shall have the meaning assigned to such term in the Note.

 

“Subsidiary Guarantee” means a guarantee executed by each Subsidiary Guarantor
in favor of Purchaser in a form satisfactory to Purchaser in its sole
discretion, as supplemented from time to time by execution and delivery of a
guaranty joinder agreement or otherwise.

 

“Subsidiary Guarantor” shall means each Subsidiary other than a Foreign
Subsidiary that is a CFC or a FSHCO.

 

“Trading Day” means a day on which the Principal Market is open for trading.

 

“Transaction Documents” means this Agreement, the Note, the Security Agreement,
the Subsidiary Guarantee, the Account Control Agreement(s), the Subordination
Agreement, the Registration Rights Agreement, and all exhibits and schedules
thereto and hereto and any other documents or agreements executed by the Company
or any Subsidiary Guarantor in connection with the transactions contemplated
hereunder.

 

“Transfer Agent” means VStock Transfer, LLC, with a mailing address of 18
Lafayette Place, Woodmere, New York 11598, and any successor transfer agent of
the Company.

 

“Variable Rate Transaction” means the issuance of any security that is
convertible into, exercisable for, or that carries the right to receive, Common
Stock, and which security would constitute a ‘future priced security’ within the
meaning of IM 5635-4 of the NASDAQ Listing Standards as in effect on the date
hereof.

 

Article II.
PURCHASE AND SALE

 

2.1 Closing. On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and the Purchaser agrees to
purchase, (i) an aggregate of 500,000 shares of Common Stock (the “Subscription
Shares”), and (ii) the Note in the principal amount of $15,000,000. The Company
and Purchaser shall deliver the other items set forth in Section 2.2 deliverable
at the Closing. Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of Keating Muething
& Klekamp PLL, 1 E. 4th Street, Suite 1400, Cincinnati, Ohio 45202 or such other
location as the parties shall mutually agree.

 

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2.2 Deliveries.

 

(a) On or prior to the Closing Date, the Company shall deliver or cause to be
delivered to Purchaser the following:

 

(i) this Agreement duly executed by the Company;

 

(ii) evidence of the Required Approvals (other than the filing of the Form D
with the Commission which shall be obtained subsequent to the Closing Date in
accordance with Article IV);

 

(iii) a legal opinion of Company Counsel, in form and substance reasonably
acceptable to Purchaser;

 

(iv) an ink-original Note registered in the name of Purchaser;

 

(v) the Subsidiary Guarantee duly executed by each Subsidiary Guarantor;

 

(vi) the Security Agreement duly executed by the Company along with all of the
other Security Documents duly executed by the applicable parties thereto;

 

(vii) the Registration Rights Agreement duly executed by the Company;

 

(viii) each other Transaction Document to which the Company is a party duly
executed by the Company;

 

(ix) the Company shall have issued irrevocable instructions to the Transfer
Agent instructing the Transfer Agent to (x) deliver on an expedited basis the
Subscription Shares, registered in the name of the Purchaser, and (y) establish
a share reserve for the issuance of Note Shares equal to at least the Required
Minimum; and

 

(x) except as contemplated by Section 2.3(b)(xi)(y), the Subordination
Agreement, duly executed by the Senior Lender (or such other party satisfactory
to Purchaser in its sole discretion) and the Company.

 

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

 

(i) this Agreement duly executed by Purchaser;

 

(ii) subject to the terms of the Escrow Agreement, the Purchase Price by wire
transfer to the account specified in writing by the Company;

 

(iii) the Security Agreement along with any other Security Documents to which
Purchaser is a party duly executed by Purchaser;

 

7

 

 

(iv) each other Transaction Document to which Purchaser is a party duly executed
by Purchaser;

 

(v) except as contemplated by Section 2.3(b)(xi)(y), the Subordination Agreement
duly executed by Purchaser; and

 

(vi) the Registration Rights Agreement duly executed by Purchaser.

 

2.3 Closing Conditions.

 

(a) The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met:

 

(i) the accuracy in all material respects (or, to the extent representations or
warranties are qualified by materiality or a Material Adverse Effect, in all
respects) on the Closing Date of the representations and warranties of the
Purchaser contained herein (except to the extent expressly made as of a specific
date, in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and

 

(iii) the delivery by Purchaser of the items set forth in Section 2.2(b).

 

(b) The obligations of the Purchaser hereunder in connection with the Closing
are subject to the following conditions being met:

 

(i) the accuracy in all material respects (or, to the extent representations or
warranties are qualified by materiality or Material Adverse Effect, in all
respects) on the Closing Date of the representations and warranties of the
Company contained herein (except to the extent expressly made as of a specific
date, in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;

 

(iii) the delivery by the Company of the items set forth in Section 2.2(a);

 

(iv) no Closing Material Change shall have occurred;

 

(v) 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 approving the
transactions contemplated by this Agreement and the other Transaction Documents,
certifying the current versions of the Company’s certificate or articles of
incorporation and bylaws and certifying as to the signatures and authority of
Persons signing the Transaction Documents and related documents on behalf of the
Company;

 

8

 

 

(vi) 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 this Section 2.3(b);

 

(vii) a security interest in substantially all of the assets of the Company and
each Subsidiary Guarantor securing the Company’s and each Subsidiary Guarantor’s
obligations under the Transaction Documents shall have been created and
perfected in favor of the Purchaser; provided such security interest shall be
limited in the case of any Foreign Subsidiary that is a CFC or FSHCO to 65% of
the voting stock of such entity;

 

(viii) from the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended or halted by the Principal Market or the
Commission and, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on the Principal Market, nor shall a
banking moratorium have been declared either by United States or New York State
authorities nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such magnitude in its
effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of Purchaser, makes it impracticable or
inadvisable to purchase the Note at the Closing;

 

(ix) the transaction with [***] (“Target”) pursuant to that certain Agreement
and Plan of Merger to be entered into by the respective parties shall have
closed in a manner and on a structure and terms and conditions reasonably
satisfactory to Purchaser; and

 

(x) either the Company (x) obtains its Senior Lender’s consent to the
transaction contemplated by the Transaction Documents, (y) repays in full the
outstanding obligations to its Senior Lender and the agreements with the Senior
Lender are terminated, or (z) the Company replaces its Senior Lender’s loan
arrangement with another senior lender satisfactory to Purchaser in its sole
discretion which arrangement shall be on terms equal to or better than such
arrangement and the agreements with the Senior Lender are terminated.

 

2.4 Conditions Subsequent. The Company shall deliver any and all Account Control
Agreements, duly executed by the Company or the applicable Subsidiary Guarantor
and the applicable depository bank, to the Purchaser as soon as possible after
the Closing Date but in any event within 10 Business Days following the Closing
Date (or such later date as may be agreed by Purchaser in its sole discretion).

 

9

 

 

Article III.
REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or warranty otherwise made herein to the
extent of the disclosure contained in the corresponding section of the
Disclosure Schedules or to the extent the relevance of such disclosure to such
representation or warranty is reasonably apparent, the Company hereby makes the
following representations and warranties as of the date hereof and as of the
Closing Date to the Purchaser as follows (except to the extent expressly made as
of a specific date therein, in which case they shall be accurate as of such
date):

 

(a) Subsidiaries. All of the direct and indirect Subsidiaries of the Company are
set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of
the Equity Interests of each Subsidiary free and clear of any Liens (other than
Permitted Liens), options or warrants, and all of the issued and outstanding
Equity Interests of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities.

 

(b) Organization and Qualification. The Company and each of the Subsidiaries is
an entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation nor default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, or financial condition of the Company and the
Subsidiaries, taken as a whole, (iii) a material adverse effect on the Company’s
ability to perform or pay in any material respect on a timely basis its
obligations under any Transaction Document, or (iv) a material adverse effect on
the Collateral or the Purchaser’s Liens on the Collateral or the priority of
such Liens (any of (i), (ii), (iii), or (iv), a “Material Adverse Effect”) and
no Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

 

10

 

 

(c) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and each of the other Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder, subject to Required
Approvals. The execution and delivery of this Agreement and each of the other
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by
the Company, the Board of Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required Approvals. This
Agreement and each other Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies, and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(d) No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (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 (other than pursuant to the Transaction Documents) 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 agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) subject to the receipt of the Required Approvals, conflict
with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or Governmental Authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as would not have or reasonably be expected to
result in a Material Adverse Effect.

 

(e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other foreign, federal, state, local
or other Governmental Authority in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than: (i) the
notice and/or application(s) to the Principal Market for the issuance of the
Subscription Shares and Note Shares, (ii) the filing of UCC-1 financing
statements with the appropriate filing office and intellectual property security
interest filings with the USPTO and US Copyright Office, (iii) the filing of
Form D with the U.S. Securities and Exchange Commission, (iv) the filings
contemplated by Section 4.6 and (v) approval of the Transaction Documents by the
Board of Directors (collectively, the “Required Approvals”).

 

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(f) Issuance of the Securities; Registration. The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents or under applicable
securities laws. The Company has reserved from its duly authorized capital stock
a number of shares of Common Stock sufficient for issuance of all of the Note
Shares up to the Required Minimum.

 

(g) Capitalization. The capitalization of the Company is as set forth on
Schedule 3.1(g). The Company has not issued any capital stock since its most
recently issued SEC Reports, other than as set forth on Schedule 3.1(g) pursuant
to the exercise of employee stock options under the Company’s stock incentive
plans, the issuance of shares of Common Stock to employees or consultants
pursuant to the Company’s stock incentive plans and pursuant to the conversion
and/or exercise of Common Stock Equivalents outstanding as of the date of the
most recently filed periodic report under the Exchange Act. No Person has any
right of first refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the Transaction
Documents. Except as set forth on Schedule 3.1(g) or in the Transactions
Documents, there are no outstanding options, warrants, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock or Common Stock Equivalents. Except as set forth on Schedule 3.1(g)
or in the Transaction Documents, the issuance and sale of the Securities will
not obligate the Company to issue shares of Common Stock or other securities to
any Person (other than the Purchaser) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange or
reset price under any of such securities. Except as set forth on Schedule
3.1(g), there are no outstanding securities or instruments of the Company or any
Subsidiary with any provision that adjusts the exercise, conversion, exchange or
reset price of such security or instrument upon an issuance of securities by the
Company or any Subsidiary, and there are no outstanding securities or
instruments of the Company or any Subsidiary that contain any redemption or
similar provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
redeem a security of the Company or such Subsidiary. The Company does not have
any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement. All of the outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and non-assessable, have
been issued in compliance with all applicable foreign, federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities. There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

 

12

 

 

(h) SEC Reports; Financial Statements. Since March 31, 2019, the Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by the Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”) on a timely basis or has
qualified for a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and none
of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company is not
currently, and has not been in the prior 12 months, an issuer subject to
paragraph (i) of Rule 144. The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated Subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the
date of the latest financial statements included within the SEC Reports, except
as specifically disclosed in a subsequent SEC Report filed prior to the date
hereof: (i) there has been no event, occurrence or development that has had or
that would reasonably be expected to result in a Material Adverse Effect, (ii)
neither the Company nor any Subsidiary has incurred any liabilities (contingent
or otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice, and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock, and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company equity
incentive plans. The Company does not have pending before the Commission any
request for confidential treatment of information. Except for the issuance of
the Securities contemplated by this Agreement or as set forth on Schedule
3.1(i), to the knowledge of the Company, no event, liability, fact,
circumstance, occurrence or development has occurred or exists or is reasonably
expected to occur or exist with respect to the Company or its Subsidiaries or
their respective businesses, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one (1) Trading Day prior to
the date that this representation is made.

 

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(j) Litigation. Except as disclosed in Schedule 3.1(j), there is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or, to
the knowledge of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities, or (ii) would, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. None of the Company, any Subsidiary, or any current director or
officer thereof, is or 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 knowledge of the
Company, there is not pending or contemplated, any investigation by a
Governmental Authority involving the Company or any current or former director
or officer of the Company. The Commission 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 Exchange Act or the Securities Act.

 

(k) Compliance. Neither the Company nor any Subsidiary, except in each case as
would not have or reasonably be expected to result in a Material Adverse Effect:
(i) except as set forth on Schedule 3.1(k), is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary, received, in the prior
two (2) years, notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any applicable judgment, decree or order of any court, arbitrator
or other Governmental Authority, or (iii) is or has been in violation of any
applicable statute, rule, ordinance or regulation of any Governmental Authority,
including without limitation all applicable foreign, federal, state and local
laws relating to taxes, bribery and corruption, occupational health and safety,
product quality and safety and employment and labor matters and law related to
the protection of the environment.

 

(l) Regulatory Permits. The Company and the Subsidiaries possess all Permits
necessary to conduct their respective businesses, except where the failure to
possess such Permits would not reasonably be expected to result in a Material
Adverse Effect, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
Permit.

 

14

 

 

(m) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable
title in all personal property owned by them that is material to the business of
the Company and the Subsidiaries, in each case free and clear of all Liens,
except for (i) Permitted Liens; (ii) Liens as do not materially affect the value
of such property and do not materially interfere with the use made and proposed
to be made of such property by the Company and the Subsidiaries, and (iii) Liens
for the payment of federal, state or other taxes, for which appropriate reserves
have been made therefor in accordance with GAAP and, the payment of which is
neither delinquent nor subject to penalties. Any real property and facilities
held under lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance, except as would not have or reasonably be
expected to result in a Material Adverse Effect. Each of LXL Influencers, KOKO
(Camden) UK Limited and KOKO (Camden) Holdings (US), Inc. does not currently
hold any assets and will not hold any assets during the term of the Note.

 

(n) Intellectual Property. To the knowledge of the Company, the Company and the
Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property rights and
similar rights as described in the SEC Reports as necessary or required for use
in connection with their respective businesses and which the failure to so have
would reasonably be expected to have a Material Adverse Effect (collectively,
the “Intellectual Property Rights”). Except as disclosed on Schedule 3.1(n),
none of, and neither the Company nor any Subsidiary has received a written
notice that any of the Intellectual Property Rights owned by the Company or any
of its Subsidiaries has expired, terminated or been abandoned, or is expected to
expire or terminate or be abandoned, within two (2) years from the date of this
Agreement. Neither the Company nor any Subsidiary has received, since the date
of the latest audited financial statements included within the SEC Reports, a
written notice of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as
would not have or reasonably be expected to have a Material Adverse Effect. To
the knowledge of the Company, all such Intellectual Property Rights that have
been registered with a Governmental Authority are enforceable and there is no
existing infringement by another Person of any of such registered Intellectual
Property Rights. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
Intellectual Property Rights, except where failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as disclosed on Schedule 3.1(n), the Company has no
knowledge of any facts that would preclude it from having valid license rights
or clear title to the Intellectual Property Rights. The Company has no knowledge
that it lacks or will be unable to obtain any rights or licenses to use all
Intellectual Property Rights that are necessary to conduct its business.

 

(o) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.

 

15

 

 

(p) Certain Fees. Except as set forth on Schedule 3.1(p), no brokerage or
finder’s fees or commissions are or will be payable by the Company or any
Subsidiaries to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchaser shall have no
obligation with respect to any claims made by or on behalf of other Persons for
fees payable by the Company or any Subsidiary of a type contemplated in this
Section that may be due in connection with the transactions contemplated by the
Transaction Documents.

 

(q) Registration Rights. Except as described in the SEC Reports and as set forth
on Schedule 3.1(q) and in the Registration Rights Agreement, no Person has any
right to cause the Company or any Subsidiary to effect the registration under
the Securities Act of any securities of the Company or any Subsidiary.

 

(r) Private Placement. Assuming the accuracy of the Purchaser’s representations
and warranties set forth in Section 3.2, no registration under the Securities
Act is required for the offer and sale of the Securities by the Company to the
Purchaser as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Principal Market.

 

(s) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.

 

(t) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided the
Purchaser or its agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchaser will rely on the foregoing
representation in effecting transactions in securities of the Company. All of
the disclosure furnished by or on behalf of the Company to the Purchaser
regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules, is true
and correct in all material respects and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not materially misleading. The press releases disseminated by the Company
since January 1, 2020, taken as a whole with the SEC Reports, do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made and when made, not materially
misleading. The Company acknowledges and agrees that the Purchaser makes no or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2.

 

16

 

 

(u) No Integrated Offering. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would case this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of any applicable shareholder approval provisions of any Principal
Market on which any of the securities of the Company are listed or designated.

 

(v) Solvency; Seniority. Based on the consolidated financial condition of the
Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair
saleable value of the Company’s tangible assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the business
conducted by the Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its liabilities when such
amounts are required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt). Except
as set forth on Schedule 3.1(v), the Company has no knowledge of any facts or
circumstances, which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date. Schedule 3.1(v) sets forth as of the date
hereof all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments. As of
the Closing Date and other than Indebtedness with the Senior Lender as of the
Closing Date, (1) no Indebtedness or other claim against the Company is senior
to the Note in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise, and (2) no Indebtedness or other claim
against any Subsidiary is senior to such Subsidiary’s obligations under the
Subsidiary Guarantee in right of payment, whether with respect to interest or
upon liquidation or dissolution, or otherwise.

 

(w) Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all United
States federal, state and local income and all foreign income and franchise tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim. The Company is not and has never been a United
States real property holding corporation within the meaning of Section 897 of
the Internal Revenue Code of 1986, as amended, and the Company shall so certify
upon Purchaser’s reasonable request at any time.

 

17

 

 

(x) Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of
an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by Purchaser or any of
their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchaser’s purchase of the Securities. The Company further represents to
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.

 

(y) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding, it is understood
and acknowledged by the Company that: (i) the Purchaser has not been asked by
the Company to agree, nor has Purchaser agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by
Purchaser, specifically including, without limitation, short sales or
“derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities, (iii) Purchaser, and counter-parties in “derivative”
transactions to which Purchaser is a party, directly or indirectly, may
presently have a “short” position in the Common Stock, and (iv) Purchaser shall
not be deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (y) Purchaser may engage in hedging activities at various
times during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Note Shares deliverable
with respect to Securities are being determined, and (z) such hedging activities
(if any) could reduce the value of the existing stockholders’ equity interests
in the Company at and after the time that the hedging activities are being
conducted.  The Company acknowledges that such aforementioned hedging activities
do not constitute a breach of any of the Transaction Documents.

 

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

 

18

 

 

(aa) Office of Foreign Assets Control; Money Laundering. Neither the Company nor
any Subsidiary nor, to the Company’s knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary, is currently subject to
any United States sanctions administered by the Office of Foreign Assets Control
of the United States Treasury Department (“OFAC”).The operations of the Company
and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1977, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened.

 

(bb) No Disqualification Events. With respect to the Securities to be offered
and sold hereunder in reliance on Rule 506 under the Securities Act, none of the
Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering hereunder,
any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the Securities Act) connected with the Company
in any capacity at the time of sale (each, an “Issuer Covered Person” and,
together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities
Act (a “Disqualification Event”), except for a Disqualification Event covered by
Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The
Company has complied, to the extent applicable, with its disclosure obligations
under Rule 506(e), and has furnished to the Purchaser a copy of any disclosures
provided thereunder.

 

(cc) Other Covered Persons. Except for the compensation payable as described on
Schedule 3.1(p), the Company is not aware of any Person (other than any Issuer
Covered Person) that has been or will be paid (directly or indirectly)
remuneration for solicitation of purchasers in connection with the sale of any
securities pursuant to Regulation D promulgated under the Securities Act.

 

19

 

 

(dd) Sarbanes-Oxley; Internal Accounting Controls. Except as set forth in the
SEC Reports, the Company and the Subsidiaries are in compliance in all material
respects with any and all applicable requirements of the Sarbanes-Oxley Act of
2002 that are effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the Commission thereunder that are effective as
of the date hereof and as of the Closing Date. Except as set forth in the SEC
Reports, the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
the Subsidiaries and designed such disclosure controls and procedures to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the
disclosure controls and procedures of the Company and the Subsidiaries as of the
end of the period covered by the most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”). The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of
the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, except as set forth in the SEC Reports, there have been no
changes in the internal control over financial reporting (as such term is
defined in the Exchange Act) that have materially affected, or are reasonably
likely to materially affect, the internal control over financial reporting of
the Company and its Subsidiaries.

 

(ee) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. The Company has not, in the twelve
(12) months preceding the date hereof, received notice from the Principal Market
to the effect that the Company is not in compliance with the listing or
maintenance requirements of the Principal Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements. The Common Stock
is currently eligible for electronic transfer through the Depository Trust
Company and the Company is current in payment of the fees to the Depository
Trust Company in connection with such electronic transfer.

 

3.2 Representations and Warranties of the Purchaser. Purchaser hereby represents
and warrants as of the date hereof and as of the Closing Date to the Company as
follows (except to the extent expressly made as of a specific date therein, in
which case they shall be accurate as of such date):

 

(a) Organization; Authority. Purchaser is an entity duly incorporated or formed,
validly existing and in good standing under the laws of the State of Delaware
with full right, limited liability company power and authority to enter into and
to consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of the Transaction Documents and performance by Purchaser of the
transactions contemplated by the Transaction Documents have been duly authorized
by all necessary limited liability company action on the part of Purchaser. Each
Transaction Document to which Purchaser is a party has been duly executed by
Purchaser, and when delivered by Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of Purchaser,
enforceable against it in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.

 

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(b) Own Account. Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law; provided, this representation and warranty
shall not be deemed to limit Purchaser’s right to sell the Securities in
compliance with applicable federal and state securities laws or pursuant to the
Registration Rights Agreement.

 

(c) Purchaser Status. At the time Purchaser was offered the Securities, it was,
and as of the date hereof it is, an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.

 

(d) General Solicitation. Purchaser is not purchasing the Securities as a result
of any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.

 

The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not modify, amend or affect Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated hereby. The
Purchaser acknowledges and agrees that neither the Company nor any Subsidiary
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than such representations and warranties.

 

Article IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1 Furnishing of Information; Public Information.

 

(a) Until the time that Purchaser does not own Securities, the Company covenants
to maintain the registration of the Common Stock under Section 12(b) or 12(g) of
the Exchange Act and to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act and to
otherwise cause all public information requirements of Rule 144(c), and, if
applicable, all information requirements of Rule 144(i) to be satisfied.

 

21

 

 

(b) At any time during the period commencing from the 6 month anniversary of the
date hereof and ending at such time that all of the Securities may be sold
without the requirement for the Company to be in compliance with Rule 144(c)(1)
and otherwise without restriction or limitation pursuant to Rule 144, if the
Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information Failure”) (for the
avoidance of doubt, a Public Information Failure shall be deemed to have
occurred during any extension pursuant to Rule 12b-25 of the deadline for the
filing of the Company’s annual and periodic reports with the Commission), then,
in addition to Purchaser’s other available remedies, the Company shall pay to
Purchaser, in cash, as partial liquidated damages and not as a penalty, by
reason of any such delay in or reduction of its ability to sell the Securities,
an amount in cash, for each $1,000 of principal amount of Note (or Note Shares
issued upon conversion thereof) still held by Purchaser, equal to $2.50 on the
day of a Public Information Failure and such amount on each Trading Day
thereafter until the earlier of (a) the date such Public Information Failure is
cured, and (b) such time that such public information is no longer required  for
the Purchaser to transfer the Note Shares pursuant to Rule 144; provided,
however, that the Company shall, in no event, be required to pay an aggregate
amount of liquidated damages under this Agreement and the Note for each $1,000
of principal amount of Note (and any Note Shares issued in respect thereof)
greater than $100.00.  The payments to which Purchaser shall be entitled
pursuant to this Section 4.3(b) are referred to herein as “Public Information
Failure Payments.”  Public Information Failure Payments shall be paid on the
earlier of (i) the last day of the calendar month during which such Public
Information Failure Payments are incurred, and (ii) the third Business Day after
the event or failure giving rise to the Public Information Failure Payments is
cured.  In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 0.5% per month (prorated for partial months) until paid
in full. Nothing herein shall limit Purchaser’s right to pursue actual damages
for the Public Information Failure, and Purchaser shall have the right to pursue
all remedies available to it at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief.

 

4.2 Integration. The Company shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of the
Principal 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.

 

4.3 Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction Documents,
including, without limitation, its obligation to issue the Note Shares pursuant
to the Transaction Documents, are unconditional and absolute and not subject to
any right of set off, counterclaim, delay or reduction, regardless of the effect
of any such dilution or any claim the Company may have against Purchaser and
regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Company.

 

22

 

 

4.4 Rule 144(i). Section 6(b) of the Note is incorporated into this Section 4.4
by reference.

 

4.5 Conversion Procedures. The forms of Notice of Conversion included in the
Note, together with any broker or seller representation letter required under
the Note, collectively set forth the totality of the procedures required of the
Purchaser in order to convert the Note. Without limiting the preceding
sentences, no ink-original Notice of Conversion shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of any such
notice be required in order to convert the Note. No additional legal opinion,
other information or instructions shall be required of the Purchaser to convert
its Note. The Company shall honor conversions of the Note and shall deliver Note
Shares in accordance with the terms, conditions and time periods set forth in
the Transaction Documents.

 

4.6 Securities Laws Disclosure; Publicity. The Company shall promptly after the
execution of this Agreement (or in any case, by no later than 8:30 a.m. (local
time in New York, New York) on or before the fourth Trading Day immediately
following the date hereof, file with the Commission a Current Report on Form 8-K
disclosing all of the material terms hereof and such Transaction Documents as
exhibits thereto as the parties shall agree. The Company shall promptly after
the Closing Date (or in any case, by no later than 8:30 a.m. (local time in New
York, New York) on or before the fourth Trading Day immediately following the
Closing Date, file with the Commission a Current Report on Form 8-K disclosing
all of the material terms hereof and attaching the Transaction Documents as
exhibits thereto (the “Second Current Report”). Upon the filing of such Second
Current Report, the Company represents to the Purchaser that it shall have
publicly disclosed all “material, non-public information” delivered to the
Purchaser by the Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and the Purchaser shall
consult with each other in issuing any other public announcements or press
releases with respect to the transactions contemplated hereby, and neither the
Company nor the Purchaser shall issue any such public announcement or press
release nor otherwise make any such public statement or communication without
the prior consent of the Company, with respect to any disclosure of the
Purchaser, or without the prior consent of the Purchaser, with respect to any
disclosure of the Company, which consent shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, then the disclosing party
shall, to the extent lawful and practicable (having regard to time and in the
case of the Company, the Company’s continuous disclosure obligations), promptly
provide the other party with prior notice of such public announcement, press
release, public statement or communication.

 

23

 

 

4.7 Disclosure of Material Information; No Obligation of Confidentiality.

 

(a) Except with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf, has provided prior to the
date hereof or will in the future provide Purchaser or its agents or counsel
with any information that the Company believes constitutes material non-public
information unless prior thereto Purchaser shall have entered into a written
agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company. In the event of a breach of the foregoing covenant by the Company, or
any of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents, in addition to any other remedy provided herein or in the
Transaction Documents, the Company shall, unless otherwise agreed by Purchaser,
publicly disclose any “material, non-public information” in a Current Report on
Form 8-K filed with the Commission within one (1) Business Day following the
date that it discloses such information to Purchaser or such earlier time as may
be required by applicable law. Any Current Report on Form 8-K filed with the
Commission by the Company pursuant to this Section 4.7(a) shall be subject to
prior review and comment by the Purchaser.  From and after the filing of
any such Current Report on Form 8-K pursuant to this Section 4.7(a), Purchaser
shall not be deemed to be in possession of any material, nonpublic information
regarding the Company existing as of the time of such filing.

 

(b) Except pursuant to any confidentiality agreement entered into by Purchaser
as described in Section 4.7(a), Purchaser shall not be deemed to have any
obligation of confidentiality with respect to (i) any non-public information of
the Company disclosed to Purchaser in breach of Section 4.7(a) (whether or not
the Company files a Current Report on Form 8-K as provided above), (ii) the fact
that Purchaser has exercised any of its rights and/or remedies under the
Transaction Documents, or (iii) any information obtained by Purchaser as a
result of exercising any of its rights and/or remedies under the Transaction
Documents. In addition, Purchaser shall not be deemed to be in breach of any
duty to the Company and/or to have misappropriated any non-public information of
the Company, if Purchaser engages in transactions of securities of the Company,
including, without limitation, any hedging transactions, short sales or any
“derivative” transactions while in possession of such non-public information.

 

4.8 Use of Proceeds. Except as set forth on Schedule 4.8, the Company shall use
the net proceeds from the sale of the Note hereunder to pay a part of the
purchase price to acquire Target, for general corporate purposes and any debt
repayment in the Company’s ordinary course of business and shall not use such
proceeds: (a) for the redemption of any Common Stock or Common Stock
Equivalents, or (b) in violation of the Foreign Corrupt Practices Act of 1970,
as amended or similar laws or OFAC regulations. The parties agree and
acknowledge that the Company may use a portion of the proceeds of the Purchase
Price, together with additional capital obtained by the Company, to repay in
full the outstanding obligations to its Senior Lender.

 

24

 

 

4.9 Indemnification of Purchaser. Subject to the provisions of this Section 4.9,
the Company will indemnify and hold Purchaser and its directors, officers,
stockholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls Purchaser (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling Persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees, costs
of investigation and costs of enforcing this indemnity that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other Transaction Documents, or (b) any action
instituted against the Purchaser Parties in any capacity, or any of them or
their respective Affiliates, by any stockholder of the Company who is not an
Affiliate of such Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of such Purchaser Party’s representations, warranties or covenants under
the Transaction Documents or any violations by such Purchaser Party of foreign,
federal or state securities laws or any conduct by such Purchaser Party which
constitutes fraud, gross negligence, bad faith or willful misconduct). If any
action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party. Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel, or (iii) in such action there is, in the reasonable written opinion of
counsel, a material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the Company
shall be responsible for the reasonable, actual and documented fees and expenses
of no more than one such separate counsel to all Purchaser Parties. The Company
will not be liable to any Purchaser Party under this Agreement (y) for any
settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (z) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents or is attributable to any
conduct by such Purchaser Party which constitutes fraud, gross negligence, bad
faith or willful misconduct. The Company shall not settle or compromise any
claim for which a Purchaser Party seeks indemnification hereunder without the
prior written consent of the Purchaser, which consent shall not be unreasonably
withheld or delayed. The indemnification required by this Section 4.9 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or are incurred. The
indemnity agreements contained herein shall be in addition to any cause of
action or similar right of any Purchaser Party against the Company or others and
any liabilities the Company may be subject to pursuant to law.

 

4.10 Reservation and Listing of Securities. The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may then be required to fulfill its
obligations in full under the Transaction Documents, but at least equal to the
Required Minimum. If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is insufficient to fulfill its
obligations in full under the Transaction Documents on such date, then the Board
of Directors shall use commercially reasonable efforts to amend the Company’s
certificate or articles of incorporation to increase the number of authorized
but unissued shares of Common Stock to at least the number required to fulfill
its obligations in full under the Transaction Documents at such time, as soon as
possible and in any event not later than the seventy-fifth day after such date.

 

25

 

 

4.11 Variable Rate Transactions. From the date hereof until such time as
Purchaser does not hold the Note, without the consent of the Purchaser, the
Company shall be prohibited from effecting or entering into an agreement to
effect any issuance by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents (or a combination of units thereof) involving a
Variable Rate Transaction.

 

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

 

4.13 No Transfers to Competitors. Purchaser agrees that it shall not, directly
or indirectly, sell, assign, transfer or otherwise dispose of the Note to any
Person identified on Schedule 4.13.

 

4.14 Shareholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and Purchaser.

 

Article V.
MISCELLANEOUS

 

5.1 Fees and Expenses. Simultaneously with execution of this Agreement, the
Company shall pay Purchaser a $75,000 commitment fee (the “Transaction Expense
Amount”); provided that if the Closing occurs on or before July 30, 2020,
Purchaser agrees to reimburse the Company an amount equal to the difference
between the Transaction Expense Amount and the amount of documented legal fees
and out-of-pocket expenses incurred by Purchaser in connection with the
transaction contemplated by the Transaction Agreements. Except as expressly set
forth in the Transaction Documents to the contrary, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees (including, without limitation, any fees
required for same-day processing of any instruction letter delivered by the
Company and any conversion or exercise notice delivered by Purchaser), stamp
taxes and other taxes and duties levied in connection with the delivery of any
Securities to the Purchaser.

 

5.2 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and thereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

26

 

 

5.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of: (a) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number or
email attachment as set forth on the signature pages attached hereto at or prior
to 5:30 p.m. (New York City time) on a Business Day, (b) the next Business Day
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email attachment as set forth on the
signature pages attached hereto on a day that is not a Business Day or later
than 5:30 p.m. (New York City time) on any Business Day, (c) the second Business
Day following the date of mailing, if sent by a nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages attached hereto.

 

5.4 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.

 

5.5 Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

 

5.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Purchaser. Purchaser may assign, with
written notice to the Company of such assignment, any or all of its rights under
this Agreement to any Person to whom Purchaser assigns or transfers any
Securities in compliance with the Transaction Documents, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
“Purchaser.”

 

5.7 No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.9 and this Section 5.7.

 

27

 

 

5.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, stockholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the County of New Castle. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the State of Delaware for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.

 

5.9 Survival. The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities for a period no longer than three
(3) years from the Closing.

 

5.10 Execution. This Agreement may be executed in two (2) or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to each other party, it being understood that the parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

 

5.11 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

5.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever Purchaser exercises a right, election, demand or
option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then Purchaser may
rescind or withdraw, in its discretion from time to time upon written notice to
the Company, any relevant conversion, redemption or exercise notice, demand or
election in whole or in part without prejudice to its future actions and rights;
provided, however, that in the case of a rescission of a conversion or
redemption of a Note, the Purchaser shall be required to return any shares of
Common Stock subject to any such rescinded conversion, redemption or exercise
notice concurrently with the return to Purchaser of the aggregate exercise price
paid to the Company for such shares and the restoration of Purchaser’s right to
acquire such shares pursuant to Purchaser’s Note.

 

28

 

 

5.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and receipt of a
customary lost Security affidavit and indemnity.

 

5.14 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of Purchaser and
the Company will be entitled to seek specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents.

 

5.15 Payment Set Aside. To the extent that the Company makes a payment or
payments to Purchaser pursuant to any Transaction Document or Purchaser enforces
or exercises its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

 

5.16 Usury. To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will resist any
and all efforts to be compelled to take the benefit or advantage of, usury laws
wherever enacted, now or at any time hereafter in force, in connection with any
claim, action or proceeding that may be brought by Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the effective date thereof forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to Purchaser with respect to indebtedness
evidenced by the Transaction Documents, such excess shall be applied by
Purchaser to the unpaid principal balance of any such indebtedness or be
refunded to the Company, the manner of handling such excess to be at Purchaser’s
election.

 

29

 

 

5.17 Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

 

5.18 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

 

5.19 Construction. The parties agree that each of them 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. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.

 

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

 

5.21 Termination.  This Agreement may be terminated by (a) Purchaser, by written
notice to the other parties, if the Closing has not been consummated on or
before July 30, 2020, or (b) the Company, by written notice to Purchaser, if the
Closing has not been consummated on or before July 30, 2020; provided, however,
that in either case such termination will not affect the right of any party to
sue for any breach of this Agreement by any other party.

 

5.22 OID. THE FOLLOWING INFORMATION IS SUPPLIED SOLELY FOR U.S. FEDERAL INCOME
TAX PURPOSES. THE NOTE WAS ISSUED WITH “ORIGINAL ISSUE DISCOUNT” (“OID”) WITHIN
THE MEANING OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), AND THIS LEGEND IS REQUIRED BY SECTION 1275(c) OF THE CODE.
PURCHASER MAY OBTAIN INFORMATION REGARDING THE AMOUNT OF ANY OID, THE ISSUE
PRICE, THE ISSUE DATE, AND THE YIELD TO MATURITY RELATING TO THE NOTE BY
CONTACTING THE ISSUER AT LIVEXLIVE MEDIA, INC., 9200 SUNSET BOULEVARD, SUITE
1201, WEST HOLLYWOOD, CA 90069.

 

(Signature Pages Follow)

 

30

 

 

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

 

LiveXLive Media, Inc.   Address for Notice:           9200 Sunset Boulevard     
Suite #1201     West Hollywood, CA 90069     Fax: By: /s/ Robert S. Ellin  
E-mail: rob@livexlive.com and Name: Robert S. Ellin   tenia@livexlive.com Title:
CEO           With a copy to (which shall not constitute notice):          
Foley Shechter Ablovatskiy LLP    

1359 Broadway, 20th Floor, Suite 2001

New York, NY 10018

    Attn: Sasha Ablovatskiy, Esq.     Email: sablovatskiy@foleyshechter.com    

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

31

 

 

 

[PURCHASER SIGNATURE PAGE TO LIVEXLIVE MEDIA, INC. SECURITIES PURCHASE
AGREEMENT]

 

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

 

Name of Purchaser: No Street Capital LLC Signature of Authorized Signatory of
Purchaser:    /s/ Jeff Osher Name of Authorized Signatory: Jeff Osher Title of
Authorized Signatory: Managing Member Email Address of Authorized Signatory:  
Facsimile Number of Authorized Signatory:   Address for Notice to Purchaser:  

 

c/o No Street Capital LLC

505 Montgomery, Suite 1250
San Francisco, CA 94111

 

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

 

Keating Muething & Klekamp PLL
1 East Fourth Street, Suite 1400
Cincinnati, Ohio 45202
Attention: Michael J. Moeddel

 

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

 

c/o No Street Capital LLC

505 Montgomery, Suite 1250
San Francisco, CA 94111

 

Purchase Price: $15,000,000

 

 

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