Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of August 6, 2018 by and among INSEEGO CORP., a Delaware corporation (the
“Company”), and the Investors identified on Exhibit A attached hereto (each an
“Investor” and collectively the “Investors”).

RECITALS

A. The Company and each Investor is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by
Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”);

B. The Investors wish to purchase from the Company, and the Company wishes to
sell and issue to the Investors, upon the terms and subject to the conditions
stated in this Agreement, immediately separable units (the “Units”), with each
Unit consisting of (i) one share of the Company’s Common Stock, par value $0.001
per share (the “Common Stock”), and (ii) a warrant, substantially in the form
attached hereto as Exhibit B (the “Warrants”), to acquire 0.35 of a share of
Common Stock; and

C. Contemporaneously with the sale of the Units, the parties hereto will execute
and deliver a Registration Rights Agreement, in substantially the form attached
hereto as Exhibit C (the “Registration Rights Agreement”), pursuant to which the
Company will agree to provide certain registration rights in respect of the
Shares (as defined below) under the 1933 Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws.

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

1. Definitions. For the purposes of this Agreement, the following terms shall
have the meanings set forth below:

“1933 Act” has the meaning set forth in the Recitals.

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

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common Control with, such Person, as such terms are used in and
construed under Rule 405 promulgated under the 1933 Act.

“Agreement” has the meaning set forth in the Preamble to this Agreement.

“Board of Directors” has the meaning set forth in Section 4.35.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in

 

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New York City are open for the general transaction of business.

“Certificate of Incorporation” has the meaning set forth in Section 4.1.

“Closing” has the meaning set forth in Section 3.1.

“Closing Bid Price” means, for any security as of any date, (a) the last
reported closing bid price per share of such security on the Principal Trading
Market, as reported by Bloomberg Financial Markets, or (b) if the Principal
Trading Market begins to operate on an extended hours basis and does not
designate the closing bid price then the last bid price of such security prior
to 4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or
(c) if the foregoing do not apply, the last closing price of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg Financial Markets, or (d) if no closing bid price is
reported for such security by Bloomberg Financial Markets, the average of the
last reported closing bid prices of any market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC.

“Closing Date” has the meaning set forth in Section 3.1.

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

“Common Stock” has the meaning set forth in the Recitals.

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

“Company” has the meaning set forth in the Preamble of this Agreement.

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

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

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

“Disclosure Schedules” has the meaning set forth in Section 4.

“EDGAR system” has the meaning set forth in Section 4.6.

 

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“Environmental Laws” has the meaning set forth in Section 4.15.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“GAAP” has the meaning set forth in Section 4.17.

“Golden Harbor” has the meaning set forth in Section 7.1(c).

“Governmental Authority” means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory organization, commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of the
foregoing.

“Indemnified Party” has the meaning set forth in Section 8.2.

“Indemnifying Party” has the meaning set forth in Section 8.3.

“Intellectual Property Rights” has the meaning set forth in Section 4.14(a).

“Investor” has the meaning set forth in the Preamble of this Agreement.

“Investor Designee” has the meaning set forth in Section 7.1(a).

“Investor Questionnaire” has the meaning set forth in Section 3.1.

“License Agreements” has the meaning set forth in Section 4.14(e).

“Market Value” means the product of (x) the number of shares of Common Stock
issued, or for which the Common Stock Equivalents issued are convertible or
exchangeable multiplied by (y) the Closing Bid Price of the Common Stock as of
the issuance date of such shares of Common Stock or Common Stock Equivalents.

“Material Adverse Effect” means any change, effect, event, occurrence, state of
facts or development that, individually or in the aggregate, has had, or would
reasonably be expected to have a material adverse effect on (i) the assets,
liabilities, results of operations, financial condition or business of the
Company, (ii) the legality, validity or enforceability of any of the Transaction
Documents or (iii) the ability of the Company to perform its obligations under
the Transaction Documents; provided, however, that in no event shall any of the
following occurring after the date hereof, alone or in combination, be deemed to
constitute, or be taken into account in determining whether a Material Adverse
Effect has occurred: (a) changes in GAAP so long as such changes do not have a
materially disproportionate effect on the Company, (b) changes in law,
regulation or other binding directives or orders issued by any Governmental
Authority so long as such changes do not have a materially disproportionate
effect on the Company, or (c) changes in general economic conditions or changes
affecting the industry in which the Company operates generally (as opposed to
Company specific changes) so long as such changes do not have a materially
disproportionate effect on the Company.

 

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“Material Contract” means any contract, instrument or other agreement to which
the Company or any Subsidiary is a party or by which it is bound (i) that
generated more than $5 million in revenue or expenditure during the Company’s
most recent fiscal year or are anticipated to generate more than $5 million in
revenue or expenditure during the Company’s current fiscal year, or (ii) that
have been filed or were required to have been filed as an exhibit to the SEC
Filings pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

“NASDAQ” means The Nasdaq Stock Market.

“OFAC” has the meaning set forth in Section 4.25.

“Owned Intellectual Property Rights” has the meaning set forth in
Section 4.13(b).

“Permits” has the meaning set forth in Section 4.12.

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

“Plan” means each “employee benefit plan” within the meaning of Section 3(3) of
ERISA and all other material plans, arrangements, policies, programs, agreements
or other commitments providing for retirement, employee benefits, compensation,
incentive compensation or fringe benefits, including, without limitation, any
material employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension profit sharing, savings, retirement,
stock option, stock purchase or severance plan, and any life, health, disability
or accident insurance plan, whether oral or written, and whether or not subject
to ERISA, to which the Company or any of its Subsidiaries sponsor, maintain or
contribute, on behalf of any current or former employee, executive, director,
officer, consultant or independent contractor, or to which the Company or any of
its Subsidiaries have or could have any direct or indirect, actual or contingent
liability.

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the NASDAQ.

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

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

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the 1933 Act, as
such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same effect as such rule.

“SEC” means the United States Securities and Exchange Commission.

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

 

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“Secretary’s Certificate” has the meaning set forth in Section 6.1(e).

“Securities” means the Units, the Unit Shares, the Warrants and the Warrant
Shares.

“Selling Stockholder Questionnaire” has the meaning set forth in Section 3.1.

“Shares” means, collectively, the Unit Shares and the Warrant Shares.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the 1934 Act and all types of direct and indirect stock pledges, forward
sales contracts, options, puts, calls, swaps and similar arrangements (including
on a total return basis), and sales and other transactions through non-U.S.
broker-dealers or foreign regulated brokers (but shall not be deemed to include
the location and/or reservation of borrowable shares of Common Stock).

“Subscription Amount” means, as to an Investor, the aggregate amount to be paid
for the Units purchased hereunder as specified opposite such Investor’s name on
Exhibit A attached hereto, under the column entitled “Aggregate Purchase Price
of Units” in U.S. dollars and in immediately available funds.

“Subsidiary” means any entity (a) in which the Company, directly or indirectly,
owns or Controls more than 50% of the voting equity interests or has the power
to elect or direct the election of a majority of the members of the governing
body of such Person, or (b) which is required to be consolidated with such
Person under GAAP.

“Trading Day” means a day on which NASDAQ is open for trading.

“Trading Market” means whichever of the New York Stock Exchange, the NYSE
American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market or the OTC Bulletin Board on which the Common Stock is listed or
quoted for trading on the date in question.

“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Registration Rights Agreement, the Warrants and any other
documents or agreements explicitly contemplated hereunder.

“Transfer Agent” has the meaning set forth in Section 7.3.

“Unit Shares” means the shares of Common Stock contained in the Units.

“Units” has the meaning set forth in the Recitals.

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

“Warrants” has the meaning set forth in the Recitals.

2. Purchase and Sale of the Units. On the Closing Date, upon the terms and
subject to the conditions set forth herein, the Company will issue and sell to
each Investor, and each Investor

 

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will purchase from the Company, severally and not jointly, the number of Units
set forth opposite the name of such Investor under the heading “Number of Units
to be Purchased” on Exhibit A attached hereto at a price per Unit equal to
$1.63.

3. Closing.

3.1 The closing of the purchase and sale of the Units (which Units are set forth
on Exhibit A attached hereto) pursuant to this Agreement (the “Closing”) shall
be held on the date hereof at the offices of Paul Hastings LLP located at 4747
Executive Drive, 12th Floor, San Diego, California, or on such other date and
place as may be mutually agreed to by the Company and the Investors (the
“Closing Date”). At or prior to the Closing, each Investor shall execute any
related agreements or other documents required to be executed hereunder, dated
on or before the Closing Date, including but not limited to the Investor
Questionnaire (the “Investor Questionnaire”) and the Selling Stockholder Notice
and Questionnaire (the “Selling Stockholder Questionnaire”), in substantially
the forms attached hereto as Appendix I and Appendix II, respectively.

3.2 On the Closing Date, each Investor shall deliver or cause to be delivered to
the Company the Subscription Amount via wire transfer of immediately available
funds pursuant to the wire instructions delivered to such Investor by the
Company on or prior to the Closing Date.

3.3 At the Closing, the Company shall (a) instruct the Transfer Agent to deliver
to each Investor in book entry the number of Unit Shares set forth opposite the
name of such Investor under the heading “Unit Shares” on Exhibit A attached
hereto and (b) deliver or cause to be delivered to each Investor a Warrant
reflecting the number Warrant Shares set forth opposite the name of such
Investor under the heading “Warrant Shares” on Exhibit A attached hereto, in
each case registered in the name of such Investor.

4. Representations and Warranties of the Company. The Company hereby represents
and warrants to each of the Investors that, except as (a) set forth in the
schedules delivered herewith (collectively, the “Disclosure Schedules”), which
such Disclosure Schedules shall be deemed a part hereof and shall qualify any
representation made herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules or any other section of the
Disclosure Schedule to the extent the relevance of such items would be
reasonably apparent, or (b) specifically disclosed in the SEC Filings
(excluding, in each case, any disclosures solely contained or referenced therein
under the captions “Risk Factors” or “Forward Looking Statements” and any other
disclosures contained or referenced therein relating to information factors or
risks that are predictive, cautionary or forward-looking in nature), which shall
be deemed to qualify all representations made herein,, as of the date hereof and
the Closing Date (except for the representations and warranties that speak as of
a specific date, which shall be made as of such date):

4.1 Organization, Good Standing and Qualification. The Company and each of its
Subsidiaries is an entity duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, formation or
organization (as applicable), with the requisite corporate power and authority
to own or lease and use its properties and assets and to carry on its business
as presently conducted. The Company is not in violation or default of any of

 

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the provisions of its Certificate of Incorporation, as amended (the “Certificate
of Incorporation”), or other organizational or constitutive documents and none
of the Company’s Subsidiaries is in violation or default of any of the
provisions of its respective certificate or articles of incorporation,
certificate of formation, bylaws, operating agreement, or other organizational
or charter documents. The Company and each of its Subsidiaries is duly qualified
to do business as a foreign entity and is in good standing (to the extent such
concept exists in the relevant jurisdiction) in each jurisdiction in which the
conduct of its business or its ownership or leasing of property makes such
qualification necessary, except to the extent any failure to so qualify has not
had and would not reasonably be expected to have a Material Adverse Effect. The
Company has no Subsidiaries other than those listed on Schedule 4.1 hereto.
Except as disclosed in Schedule 4.1 hereto, the Company owns, directly or
indirectly, all of the capital stock or comparable equity interests of each
Subsidiary free and clear of any and all liens, and all the issued and
outstanding shares of capital stock or comparable equity interest 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.

4.2 Authorization. The Company has the requisite corporate power and authority
and has taken all requisite corporate action necessary for, and no further
action on the part of the Company, its officers, directors and stockholders is
necessary for, (a) the authorization, execution and delivery of the Transaction
Documents, (b) the authorization of the performance of all obligations of the
Company hereunder or thereunder, and (c) the authorization, issuance (or
reservation for issuance) and delivery of the Shares. The Company’s execution
and delivery of each of the Transaction Documents and the consummation by it of
the transactions contemplated hereby and thereby (including, but not limited to,
the issuance of the Warrants and the reservation for issuance and the subsequent
issuance of the Warrant Shares upon exercise of the Warrants) have been duly and
validly authorized by all necessary corporate and stockholder action. Each of
the Transaction Documents has been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery by the Investors,
constitute valid and binding obligations of the Company enforceable in
accordance with their terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors’ rights, (ii) general principles of
equity that restrict the availability of equitable remedies and (iii) to the
extent that the enforceability of indemnification provisions may be limited by
applicable laws.

4.3 Capitalization. Schedule 4.3 sets forth as of the date hereof (a) the
authorized capital stock of the Company; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital stock issuable
pursuant to the Company’s stock or equity compensation plans; and (d) the number
of shares of capital stock issuable and reserved for issuance pursuant to
securities (other than the Shares) exercisable for, or convertible into or
exchangeable for, any shares of capital stock of the Company. All of the issued
and outstanding shares of the Company’s and its Subsidiaries’ capital stock have
been duly authorized and are validly issued, fully paid and nonassessable. None
of such shares were issued in violation of any preemptive rights or other
similar rights of third parties and such shares were issued in compliance with
applicable state and federal securities laws. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries to provide any
funds to or make any investment in respect of any unsatisfied subscription
obligation or capital contribution or capital account funding obligation in any
Person. No Person is entitled to preemptive or

 

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similar statutory or contractual rights with respect to the issuance by the
Company of any securities of the Company. Except as described on Schedule 4.3
and the SEC Filings, there are no outstanding warrants, options, convertible
securities or other rights, agreements or arrangements of any character under
which the Company is or may be obligated to issue any equity securities of any
kind and except as contemplated by this Agreement. There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Units and the Company does not have any stock
appreciation rights, “phantom stock” plans or agreements or any similar plans or
agreements. Except for the Registration Rights Agreement, there are no voting
agreements, stockholder agreements, buy-sell agreements, option or right of
first purchase agreements or other agreements of any kind among the Company and
any of the security holders of the Company or, to the Company’s Knowledge,
between or among any of the Company’s security holders, relating to the
securities of the Company held by them. Except as provided in the Registration
Rights Agreement, (i) no Person has the right to require the Company to register
any securities of the Company under the 1933 Act, whether on a demand basis or
in connection with the registration of securities of the Company for its own
account or for the account of any other Person, (ii) there are no outstanding
debt securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing indebtedness of the Company or
any of its Subsidiaries or by which the Company or any of its Subsidiaries is or
may become bound having the right to vote on any matter which the stockholders
of the Company or its Subsidiaries as the case may be, may vote, and (iii) there
are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries. The issuance and sale of the Units hereunder
will not obligate the Company to issue shares of Common Stock or other
securities to any other Person (other than the Investors) and will not result in
the adjustment of the exercise, conversion, exchange or reset price of any
outstanding security.

4.4 Valid Issuance. The Unit Shares have been duly and validly authorized and,
when issued and paid for pursuant to this Agreement, will be validly issued,
fully paid and nonassessable, and shall be free and clear of all encumbrances
and restrictions (other than those created by the Investors), except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws, and shall not be subject to preemptive or similar
rights. The Warrants have been duly and validly authorized and, when issued and
paid for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and shall be free and clear of all encumbrances and restrictions
(other than those created by the Investors), except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities laws,
and shall not be subject to preemptive or similar rights. The Warrant Shares
issuable upon exercise of the Warrants have been duly and validly authorized
and, upon the valid exercise of the Warrants and payment of the exercise price
therefore, will be validly issued, fully paid and nonassessable, and shall be
free and clear of all encumbrances and restrictions (other than those created by
the Investors), except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights. Assuming the accuracy of the representations and
warranties of the Investors in this Agreement, the Units will be issued in
compliance with all applicable federal and state securities laws.

 

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4.5 Consents. The execution, delivery and performance by the Company of the
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby, including the offer, issuance and sale of the Units require
no consent of, action by or in respect of, or filing with, any Person, including
any Governmental Authority, other than filings that have been made pursuant to
applicable state securities laws and post-sale filings pursuant to applicable
state and federal securities laws and the rules and regulations of NASDAQ, which
the Company undertakes to file within the applicable time periods, and other
than the registration statement required to be filed by the Registration Rights
Agreement.

4.6 SEC Filings. True and complete copies of the SEC Filings are available to
the Investors through the Electronic Data Gathering, Analysis, and Retrieval
system (the “EDGAR system”) (other than any information for which the Company
has received confidential treatment from the SEC). The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the 1933 Act and the 1934 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 Filings”), for the one (1) year preceding the
date hereof (or such shorter period as the Company was required by law or
regulation to file such material). At the time of filing thereof, the SEC
Filings complied as to form in all material respects with the requirements of
the 1933 Act or 1934 Act, as applicable, and, as of their respective dates, did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.

4.7 No Material Adverse Change. Since March 31, 2018, except as specifically set
forth in a subsequent SEC Filing filed prior to the date hereof, there has not
been:

(a) any change in the assets, liabilities, financial condition or operating
results of the Company from that reflected in the financial statements included
in the Company’s Quarterly Report on Form 10-Q for the three (3) months ended
March 31, 2018, except for changes in the ordinary course of business which have
not had and would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect;

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

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

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

(e) any satisfaction or discharge of a material lien, claim or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business;

(f) any material labor difficulties or, to the Company’s Knowledge, labor union
organizing activities with respect to employees of the Company; or

 

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(g) any issuance of any equity securities to any executive officer, director or
Affiliate of the Company, except Common Stock issued in the ordinary course
pursuant to existing Company stock option or stock purchase plans or executive
and director corporate arrangements disclosed in the SEC Filings.

4.8 No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Units in accordance with the provisions thereof will not
(a) conflict with or result in a breach or violation of (i) any of the terms and
provisions of, or constitute a default under, the Certificate of Incorporation
or bylaws, both as in effect on the date hereof (true and complete copies of
which have been made available to the Investors through the EDGAR system) or any
of the Company’s Subsidiaries’ certificate or articles of incorporation,
certificate of formation, bylaws, operating agreement, or other organizational
or charter documents, or (ii) assuming the accuracy of the representations and
warranties in Section 5, any applicable statute, rule, regulation or order of
any Governmental Authority having jurisdiction over the Company, its
Subsidiaries or any of their respective assets or properties, or (b) conflict
with, or constitute a default (or an event that, with notice, lapse of time or
both, would become a default) under, result in the creation of any lien,
encumbrance or other adverse claim upon any of the properties or assets of the
Company or any Subsidiary or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any Material Contract, except in the case of (a)(ii) and (b), for
such defaults, breaches, violations or conflicts as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
This Section does not relate to matters with respect to taxes, which are the
subject of Section 4.10, employee relations and labor matters, which are the
subject of Section 4.13, and environmental laws, which are the subject of
Section 4.15.

4.9 Compliance. Neither the Company nor any of its Subsidiaries is (a) in
default under or in violation of (and no event has occurred that has not been
waived that, with notice, 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 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), (b) in
violation of any judgment, decree or order of any Governmental Authority or
(c) in violation of any statute, rule, ordinance or regulation of any
Governmental Authority, including without limitation all foreign, federal, state
and local laws relating to environmental protection, occupational health and
safety, product quality and safety and employment and labor matters, except in
each case as would not have or reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

4.10 Tax Matters. The Company and all of its Subsidiaries have filed (or filed
for an extension for) all material tax returns required to have been filed by
the Company and its Subsidiaries with all appropriate governmental agencies and
has paid all material taxes shown thereon or otherwise owed by it, other than
taxes being contested in good faith and for which adequate reserves have been
made on the Company’s financial statements. The Company and its Subsidiaries
have made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 4.17 below in respect of all federal, state
and foreign income and franchise taxes as of the date thereof, except to the
extent of any inadequacy that would not

 

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reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. Except as would not, individually or in the aggregate be
material to the Company and its Subsidiaries, taken as a whole, all taxes and
other assessments and levies that the Company or any Subsidiary is required to
withhold or to collect for payment have been duly withheld and collected and
paid to the proper governmental entity or third party when due, other than taxes
being contested in good faith and for which adequate reserves have been made on
the Company’s financial statements included in the SEC Filings. There are no tax
liens or claims pending or, to the Company’s Knowledge, threatened against the
Company or any Subsidiary or any of their respective assets or property, other
than liens for taxes not yet due and payable or taxes being contested in good
faith and for which adequate reserves have been made on the Company’s financial
statements. There are no outstanding tax sharing agreements or other such
arrangements between the Company and any Subsidiary or other corporation or
entity (other than any such arrangement or agreement the principal subject
matter of which is not taxes). The representations and warranties in this
Section 4.10 shall constitute the sole and exclusive representations and
warranties made herein regarding tax matters, and nothing herein shall be
construed as providing a representation or warranty that could give rise to
indemnification under this Agreement for any taxes arising in a taxable period
(or portion thereof) beginning after the Closing Date.

4.11 Title to Properties. The Company and its Subsidiaries have good and
marketable title to all real properties and all other tangible properties and
tangible assets owned by them, in each case free from liens, encumbrances and
defects, except such as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, and the Company and its
Subsidiaries hold any leased real or tangible personal property under valid,
subsisting and enforceable leases with which the Company and its Subsidiaries
are in compliance and with no exceptions, except such as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

4.12 Certificates, Authorities and Permits. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now operated
by them (the “Permits”), except where failure to so possess would not reasonably
be expected to, individually or in the aggregate, result in a Material Adverse
Effect and such Permits are in full force and effect. The Company and each of
its Subsidiaries is in compliance with each of its Permits in all material
respects and no material violations are or have been recorded in respect of any
Permits. Neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such Permit that,
if determined adversely to the Company or any of its Subsidiaries, would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

4.13 Labor Matters.

(a) Neither the Company nor any Subsidiary is a party to or bound by any
collective bargaining agreements or other agreements with labor organizations.

(b) No labor dispute with the employees of the Company or any Subsidiary, or
with the employees of any principal supplier, manufacturer, customer or
contractor of the Company or any Subsidiary, exists or, to the Company’s
Knowledge, is threatened or imminent

 

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that would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.

4.14 Intellectual Property.

(a) To the Company’s Knowledge, the Company and its Subsidiaries own (free and
clear of all material liens or security interests), possess, license or have
other rights to use, all patents, patent applications, trade and service marks
and other protectable source code indicators, trade and service mark
applications and registrations, copyrights, trade secrets (including inventions,
technology and know-how), domain names, mask works and other intellectual
property rights and similar proprietary rights necessary or material to the
conduct of their respective businesses as currently conducted (collectively, the
“Intellectual Property Rights”). To the Company’s Knowledge, the issued patents,
trademark registrations and copyright registrations owned by the Company and its
Subsidiaries included within the Intellectual Property Rights that are material
to the conduct of their respective businesses are valid, enforceable and
subsisting.

(b) To the Company’s Knowledge, there is no infringement by third parties of any
of the Intellectual Property Rights owned by the Company or any of its
Subsidiaries (collectively, “Owned Intellectual Property Rights”). Except as set
forth on Schedule 4.14(b), no action, suit, claim or other proceeding is pending
or, to the Company’s Knowledge, threatened, challenging the validity,
enforceability or use by the Company or any of its Subsidiaries of any of the
Owned Intellectual Property Rights. No action, suit, claim or other proceeding
is pending or, to the Company’s Knowledge, threatened, challenging the Company’s
or any Subsidiary’s ownership rights in or to any Owned Intellectual Property
Rights. The use, manufacture and sale by the Company and its Subsidiaries of any
of their respective proprietary products and processes referred to in the SEC
Filings in the current conduct of their respective businesses do not currently
infringe any Intellectual Property Right (with respect to patents, any valid
patent claim) of any third party, except as would not have or reasonably be
expected to have a Material Adverse Effect.

(c) To the Company’s Knowledge, no third party has any ownership right in or to
any Owned Intellectual Property Rights material to the conduct of the business
of the Company or any of its Subsidiaries. To the Company’s Knowledge, no
employee, consultant or independent contractor that has developed any Owned
Intellectual Property Rights material to the conduct of the business of the
Company or any of its Subsidiaries is in violation in any material respect of
any term of any invention assignment agreement or nondisclosure agreement with a
former employer or third party with whom they were engaged as an independent
contractor where the basis of such violation relates to such employee’s or
independent contractor’s development of Intellectual Property Rights undertaken
while employed or engaged with the Company or any Subsidiary.

(d) The Company and each of its Subsidiaries has taken commercially reasonable
measures to protect its Confidential Information and trade secrets constituting
Owned Intellectual Property Rights that are material to the conduct of the
businesses of the Company and its Subsidiaries and to maintain and safeguard
such Intellectual Property Rights, including the execution of appropriate
nondisclosure and confidentiality agreements.

 

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(e) All of the agreements containing licenses and sublicenses granting to the
Company or its Subsidiaries a right to use third party Intellectual Property
Rights which are material to the conduct of the Company’s and each of its
Subsidiaries’ respective businesses as currently conducted (other than
non-exclusive licenses for commercially available software or software services)
(collectively, the “License Agreements”) are binding obligations of the Company
or its Subsidiaries that are parties thereto and, to the Company’s Knowledge,
the other parties thereto, and, to the Company’s Knowledge, are enforceable in
accordance with their terms, except to the extent that enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors’ rights
generally. To the Company’s Knowledge, neither the Company nor any of its
Subsidiaries is in material breach of or default under, nor has provided or
received any notice of any intention to terminate, any such License Agreement.

(f) The consummation of the transactions contemplated hereby and by the other
Transaction Documents will not result in a material loss, impairment of or
restriction on the Company’s or any Subsidiaries’ ownership or right to use any
of the Owned Intellectual Property Rights or Intellectual Property Rights
licensed or sublicensed to the Company or its Subsidiary pursuant to a License
Agreement, in each case, that are material to and necessary for the conduct of
the Company’s and each of its Subsidiaries’ respective businesses as currently
conducted.

4.15 Environmental Matters. Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, the Company
and its Subsidiaries are not in violation of any statute, rule, regulation,
decision or order of any Governmental Authority relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, “Environmental Laws”), have not released any hazardous
substances regulated by Environmental Laws onto any real property that they own
or operate, and have not received any written notice or claim that they are
liable for any off-site disposal or contamination pursuant to any Environmental
Laws; and there is no pending or, to the Company’s Knowledge, threatened
investigation that would reasonably be expected to lead to such a claim.

4.16 Legal Proceedings. There are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending or, to the Company’s
Knowledge, threatened to which the Company or any of its Subsidiaries is or may
reasonably be expected to become a party or to which any property of the Company
or any of its Subsidiaries is or may reasonably be expected to become the
subject, except, in each case, as would not reasonably be expected to have a
Material Adverse Effect. No judgment, injunction or order of any nature has been
issued by any Governmental Authority against the Company purporting to enjoin or
restrain the execution, delivery or performance of this Agreement, the
Transaction Documents or the transactions contemplated hereby or thereby. There
is not pending or, to the Company’s Knowledge, contemplated, any investigation
by the SEC involving the Company, any Subsidiary, or any current or former
director or officer of the Company or any Subsidiary. The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the 1933 Act or the 1934 Act.

4.17 Financial Statements. The financial statements included in each SEC Filing
comply in all material respects with applicable accounting requirements and the
rules and

 

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regulations of the SEC with respect thereto as in effect at the time of filing
(or to the extent corrected by a subsequent restatement) and present fairly, in
all material respects, the consolidated financial position of the Company as of
the dates shown and its consolidated results of operations and cash flows for
the periods shown, subject in the case of unaudited financial statements to
normal, immaterial year-end audit adjustments, and such financial statements
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”) (except as may be disclosed therein or in the notes thereto, and except
that the unaudited financial statements may not contain all footnotes required
by GAAP, and, in the case of quarterly financial statements, normal year-end
audit adjustments and as otherwise permitted by Form 10-Q under the 1934 Act).

4.18 Insurance Coverage. The Company and its Subsidiaries maintain insurance
covering their respective properties, operations, personnel and businesses as
the Company and such Subsidiaries reasonably deem adequate. The Company
reasonably believes such insurance (a) insures against such losses and risks to
the Company and its Subsidiaries and their respective businesses as is customary
for comparably situated companies and (b) is commercially reasonable for the
current conduct of their respective businesses. All such insurance is fully in
force on the date hereof. Neither the Company nor any of its Subsidiaries 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 at a cost that
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.

4.19 Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries
has, and to the Company’s Knowledge, no agent or other Person acting on behalf
of the Company or any Subsidiary, has (a) directly or indirectly, used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (b) made any unlawful payment
to foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (c) failed to
disclose fully any contribution made by the Company or any Subsidiary (or made
by any Person acting on its behalf of which the Company or any Subsidiary is
aware) which is in violation of law, or (d) violated in any material respect any
provision of FCPA.

4.20 Compliance with NASDAQ Continued Listing Requirements. The Company is in
compliance with applicable NASDAQ continued listing requirements. There are no
proceedings pending or, to the Company’s Knowledge, threatened against the
Company relating to the continued listing of the Common Stock on NASDAQ and the
Company has not received any notice of, nor, to the Company’s Knowledge, is
there any reasonable basis for, the delisting of the Common Stock from NASDAQ.

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

 

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4.22 No Directed Selling Efforts or General Solicitation. Neither the Company
nor any Person acting on its behalf has conducted any general solicitation or
general advertising (as those terms are used in Regulation D) in connection with
the offer or sale of any of the Units. The Company has offered the Units for
sale only to the Investors and certain other “accredited investors” within the
meaning of Rule 501 under the 1933 Act.

4.23 No Integrated Offering. 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 Company security or solicited any offers to buy any
Company security, under circumstances that would adversely affect reliance by
the Company on Section 4(a)(2) for the exemption from registration for the
transactions contemplated hereby or would require registration of the Units
under the 1933 Act.

4.24 Private Placement. Assuming the accuracy of the representations and
warranties of the Investors set forth in Section 5, the offer and sale of the
Units to the Investors as contemplated hereby is exempt from the registration
requirements of the 1933 Act. The issuance and sale of the Shares does not
contravene the rules and regulations of NASDAQ.

4.25 Questionable Payments. Neither the Company or any Subsidiary nor, to the
Company’s Knowledge, any of their respective current or former directors,
officers, employees, agents or other Persons acting on behalf of the Company or
its Subsidiaries, has on behalf of the Company or any of its Subsidiaries:
(a) used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets which is in violation of law; (d) made any
false or fictitious entries on the books and records of the Company or any
Subsidiary; or (e) made any unlawful rebate, payoff, influence payment,
kickback, bribe or other unlawful payment of any nature. Neither the Company or
any Subsidiary nor, to the Company’s Knowledge, any of their respective current
or former directors, officers, employees, agents or other Persons acting on
behalf of the Company or its Subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”). The Company will not, and will not allow any
Subsidiary to, directly or indirectly, use the proceeds of the sale of the
Units, or lend, contribute or otherwise make available such proceeds to any
Subsidiary, joint venture partner or other Person or entity, towards any sales
or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.

4.26 Transactions with Related Parties. None of the executive officers or
directors of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers and directors) that
would be required to be disclosed pursuant to Item 404 of Regulation S-K
promulgated under the 1933 Act.

4.27 Internal Controls. The Company and each of its Subsidiaries has established
and maintains disclosure controls and procedures (as defined in Rules 13a-15 and
15d-15 under the 1934 Act), that have been designed to ensure that material
information relating to the Company and its Subsidiaries is made known to the
Company’s principal executive officer and its principal

 

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financial officer by others within those entities and sufficient to provide
reasonable assurance that (a) transactions are executed in accordance with
management’s general or specific authorizations, (b) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset and liability accountability, (c) access to assets or
incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization, and (d) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
differences. Since the end of the Company’s most recent audited fiscal year, to
the Company’s Knowledge, there have been no significant deficiencies or material
weaknesses detected in the Company’s or any of its Subsidiaries’ internal
controls over financial reporting (whether or not remediated) and no change in
the Company’s or any of its Subsidiaries’ internal controls over financial
reporting that has materially affected, or is reasonably likely to materially
affect, the Company’s or any of its Subsidiaries’ internal controls over
financial reporting. To the Company’s Knowledge, there has been no change in its
internal controls over financial reporting that has occurred during its most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company’s or any of its Subsidiaries’ internal controls
over financial reporting.

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

4.29 Manipulation of Price. The Company has not, and, to the Company’s
Knowledge, no Person acting on its behalf has (a) 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 Shares, (b) sold, bid for, purchased or paid any compensation for
soliciting purchases of, any of the Shares in violation of Regulation M under
the 1934 Act or (c) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the Company.

4.30 Bad Actor Disqualification. None of the Company, any Subsidiary, any
predecessor or affiliated issuer of the Company, any director, executive officer
or other officer of the Company or any Subsidiary or, to the Company’s
Knowledge, any beneficial owner of twenty percent (20%) or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power,
or any promoter connected with the Company in any capacity, is subject to any of
the “bad actor” disqualifications within the meaning of Rule 506(d) under the
1933 Act, except for a disqualification event covered by Rule 506(d)(2) or
(d)(3).

4.31 Stock Option Plans. Each outstanding option to purchase Common Stock
granted by the Company (the “Stock Options”) was granted pursuant to one of the
Company’s equity incentive plans in accordance with the terms of such equity
incentive plan and no such Stock Option has been backdated. There is no and, to
the Company’s Knowledge, during the past five (5) years there has been no
Company policy or practice to coordinate the grant of stock options with the
release or other public announcement of material information regarding the
Company or its financial results or prospects.

 

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4.32 Off Balance Sheet Arrangements. Except as would not have or reasonably be
expected to result in a Material Adverse Effect, there is no transaction,
arrangement, or other relationship between the Company (or any Subsidiary) and
an unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in SEC Filings and is not so disclosed.

4.33 Acknowledgment Regarding Investors’ Purchase of Units. The Company
acknowledges and agrees that each of the Investors is acting solely in the
capacity of an arm’s length investor with respect to the Transaction Documents
and the transactions contemplated hereby and thereby. The Company further
acknowledges that no Investor is 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 any
Investor or any of their respective representatives or agents in connection with
the Transaction Documents and the transactions contemplated thereby is merely
incidental to the Investors’ purchase of the Units. The Company further
represents to each Investor 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.

4.34 Use of Form S-3. The Company meets the registration and transaction
requirements for use of Form S-3 for the registration of the Shares and the
Warrant Shares for resale by the Investors.

4.35 Takeover Protections; Rights Agreements. The Company and the Board of
Directors of the Company (the “Board of Directors”) have taken all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s charter
documents or the laws of its state of incorporation that is or could reasonably
be expected to become applicable to any of the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including, without limitation, the
Company’s issuance of the Units and the Investors’ ownership of the Units.

4.36 Solvency. Immediately following the Closing and after giving effect to the
consummation of the transactions contemplated hereby, the Company and its
Subsidiaries, taken as a whole, will be able to satisfy their probable liability
on their existing debts, including contingent and other liabilities, as they
mature and will not have unreasonably small capital for the operation of the
businesses in which they are engaged. 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). To the
Company’s Knowledge, there are no 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 (1) year from the Closing
Date.

 

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4.37 Employee Benefit Plans.

(a) Neither the Company nor any other entity which, together with the Company or
any Subsidiary would be treated as a single employer under Section 4001 of ERISA
or Section 414 of the Code maintains or contributes to, or has within the
preceding six (6) years maintained or contributed to, or has any liability with
respect to, any Plan subject to Title IV of ERISA or Section 412 of the Code.
Except as would not be material to the Company and its Subsidiaries, taken as a
whole: (i) each Plan (and related trust, insurance contract or fund) has been
established and administered in all material respects in accordance with its
terms, and complies in all material respects in form and in operation with the
applicable requirements of ERISA and the Code and all other applicable laws; and
(ii) all contributions (including all employer contributions and employee salary
reduction contributions) which are due have been paid to each Plan.

(b) Except as would not be material to the Company and its Subsidiaries, taken
as a whole, each Plan that is intended to be qualified under Section 401(a) of
the Code is so qualified and has received a favorable determination letter from
the Internal Revenue Service that the form of the Plan satisfies Section 401(a)
of the Code and no circumstance, fact or event has occurred or exists that is
reasonably likely to adversely affect the qualified status of any such Plan.

(c) Neither the execution of this Agreement and each of the other Transaction
Documents nor the consummation of the transactions contemplated by the foregoing
will either alone or in combination with another event result in (i) severance
pay or any increase in severance pay upon any termination of employment after
the date of this Agreement, (ii) any payment, compensation or benefit becoming
due to any current or former employee, director, consultant or independent
contractor of the Company or any Subsidiary, (iii) acceleration of the time of
the payment or vesting of, or increase in the amount of, compensation due to any
current or former employee, director, consultant or independent contractor of
the Company or any of its Subsidiaries, (iv) any material obligation pursuant to
any of the Plans, or (v) the payment of any amount that, individually or in
combination with any other such payment, right or benefit constitutes an “excess
parachute payment,” as defined in Section 280G(b)(1) of the Code.

(d) With respect to any material Plan or exclusion therefrom with respect to any
independent contractor, (i) no actions, liens, lawsuits, claims, proceedings or
investigations or complaints (other than routine claims for benefits) are
pending or, to the Company’s Knowledge, threatened, and (ii) no administrative
investigation, audit or other administrative proceeding by the Department of
Labor, the Pension Benefit Guarantee Corporation, the Internal Revenue Service
or any other governmental authority is pending, in progress, or to the Company’s
Knowledge, threatened.

(e) Neither the Company nor any Subsidiary has any liability, whether absolute
or contingent, including any obligations under any Plan, with respect to any
misclassification of any person as an independent contractor rather than as an
employee or with respect to any current or former employee classified as exempt
from overtime wages, except as would not and would not reasonably be expected to
have a Material Adverse Effect.

 

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(f) All Plans subject to Section 409A of the Code or similar law have been
operated and administered in all material respects in compliance with
Section 409A of the Code or similar law.

4.38 Material Contracts. Each Material Contract is valid and binding on the
Company and any of its Subsidiaries party thereto in accordance with its terms
and is in full force and effect, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting the enforcement of creditors’ rights, (b) general principles of equity
that restrict the availability of equitable remedies and (c) to the extent that
the enforceability of indemnification provisions may be limited by applicable
laws. Neither the Company nor any of its Subsidiaries is in default under or in
violation or breach of any Material Contract to which it is a party, and to the
Company’s Knowledge, no third party defaults exist thereunder, except as would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

5. Representations and Warranties of the Investors.

Each of the Investors hereby severally, and not jointly, represents and warrants
to the Company that as of the date hereof and the Closing Date:

5.1 Organization and Existence. Such Investor is a validly existing corporation,
limited partnership or limited liability company and has all requisite
corporate, partnership or limited liability company power and authority to enter
into and consummate the transactions contemplated by the Transaction Documents
and to carry out its obligations hereunder and thereunder, and to invest in the
Units pursuant to this Agreement.

5.2 Authorization. The execution, delivery and performance by such Investor of
the Transaction Documents to which such Investor is a party have been duly
authorized by all necessary corporate action or, if such Investor is not a
corporation, such partnership, limited liability company or other applicable
like action, on the part of such Investor and each Transaction Document to which
it is a party has been duly executed and when delivered will constitute the
valid and legally binding obligation of such Investor, enforceable against such
Investor in accordance with their respective terms, except (a) as limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors’ rights, (b) general principles of equity that restrict the
availability of equitable remedies and (c) to the extent the enforceability of
indemnification provisions may be limited by applicable laws.

5.3 Purchase Entirely for Own Account. The Units to be received by such Investor
hereunder will be acquired for such Investor’s own account, not as nominee or
agent, and not with a view to the resale or distribution of any part thereof in
violation of the 1933 Act; provided, however, that by making the representations
herein, such Investor does not agree to hold any of the Units for any minimum
period of time and reserves the right, subject to the provisions of this
Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Units, Unit Shares, Warrants or
Warrant Shares pursuant to an effective registration statement under the 1933
Act or under an exemption from such registration and in compliance with
applicable federal and state securities laws. Such

 

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Investor is acquiring the Units hereunder in the ordinary course of its
business. Such Investor does not presently have any agreement, plan or
understanding, directly or indirectly, with any Person to distribute or effect
any distribution of any of the Units, Unit Shares, Warrants or Warrant Shares
(or any securities which are derivatives thereof) to or through any person or
entity. Such Investor is not, nor is any Affiliate of such Investor, a
broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.

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

5.5 Disclosure of Information. Such Investor has had an opportunity to receive,
review and understand all information related to the Company requested by it and
to ask questions of and receive answers from the Company regarding the Company,
its business and the terms and conditions of the offering of the Units, and has
conducted and completed its own independent due diligence. Such Investor
acknowledges that no officer, director, attorney, broker-dealer, placement
agent, finder or other person affiliated with the Company has given such
Investor any information or made any representations, oral or written, other
than as expressly provided in this Agreement, on which the Investor has relied
upon in deciding to invest in the Securities. Based on the information such
Investor has deemed appropriate, it has independently made its own analysis and
decision to enter into the Transaction Documents. Such Investor has sought its
own accounting, legal and tax advice as it has considered necessary to make an
informed decision with respect to its acquisition of the Units. Neither such
inquiries nor any other due diligence investigation conducted by such Investor
shall modify, limit or otherwise affect such Investor’s right to rely on the
Company’s representations and warranties contained in this Agreement.

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

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

(a) “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN

 

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ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS
TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.”

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

5.8 Accredited Investor. At the time such Investor was offered the Units, it
was, and as of the date hereof and the Closing Date, is an “accredited investor”
within the meaning of Rule 501 under the 1933 Act and has executed and delivered
to the Company its Investor Questionnaire, which such Investor represents and
warrants is true, correct and complete. Such Investor is a sophisticated
institutional investor with sufficient knowledge and experience in investing in
private equity transactions to properly evaluate the risks and merits of its
purchase of the Units.

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

5.10 Consultation With Own Advisors. Such Investor has been advised to consult
with its own attorney and other financial and tax advisers regarding all legal
matters concerning an investment in the Company and the tax consequences of
purchasing the Securities, and has done so, to the extent such Investor
considers necessary.

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

5.12 Short Sales and Confidentiality Prior to the Date Hereof. Other than
consummating the transactions contemplated hereunder, such Investor has not,
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Investor which (a) had knowledge of the transactions
contemplated hereby, (b) has or shares discretion relating to the Investor’s
investments and trading or information concerning the Investor’s investments or
(c) is subject to the Investor’s review or input concerning the Investor’s
investments or trading, executed any purchases or sales, including Short Sales,
of the securities of the Company during the period commencing as of the time
that such Investor was first contacted by the Company or any other Person
regarding the transactions contemplated hereby and ending immediately prior to
the date hereof. Notwithstanding the foregoing, in the case of an Investor that
is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Investor’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Investor’s assets, the representation set forth
above shall only apply with respect to the

 

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portion of assets managed by the portfolio manager that made the investment
decision to purchase the Units covered by this Agreement. Other than to other
Persons party to this Agreement, such Investor has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions,
with respect to the identification of the availability of, or securing of,
available shares to borrow in order to effect Short Sales or similar
transactions in the future.

5.13 No Government Recommendation or Approval. Such Investor understands that no
United States federal or state agency, or similar agency of any other country,
has reviewed, approved, passed upon, or made any recommendation or endorsement
of the Company or the offering of the Units.

5.14 No Intent to Effect a Change of Control; Ownership. Such Investor has no
present intent to effect a “change of control” of the Company as such term is
understood under the rules promulgated pursuant to Section 13(d) of the 1934 Act
and under the rules of NASDAQ. Except as set forth in its Selling Stockholder
Questionnaire, as of the date hereof, neither the Investor nor any of its
Affiliates is the owner of record or the beneficial owner of shares of Common
Stock or securities convertible into or exchangeable for Common Stock.

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

5.16 No Rule 506 Disqualifying Activities. Such Investor has not taken any of
the actions set forth in, and is not subject to, the disqualification provisions
of Rule 506(d)(1) of the 1933 Act.

5.17 Residency. Such Investor is a resident of the jurisdiction specified below
its address on the Schedule of Investors.

6. Closing Deliveries.

6.1 Company’s Closing Deliveries. On or prior to the Closing Date, the Company
shall deliver each of the following deliverables to the Investors, any of which
may be waived by such Investor (as to itself only):

(a) Copies of any and all consents, permits, approvals, registrations and
waivers necessary for consummation of the purchase and sale of the Shares and
the

 

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consummation of the other transactions contemplated by the Transaction
Documents, all of which shall be in full force and effect.

(b) The Registration Rights Agreement, duly executed by the Company.

(c) A copy of the Notification Form: Listing of Additional Shares for the
listing of the Shares, as filed with NASDAQ.

(d) An opinion from Paul Hastings LLP, dated as of the Closing Date, addressed
to the Investors, in substantially the form attached hereto as Exhibit D.

(e) A certificate of the secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the resolutions
adopted by the Board of Directors or a duly authorized committee thereof
approving the transactions contemplated by this Agreement and the other
Transaction Documents, the issuance of the Units, setting the number of
directors on the Board of Directors at five (5) and appointing each initial
Investor Designee to the Board of Directors in accordance with the Company’s
bylaws and Section 7.1 of this Agreement, (b) certifying the current versions of
the Certificate of Incorporation and bylaws of the Company and (c) certifying as
to the signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company.

(f) A duly executed instruction letter to the Transfer Agent, acknowledged in
writing by the Transfer Agent, instructing the Transfer Agent to deliver to each
Investor, on an expedited basis, the number of Unit Shares set forth opposite
the name of such Investor on Exhibit A attached hereto, registered in the name
of such Investor.

(g) Facsimile copies of the Warrants purchased by the Investors hereunder, as
set forth on Exhibit A attached hereto, registered in the name of such
Investors, with the original Warrants delivered within three (3) Business Days
of Closing.

6.2 Investors’ Closing Deliveries. On or prior to the Closing Date, the
Investors shall deliver each of the following deliverables to the Company, any
of which may be waived by the Company:

(a) Copies of any and all consents, permits, approvals, registrations and
waivers necessary for consummation of the purchase of the Shares and the
consummation of the other transactions contemplated by the Transaction
Documents, all of which shall be in full force and effect.

(b) The Registration Rights Agreement, duly executed by all Investors.

(c) Investor Questionnaires, duly executed by each Investor.

(d) Selling Stockholder Questionnaires, duly executed by each Investor.

(e) Each Investor’s full Subscription Amount.

 

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7. Covenants and Agreements.

7.1 Board Representation.

(a) The Company shall, effective as of the Closing Date, set the number of the
members of its Board of Directors at five (5) and shall, subject to the
provisions of this Section 7.1, fill two (2) vacancies by designating and
appointing a designee of each Investor (each, an “Investor Designee”) as a
member of the Board of Directors.

(b) Each Investor Designee shall, at the time of nomination and at all times
thereafter until such individual’s service on the Board of Directors ceases:
(i) be at least twenty-one (21) years of age; (ii) have the ability to be
present, in person, at all regular and special meetings of the Board of
Directors; (iii) meet any applicable requirements under applicable law, stock
exchange rules or the Company’s corporate governance policies to be an
independent member of the Board of Directors and a member of the Company’s
compensation and audit committees; and (iv) not be an officer, director or
employee of a competitor of the Company in one of its principal lines of
business, as determined in good faith by the Company. In addition to the
foregoing, no individual shall be eligible for election or appointment to the
Board of Directors if such individual has been convicted of a crime involving
dishonesty or breach of trust or if such individual is currently charged with
the commission of or participation in such a crime.

(c) In the event that Golden Harbor Ltd. (“Golden Harbor”), subsequent hereto,
beneficially owns an aggregate of at least twenty percent (20%) of the total
issued and outstanding Common Stock (as adjusted for any stock splits, stock
dividends, recapitalizations or similar transactions), then Golden Harbor shall
have the right to designate one (1) additional Investor Designee as a member of
the Board of Directors. Upon Golden Harbor requesting the appointment of such
additional Investor Designee (with appropriate evidence of its shareholding),
the Board of Directors shall (i) increase the number of seats on the Board of
Directors to equal seven (7), and (ii) (A) if the Board of Directors is then
comprised of six (6) members, immediately fill the newly created vacancy by
appointing such additional Investor Designee selected by Golden Harbor as a
member of the Board of Directors; and (B) if the Board of Directors is then
comprised of five (5) members, (1) immediately fill one (1) newly created
vacancy by appointing such additional Investor Designee selected by Golden
Harbor as a member of the Board of Directors and (2) at such time as the Board
of Directors shall have selected an independent director candidate, fill the
other newly created vacancy by appointing such independent director candidate as
a member of the Board of Directors.

(d) At no time while any of the Investors has rights under this Section 7 shall
the Board of Directors have more than seven (7) members without the prior
written consent of each Investor then having such rights. Notwithstanding the
foregoing, any Investor’s rights under this Section 7.1 shall terminate
automatically on the date such Investor ceases to beneficially own at least five
percent (5%) of the total issued and outstanding Common Stock (as adjusted for
any stock splits, stock dividends, recapitalizations or similar transaction).

7.2 NASDAQ Listing. For so long as a prospectus is required under the 1933 Act
to be delivered in connection with any sale of the Securities, the Company shall
use commercially reasonable efforts to continue the listing and trading of its
Common Stock on NASDAQ and, in

 

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accordance therewith, will use commercially reasonable efforts to comply in all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of such market or exchange, as applicable.

7.3 Removal of Legends. Subject to receipt by the Company of customary
representations and other documentation reasonably acceptable to the Company in
connection therewith, upon the earlier of such time as the Shares (a) have been
sold or transferred pursuant to an effective registration statement, (b) such
time as the Shares have been sold pursuant to Rule 144, or (c) are eligible for
resale under Rule 144(b)(1) or any successor provision, the Company shall cause
the transfer agent for the Common Stock (the “Transfer Agent”) to timely remove
any restrictive legends related to the book entry account holding such Shares
and make a new, unlegended entry for such book entry Shares sold or disposed of
without restrictive legends, including, if necessary, causing its counsel to
deliver to the Transfer Agent one or more opinions to the effect that the
removal of such legends in such circumstances may be effected under the 1933
Act. Shares subject to legend removal hereunder shall, unless otherwise directed
by an Investor, be transmitted by the Transfer Agent to the Investor by
crediting the account of the Investor’s prime broker with the Depository Trust
Company System (DTC) as directed by such Investor. The Company shall be
responsible for all fees (with respect to its Transfer Agent, counsel, DTC or
otherwise) associated with such issuance. The Company acknowledges that a breach
by it of its obligations under this Section 7.3 will cause irreparable harm to
an Investor. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 7.3 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 7.3, that an Investor shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

7.4 Short Sales and Confidentiality After the Date Hereof. Each Investor
covenants that neither it nor any Affiliates acting on its behalf or pursuant to
any understanding with it will execute any Short Sales during the period from
the date hereof until the earlier of such time as (a) the transactions
contemplated by this Agreement are first publicly announced or (b) this
Agreement is terminated in full. Each Investor covenants that until such time as
the transactions contemplated by this Agreement are publicly disclosed by the
Company, such Investor will maintain the confidentiality of all disclosures made
to it in connection with this transaction (including the existence and terms of
this transaction). Each Investor understands and acknowledges that the SEC
currently takes the position that coverage of Short Sales of shares of the
Common Stock “against the box” prior to effectiveness of a resale registration
statement with securities included in such registration statement would be a
violation of Section 5 of the 1933 Act, as set forth in Item 239.10 of the 1933
Act Rules Compliance and Disclosure Interpretations compiled by the Office of
Chief Counsel, Division of Corporation Finance.

7.5 Shareholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that any Investor 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 any Investor could be deemed to trigger the provisions of any such plan
or arrangement, in either case solely by virtue of receiving Units under the
Transaction

 

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Documents; provided, however, that no such Investor owns any equity in the
Company prior to its purchase of the Units hereunder.

7.6 Non-Public Information. The Company covenants and agrees that it has not
provided, and to the Company’s Knowledge, none of its officers or directors nor
any other Person acting on its or their behalf has provided any information that
it believes constitutes material, non-public information, other than certain
information pursuant to certain confidentiality agreements. The Company
understands and confirms that the Investors will rely on the foregoing
representations in effecting transactions in securities of the Company.

7.7 Subsequent Equity Sales. From the date hereof until ninety (90) days
following the Closing Date, the Company shall not issue shares of Common Stock
or Common Stock Equivalents; provided, however, that the Company may, without
the prior written consent of the Required Investors, (a) sell and issue the
Securities as contemplated by this Agreement; (b) issue Common Stock, Common
Stock Equivalents and other equity awards (including the issuance of Common
Stock and Common Stock Equivalents upon exercise or settlement of such equity
awards) pursuant to the Company’s equity incentive plans and employee stock
purchase plans as such plans are in existence on the date hereof; (c) issue
Common Stock pursuant to the vesting or exercise of Common Stock Equivalents
outstanding on the date hereof; and (d) issue or sell, or agree to issue or
sell, shares of Common Stock or Common Stock Equivalents to vendors, consultants
and service providers of the Company as compensation or to settle bona fide
liabilities or to one or more Persons in connection with any strategic
transactions involving the Company and such other Persons, including without
limitation, merger, acquisition, joint venture, licensing, collaboration,
manufacturing, development, marketing and co-promotion or distribution
arrangements or litigation settlements, in each case, as approved by the Board
of Directors, provided that the aggregate number of shares of Common Stock or
Common Stock Equivalents that the Company may issue or sell, or agree to issue
or sell, pursuant to the foregoing clause (d) shall not have an aggregate Market
Value exceeding $2.0 million, and provided, further, that with respect to any
Common Stock or Common Stock Equivalents the Company issues or sells, or agrees
to issue or sell, pursuant to the foregoing clause (d) with an aggregate Market
Value in excess of $1.0 million, each recipient of such Common Stock or Common
Stock Equivalents shall execute a lock-up agreement with a duration equal to the
remaining duration of the covenants set forth in this Section 7.7.

7.8 Acknowledgement Regarding Investor’s Pledge of the Securities. The Company
acknowledges and agrees that an Investor may from time to time pledge pursuant
to a bona fide margin agreement with a registered broker-dealer or grant a
security interest in some or all of the Shares to a financial institution that
is an “accredited investor” as defined in Rule 501(a) under the 1933 Act and, if
required under the terms of such arrangement, such Investor may transfer pledged
or secured Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no legal opinion of
legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At
the applicable Investor’s expense, the Company will, subject to Section 9.1
hereof, execute and deliver such reasonable documentation as a pledgee or
secured party of Securities may reasonably request in connection with a pledge
or transfer of the Securities, including, if the Securities are subject to
registration pursuant to the Registration Rights Agreement, the preparation and
filing of any required prospectus supplement under Rule

 

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424(b)(3) under the 1933 Act or other applicable provision of the 1933 Act to
appropriately amend the list of selling stockholders thereunder; provided,
however, that nothing in this provision will require the Company to
post-effectively amend any registration statement filed pursuant to the
Registration Rights Agreement to amend the list of selling stockholders included
therein.

8. Survival and Indemnification.

8.1 Survival. The representations and warranties contained in this Agreement
shall survive the Closing and the delivery of the Units for a period of twelve
(12) months. Notwithstanding the foregoing, the representations and warranties
of (a) the Company set forth in Sections 4.1, 4.2, 4.3, 4.4 and 4.5 and (b) the
investors set forth in Section 5 shall survive indefinitely; provided, however,
that if notice of a claim for indemnification pursuant to Section 8.3 for breach
of any representation or warranty is brought prior to the end of such period,
then the obligation to indemnify in respect of such breach shall survive as to
such claim, until such claim has been finally resolved. Subject to applicable
statute of limitations, the covenants and agreements contained in this Agreement
shall survive the Closing and delivery of the Units until fully performed or
fulfilled, unless noncompliance with such covenants, agreements or obligations
is waived in writing by the party or parties entitled to such performance.

8.2 Indemnification by the Company. The Company agrees to indemnify and hold
harmless each of the Investors and their respective officers, directors,
partners, members, managers, shareholders, employees, agents of each Investor,
each Person who Controls any such Investor (within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act) and the officers, directors,
partners, members, shareholders, employees and agents of each such controlling
Person (each, an “Indemnified Party”), against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Indemnified Party may
become subject under the 1933 Act, the 1934 Act, or any other federal or state
statutory law or regulation (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based in whole or in part on the
inaccuracy in the representations, warranties, covenants or agreements of the
Company contained in this Agreement or in the other Transaction Documents or the
failure of the Company to perform its obligations hereunder, or any action
instituted against an Investor in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such investor, with respect to any of the transactions contemplated by the
Transaction Documents, and will reimburse each Indemnified Party for legal and
other expenses reasonably incurred as such expenses are reasonably incurred by
such Indemnified Party in connection with investigating, defending, settling,
compromising or paying such loss, claim, damage, liability, expense or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon (a) the failure of such Indemnified Party to comply with the
covenants and agreements contained herein or in any of the other Transaction
Documents, or (b) the inaccuracy of any representations made by such Indemnified
Party herein or in any of the other Transaction Documents.

 

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8.3 Indemnification Procedure. As soon as practicable after any Indemnified
Party has received notice of any indemnifiable claim hereunder, or the
commencement of any action, suit or proceeding by a third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give the indemnitor hereunder (the
“Indemnifying Party”) written notice of such claim or the commencement of such
action, suit or proceeding, but failure to so notify the Indemnifying Party will
not relieve the Indemnifying Party from any liability it may have to such
Indemnified Party hereunder except to the extent that the Indemnifying Party is
materially prejudiced by such failure. Such notice shall state the nature and
the basis of such claim to the extent then known. The Indemnifying Party shall
have the right to defend and settle, at its own expense and by its own counsel
who shall be reasonably acceptable to the Indemnified Party, any such matter as
long as the Indemnifying Party pursues the same diligently and in good faith. If
the Indemnifying Party undertakes to defend or settle, it shall promptly notify
the Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and the settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party’s possession or
control. Such cooperation of the Indemnified Party shall be at the cost of the
Indemnifying Party. After the Indemnifying Party has notified the Indemnified
Party of its intention to undertake to defend or settle any such asserted
liability, and for so long as the Indemnifying Party diligently pursues such
defense, the Indemnifying Party shall not be liable for any additional legal
expenses incurred by the Indemnified Party in connection with any defense or
settlement of such asserted liability; provided, however, that the Indemnified
Party shall be entitled (a) at its expense, to participate in the defense of
such asserted liability and the negotiations of the settlement thereof and
(b) if (i) the Indemnifying Party has failed to assume the defense or employ
counsel reasonably acceptable to the Indemnified Party or (ii) if the defendants
in any such action include both the Indemnified Party and the Indemnifying Party
and counsel to the Indemnified Party shall have reasonably concluded that there
may be reasonable defenses available to the Indemnified Party that are different
from or in addition to those available to the Indemnifying Party or if the
interests of the Indemnified Party reasonably may be deemed to conflict with the
interests of the Indemnifying Party, then the Indemnified Party shall have the
right to select a separate counsel and to assume such legal defense and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other reasonable expenses related
to such participation to be reimbursed by the Indemnifying Party as incurred.
Notwithstanding any other provision of this Agreement, the Indemnifying Party
shall not settle any indemnified claim without the consent of the Indemnified
Party, unless the settlement thereof imposes no liability or obligation on, and
includes a complete release from liability of, and does not include any
admission of wrongdoing or malfeasance by, the Indemnified Party.

8.4 Purchase Price Adjustment. Any indemnification payments pursuant to this
Section 8 shall be treated as an adjustment to the applicable Closing
consideration for U.S. federal income and applicable state and local tax
purposes, unless a different treatment is required by applicable law.

9. Miscellaneous.

 

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

9.2 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Investors
and the Company will be entitled to 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
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for a temporary restraining order) the defense that a remedy at law would
be adequate.

9.3 Counterparts; Faxes; E-mail. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile or e-mail, which shall be deemed an original.

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

9.5 Notices. All notices and other communications under this Agreement must be
in writing and are deemed duly delivered when (a) if delivered personally or by
nationally recognized overnight courier service (costs prepaid), upon delivery,
(b) if sent by facsimile, upon confirmation of transmission, or (c) if sent by
mail, upon the earlier of (i) receipt or rejection by the addressee and
(ii) three (3) days after mailing by United States of America certified or
registered mail, postage prepaid and with return receipt requested, in each case
to the following addresses or facsimile numbers and marked to the attention of
the individual (by name or title) designated below (or to such other address,
facsimile number or individual as a party may designate by notice to the other
parties):

If to the Company:

Inseego Corp.

 

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9605 Scranton Drive, Suite 300

San Diego, CA 92112

Attention: Dan Mondor

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

Paul Hastings LLP

4747 Executive Drive, 12th Floor

San Diego, California 92121

Attention: Teri O’Brien

Fax: (858) 458-3131

E-mail: teriobrien@paulhastings.com

If to the Investors:

To the addresses set forth on the signature pages hereto.

9.6 Expenses. The Company shall pay its costs and expenses in connection
herewith and the reasonable expenses incurred by the Investors or its
Affiliates, upon receipt of documentation reasonably demonstrating the amount
and nature thereof, including without limitation reasonable attorneys’ fees and
disbursements, in an amount not to exceed $125,000 in the aggregate. The
Company’s obligation to pay such costs and expenses shall apply regardless of
whether the transactions contemplated hereby are consummated, it being
understood that each of the Company and each Investor has relied on the advice
of its own respective counsel. The Company shall pay all Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the sale and
issuance of the Units to the Investors.

9.7 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Required Investors. Notwithstanding the
foregoing, this Agreement may not be amended and the observance of any term of
this Agreement may not be waived with respect to any Investor without the
written consent of such Investor unless such amendment or waiver applies to all
Investors in the same fashion. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each holder of any Securities
purchased under this Agreement at the time outstanding, and in each case, each
future holder of all such Securities and the Company.

9.8 Publicity. Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Company
or the Investors without the prior written consent of the Company (in the case
of a release or announcement by the Investors) or the Investors (in the case of
a release or announcement by the Company) (which consents shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the applicable rules or regulations of any securities exchange or
securities market, in which case the Company or the Investors, as the case may
be, shall allow the Investors or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance. By

 

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9:00 A.M. (New York City time) on the Trading Day immediately following the date
of this Agreement, the Company shall issue a press release disclosing all
material terms of the transactions contemplated by this Agreement. No later than
5:30 P.M. (New York City time) on the fourth Business Day following the date of
this Agreement, the Company will file a Current Report on Form 8-K attaching the
press release described in the foregoing sentence as well as copies of the
Transaction Documents to the extent so required. Notwithstanding the foregoing
or anything to the contrary in this Agreement, each Investor shall remain
subject to the obligations contained in any separate agreement with respect to
the non-disclosure or confidentiality of any information provided by the Company
to such Investor in connection with such Investor’s evaluation of the
transactions contemplated hereby and acknowledges that the federal securities
laws prohibit the purchase or sale of securities while in possession of
material, nonpublic information.

9.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

9.10 Entire Agreement. This Agreement, including the signature pages, Exhibits
attached hereto, Appendices attached hereto and the Disclosure Schedules
attached hereto, the Mutual Nondisclosure Agreement between the Company and
Tavistock Group Inc., dated March 23, 2018, and the other Transaction Documents
constitute the entire agreement among the parties hereof with respect to the
subject matter hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof.

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

9.12 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Any suit, action or other proceeding arising out of or relating to this
Agreement or the other Transaction Documents shall be brought exclusively in the
courts of the State of New York, or in the event (but only in the event) that
such court does not have subject matter jurisdiction over such action, the
United States District Court for the Southern District of New York and each of
the parties hereto hereby submits to the exclusive jurisdiction of such courts
for the purpose of any such suit, action or other proceeding. Each party agrees
to commence any action, suit or proceeding relating thereto in the courts of the
State of New York. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to

 

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the jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.

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

[Signature Page to Follow]

 

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

 

COMPANY:     INSEEGO CORP.     By:  

/s/ Stephen Smith

    Name: Stephen Smith     Title: Chief Financial Officer

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INVESTOR:     GOLDEN HARBOR LTD.     By:  

/s/ James B. Avery

    Name: James B. Avery     Title: Vice President

Investor Information

Entity Name: Golden Harbor Ltd.

Contact Person: James B. Avery

Address: Cay House, EP Taylor Drive N7776

City: Lyford Cay, New Providence

State: The Bahamas

Zip Code: N/A

Telephone: 407-909-9905

Facsimile: ---

Email: javery@tavistock.com

Tax ID # or Social Security #: N/A

Name in which Units should be issued: Golden Harbor Ltd.

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INVESTOR:     NORTH SOUND TRADING, L.P.     By:  

/s/ Brian Miller

    Name: Brian Miller     Title: President, North Sound Management, Inc.    
General Partner of North Sound Trading, L.P.

Investor Information

Entity Name: North Sound Trading, L.P.

Contact Person: Brian Miller

Address: c/o North Sound Management, Inc., 115 East Putnam Avenue

City: Greenwich

State: Connecticut

Zip Code: 06830

Telephone:

Facsimile:

Email: bmiller@northsoundmgt.com

Tax ID # or Social Security #:

Name in which Units should be issued: North Sound Trading, L.P.