Blueprint






Exhibit 10.1



 

SECURITIES
PURCHASE AGREEMENT

 


This
Securities Purchase Agreement (this “Agreement”) is dated as
of July 21, 2017, between Friendable, Inc., a Nevada corporation
(the “Company”), and purchaser
identified on the signature pages hereto (each, including its
successors and permitted assigns, a “Purchaser”).

 


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

 


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


 


ARTICLE
I.


DEFINITIONS

 


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

 


“Accredited Investor”
shall have the meaning ascribed to such term in Section
3.2(c).

 


“Acquiring Person” shall
have the meaning ascribed to such term in Section 4.7.

 


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

 


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

 


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

 


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

 


“Buy In” shall have the
meaning ascribed to such term in Section 4.1(h).

 


“Closing” means the Initial Closing and Subsequent Closing,
if any, of the purchase and sale of the Securities pursuant to
Section 2.1 or 2.4.

 


“Closing Date”
means each of the Initial Closing Date
and the Subsequent Closing Date, if any, and is the Business Day on
which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchaser’s obligation to pay the
Subscription Amount at such Closing, and (ii) the Company’s
obligations to deliver the Securities to be issued and sold at such
Closing, in each case, have been satisfied or waived, but in no
event later than the tenth Business Day following the date hereof
in the case of the Initial Closing.

 


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


 



 

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“Common Stock” means the
common stock of the Company or the Subsidiaries, par value $0.0001
per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.

 


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

 


“Company Counsel” means,
Lucosky Brookman LLP, 101 Wood Avenue South, Woodbridge, NJ 08830,
Attn: Steven A. Lipstein, Esq., fax: (732) 395-4401.

 


“Conversion Price” shall
have the meaning ascribed to such term in the Notes.

 


“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered
concurrently herewith.

 


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

 


“Escrow Agreement” means
the escrow agreement to be employed in connection with the sale of
the Securities, a copy of which is annexed hereto as Exhibit B.

 


“Equity Line of Credit”
shall have the meaning ascribed to such term in Section
4.13.

 


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

 


“Event of Default” shall
have the meaning ascribed to such term in the Note.

 


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

 


“Exchanged Securities”
shall mean the exchange of Purchaser’s Notes and accrued
interest for equity in Fan Pass, Inc., as described in Section
2.1.

 


“Exercise Notice” shall
have the meaning ascribed to such term in Section 2.4.

 


“Exempt Issuance” means
the issuance of (a) shares of Common Stock and options to officers,
directors, or employees of the Company after the Closing Date up to
the amounts and on the terms set forth on Schedule 3.1(g) consistent with
past practices pursuant to the Stock Option Plans, (b) except for
any securities exercisable or exchangeable for or convertible into
shares of Common Stock previously issued or issuable to Purchaser
and which securities are specifically excluded from the definition
of Exempt Issuance, securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on
the date of this Agreement, provided that such securities and any
term thereof have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the issue
price, exercise price, exchange price or conversion price of such
securities and which securities and the principal terms thereof are
set forth on Schedule
3.1(g), and described in the SEC Reports, (c) securities
issued pursuant to acquisitions or strategic transactions approved
by a majority of the disinterested directors of the Company,
provided that any such issuance shall only be to a Person (or to
the equity holders of a Person) which is, itself or through its
subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall be
intended to provide to the Company substantial additional benefits
in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary
business is investing in securities, (d) as set forth on
Schedule 3.1(g),
and (e) securities issued or issuable to the Purchasers and their
assigns pursuant to this Agreement or the Notes, including without
limitation, Section 4.17 herein or upon conversion of any such
securities.


 



 

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“Fan Pass, Inc.” shall
mean the Subsidiary of the Company incorporated in the State of
Nevada on June 28, 2017.

 


“Fan Pass Intellectual Property
Software” shall have the meaning ascribed to such term
in Section 2.6(b)(ix).

 


“Fan Pass Securities”
shall mean the shares of common stock of Fan Pass,
Inc.

 


“Fan Pass Security
Agreement” shall mean the Security Agreement executed
by Fan Pass, Inc., a form of which is annexed hereto as
Exhibit
I.

 


“Fan Pass Transaction”
shall have the meaning, terms and conditions described on
Exhibit H annexed
hereto.

 


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

 


“FDA” shall have the
meaning ascribed to such term in Section 3.1(nn).


 


“Form 8-K” shall have the
meaning ascribed to such term in Section 4.6.


 


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


 


“G&M” shall mean
Grushko & Mittman, P.C., with offices located at 515 Rockaway
Avenue, Valley Stream, New York 11581, Fax:
212-697-3575.

 


“Going Public Event” shall
have the meaning ascribed to such term in Section
2.6(b)(x).

 


“Indebtedness” shall have
the meaning ascribed to such term in Section 3.1(z).

 


“Initial
Closing” shall have the
meaning ascribed to such term in Section 2.1.


 


“Initial Closing
Date” shall mean the date
upon which the Initial Closing occurs.

 


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

 


“Investor Questionnaire”
means the form of Accredited Investor Questionnaire annexed hereto
as Exhibit
E.

 


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

 


“Legal Opinion” shall have
the meaning ascribed to such term in Section
2.2(a)(ii).

 


“Legend Removal Date”
shall have the meaning ascribed to such term in Section
4.1(c).

 



 

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

 


“Listing Default” shall
have the meaning ascribed to such term in Section
4.11(c).


 


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

 


“Material Permits” shall
have the meaning ascribed to such term in Section
3.1(m).

 


“Maximum Rate” shall have
the meaning ascribed to such term in Section 5.17.

 


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

 


“Notes” means the
convertible notes issuable pursuant to this Agreement, in the form
of Exhibit A
hereto.

 


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

 


“Participation Maximum”
shall have the meaning ascribed to such term in Section
4.17(a).

 


“Permitted Indebtedness”
means (a) any liabilities for borrowed money or amounts owed not in
excess of $50,000 in the aggregate (other than trade accounts
payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in
respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s consolidated balance
sheet (or the notes thereto) not affecting more than $50,000 in the
aggregate, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business; and (c) the present value of any
lease payments not in excess of $50,000 due under leases required
to be capitalized in accordance with GAAP.

 


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

 


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


 



 

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“Pre-Notice” shall have
the meaning ascribed to such term in Section 4.17(b).

 


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

 


“Pro-Rata Portion” shall
have the meaning ascribed to such term in Section
4.17(c).

 


“Public Information
Failure” shall have the meaning ascribed to such term
in Section 4.3(b).

 


“Public Information Failure
Payments” shall have the meaning ascribed to such term
in Section 4.3(b).

 


“Purchaser Party” shall
have the meaning ascribed to such term in Section
4.10.

 


“Registration Expenses”
shall have the meaning ascribed to such term in Section
4.30.

 


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

 


“Required Minimum” means,
as of any date, the maximum aggregate number of shares of Common
Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Underlying Shares issuable
upon conversion in full of all Notes, ignoring any conversion or
exercise limits set forth therein.

 


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

 


“Rule 506 Bad Actor
Questionnaire” means the
form annexed hereto as Exhibit
F.

 


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


 


“Securities” means the
Notes and the Underlying Shares.

 


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

 


“Selling Expenses” shall
have the meaning ascribed to such term in Section
4.30.

 


“Short Sales” means
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, swaps and
similar arrangements (including on a total return basis) whether
such transactions are made through U.S. or non-U.S. broker dealers
or foreign regulated brokers. 

 


“Stock Option Plans” means
the Company’s 2011 Stock Option Plan and the Company’s
2014 Equity Incentive Plan, copies of which are included in the SEC
Reports. 

 


“Stock Pledge Agreement”
means the Stock Pledge Agreement to be employed in connection with
the Company’s pledging of Fan Pass Securities, a copy of
which is annexed hereto as Exhibit D.

 



 

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

 


“Subsequent Closing” shall
have the meaning ascribed to such term in Section 2.4.

 


“Subsequent Closing Date”
shall have the meaning ascribed to such term in Section
2.4.

 


“Subsequent Closing Escrow
Agreement” shall have the meaning ascribed to such
term in Section 2.4.

 


“Subsequent Closing Subscription
Amount” shall have the meaning ascribed to such term
in Section 2.4.

 


“Subsequent Financing”
shall have the meaning ascribed to such term in Section
4.17(a).

 


“Subsequent Financing
Notice” shall have the meaning ascribed to such term
in Section 4.17(b).

 


 “Subsidiary”
means with respect to any entity at
any date, any direct or indirect corporation, limited or general
partnership, limited liability company, trust, estate, association,
joint venture or other business entity of which (A) more than
30% of (i) the outstanding capital stock having (in the
absence of contingencies) ordinary voting power to elect a majority
of the board of directors or other managing body of such entity,
(ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership
or limited liability company or (iii) in the case of a trust,
estate, association, joint venture or other entity, the beneficial
interest in such trust, estate, association or other entity
business is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by such
entity, or (B) is under the actual control of the
Company.

 


“Termination Date” shall
have the meaning ascribed to such term in Section 2.1.

 


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

 


“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE MKT,
the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ
Global Select Market, the New York Stock Exchange, the OTC Bulletin
Board, the OTCQB, the OTCQX or the OTC Pink Marketplace (or any
successors to any of the foregoing).

 


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

 


“Transfer Agent” means
Nevada Agency and Transfer, 50 West Liberty Street, Suite 880,
Reno, NV 89501, and any successor transfer agent of the
Company.

 


“Underlying Shares” means
the shares of Common Stock issued and issuable upon conversion of
the Notes and issued and issuable in lieu of the cash payment of
interest on the Notes in accordance with the terms of the Notes and
any other shares of Common Stock issued or issuable to Purchaser in
connection with or pursuant to the Securities or Transaction
Documents.


 



 

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“Unlegended Shares” shall
have the meaning ascribed to such term in Section
4.1(c).

 


“Variable Priced Equity Linked
Instruments” shall have the meaning ascribed to such
term in Section 4.13.

 


“Variable Rate
Transaction” shall have
the meaning ascribed to such term in Section
4.13.

 


“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b)  if the Common Stock is not then listed or quoted for
trading on a Trading Market but is then reported on the OTC Pink
Marketplace maintained by the OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting
prices), the volume weighted average price of the Common Stock on
the first such facility (or a similar organization or agency
succeeding to its functions of reporting prices), or (d) in
all other cases, the fair market value of a share of Common Stock
as determined by an independent appraiser selected in good faith by
a Majority in Interest and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the
Company.

 


ARTICLE
II.


PURCHASE
AND SALE

 

2.1 Initial Closing.

 


(a) On the Initial
Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company
agrees to sell, and the Purchaser, agrees to purchase, a Note in
the principal amount of $300,000 (plus a portion of the placement
agent fee payable in the form of a Note) as determined pursuant to
Section 2.2(a) (such purchase and sale being the
“Initial
Closing”. Following the Company’s delivery of
all Deliveries as described in Section 2.2(a), Purchaser shall then
deliver to the Company such Purchaser’s Subscription Amount,
and the Company and each Purchaser shall deliver the other items
set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall occur at the offices of G&M or
such other location as the parties shall mutually agree.
Notwithstanding anything herein to the contrary, the Initial
Closing Date shall occur on or before August 4, 2017 (the
“Termination
Date”). If the Closing is not held on or before the
Termination Date, the Company shall cause all subscription
documents and funds to be returned, without interest or deduction
to each prospective Purchaser.

 


NO
MINIMUM NUMBER OF NOTES MUST BE SOLD IN ORDER FOR THE COMPANY TO
ACCEPT ANY SUBSCRIPTIONS, AND ALL NET PROCEEDS OF THE OFFERING WILL
BE IMMEDIATELY AVAILABLE FOR COMPANY PURPOSES.

 


(b) On the Initial
Closing Date the Purchaser shall also surrender and exchange each
such Purchaser’s Exchanged Securities (in type and amounts
described on Schedule
2.1) for equity in Fan Pass, Inc. in the amounts set forth
on Schedule
2.1.

 



 

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2.2 Deliveries.

 


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

 

(i) this Agreement duly
executed by the Company;

 

(ii) a
legal opinion of Company Counsel, substantially in the form of
Exhibit C attached
hereto;

 

(iii) a
Note with a principal amount equal to such Purchaser’s
Subscription Amount registered in the name of such
Purchaser;

 

(iv) the
Stock Pledge Agreement duly executed by the Company;

 

(v) the Fan Pass
Security Agreement duly executed by Fan Pass, Inc.;


 

(vi) the
Escrow Agreement duly executed by the Company and Escrow
Agent;


 

(vii) stock
certificates representing Purchaser’s equity interest in Fan
Pass, Inc. which certificate the Company must deliver to Purchaser
no later than five (5) Business Days following the Initial Closing
Date;


 

(viii) a
certificate of the Principal Executive Officer and Chief Executive
Officer (each as defined in the Exchange Act) of each of the
Company and Fan Pass, Inc., dated as of each Closing Date, in which
such officers shall certify that the conditions set forth in
Section 2.3(b) have
been fulfilled, and in connection with subsequent Closing following
the initial Closing, ratifying the terms of this Agreement as an
additional Closing under this Agreement and under the Transaction
Documents; and


 

(ix) Secretary’s
certificate containing (i) copies of the text of the resolutions by
which the corporate action on the part of each of the Company and
Fan Pass, Inc. necessary to approve this Agreement and the other
Transaction Documents and the transactions and actions contemplated
hereby and thereby, which shall be accompanied by a certificate of
the corporate secretary or assistant corporate secretary of each of
the Company and Fan Pass, Inc. dated as of the Closing Date
certifying to the Purchaser that such resolutions were duly adopted
and have not been amended or rescinded, (ii) an incumbency
certificate dated as of the Closing Date executed on behalf of each
of the Company and Fan Pass, Inc. by its corporate secretary or one
of its assistant corporate secretaries certifying the office of
each officer of each of the Company and Fan Pass, Inc. executing
this Agreement, or any other agreement, certificate or other
instrument executed pursuant hereto, and (iii) copies of (A) each
of the Company’s and Fan Pass, Inc.’s Certificate of
Incorporation and bylaws in effect on the Closing Date, and (B) the
certificate evidencing the good standing of each of the Company and
Fan Pass, Inc. as of a day within five (5) Business Days prior to
the Closing Date.


 


(b) Following the
delivery by the Company of all items described in Section 2.2(a)
above, on or prior to the Initial Closing Date, each Purchaser
shall deliver or cause to be delivered to the Company the
following:

 

(i) this Agreement and the Escrow Agreement each duly
executed by such Purchaser;

 

(ii) such
Purchaser’s Subscription Amount by wire transfer or as
otherwise permitted under the Escrow Agreement, to the Escrow
Agent;

 



 

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(iii) Accredited
Investor Questionnaire duly executed by Purchaser;

 

(iv) the
Stock Pledge Agreement duly executed by Purchaser and the
Collateral Agent;

 

(v) the Fan Pass
Security Agreement duly executed by Purchaser and the Collateral
Agent;

 

(vi) as
applicable, such Purchaser’s Exchanged Securities to be
exchanged for Purchaser’s equity interest of Fan Pass, Inc.
in the amounts described on Schedule 2.1.

 


(c)           Anything
to the contrary herein notwithstanding, Purchaser may elect to
bypass the escrow arrangement described herein and arrange for its
Closing directly with the Company without employing the Escrow
Agent as an intermediary.

 


2.3 Closing
Conditions.

 


(a) The obligations of
the Company hereunder to effect the Initial Closing are subject to
the following conditions being met:

 

(i) the accuracy in all
material respects on the Initial Closing Date of the
representations and warranties of the Purchaser contained herein
(unless as of a specific date therein in which case they shall be
accurate as of such date);

 

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

 

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

 


(b) The respective
obligations of Purchaser hereunder to effect the Initial Closing,
unless waived by Purchaser, are subject to the following conditions
being met:

 

(i) the accuracy in all
material respects (determined without
regard to any materiality, Material Adverse Effect or other similar
qualifiers therein) on the Initial Closing Date of the
representations and warranties of the Company contained herein
(unless as of a specific date therein in which case they shall be
accurate as of such date);

 

(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Initial Closing Date shall have been
performed; including but not limited to having obtained the
Required Approvals.

 

(iii) the
Company shall have received executed signature pages to this
Agreement together with the Subscription Amount of $300,000 prior
to the Closing;

 

(iv) the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;

 

(v) there shall have
been no Material Adverse Effect with respect to the Company since
the date hereof; and

 



 

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

 


2.4           Subsequent
Closing. A Closing for an additional $200,000 of
Subscription Amount will be held on the same terms and conditions
as the Initial Closing (“Subsequent Closing”). The
Subsequent Closing Subscription Amount shall be equal to $200,000
unless otherwise agreed to in writing by the
Purchaser.


 


2.5           Subsequent
Closing Deliveries.


 


(a)           On
or prior to the Subsequent Closing, the Company shall deliver or
cause to be delivered to the Escrow Agent the
following:


 


(i)    current
updated Schedules;


 


(ii)    a legal opinion of Company counsel, substantially
in the form of Exhibit C
attached hereto;


 


(iii)   a Note in the principal amount equal to
Purchaser’s Subsequent Closing Subscription Amount registered
in the name of Purchaser. The maturity date on the Note issued on
any Subsequent Closing will be twelve (12) months from the
date of the Note issued on the Initial Closing Date;


 


(iv)   a
Stock Pledge Agreement duly re-executed by the Company and
Collateral Agent together with updated schedules which may not be
materially adversely different than the schedules delivered on the
Initial Closing Date;


 


(v)   
a Fan Pass Security Agreement duly
re-executed by Fan Pass, Inc. and Collateral Agent together with
updated schedules which may not be materially adversely different
than the schedules delivered on the Initial Closing Date;
and


 


(vi)   
an Escrow Agreement similar to the Escrow Agreement employed in
connection with the Initial Closing duly executed by the Company
and Escrow Agent (“Subsequent Closing Escrow
Agreement”).

 


(b)         Following
delivery by the Company to Purchaser of the items described in
Section 2.5(a) above, on or prior to the Subsequent Closing Date,
Purchaser shall deliver or cause to be delivered to the Escrow
Agent, the following:


 


(i)     the
Subsequent Closing Escrow Agreement, Stock Pledge Agreement and Fan
Pass Security Agreement duly executed by Purchaser;
and


 


(ii)    to
Escrow Agent, Purchaser’s Subscription Amount by wire
transfer to the account specified in the Subsequent Closing Escrow
Agreement.


 


2.6        Subsequent
Closing Conditions.


 


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


 



 

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(i)     
the accuracy in all material respects
(determined without regard to any materiality, Material Adverse
Effect or other similar qualifiers therein) on the Subsequent
Closing Date of the representations and warranties of the Purchaser
contained herein (unless as of a specific date therein in which
case they shall be accurate as of such date);


 


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


 


(iii)     the delivery by Purchaser to the Escrow Agent of
the items set forth in Section 2.5(b) of this
Agreement;


 


(iv)     following the delivery by the Company to Purchaser
all items described in Section 2.5(a) above, the Escrow Agent shall
have received $200,000 Subsequent Closing Subscription Amount from
Purchaser in good funds in the amount designated on such
Purchaser’s signed signature page to this
Agreement.


 


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


 


(i)   
the accuracy in all material respects (determined without regard to
any materiality, Material Adverse Effect or other similar
qualifiers therein) on the Subsequent Closing Date of the
representations and warranties of the Company contained herein
(unless as of a specific date therein in which case they shall be
accurate as of such date);


 


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


 


(iii)    
the delivery by the Company to the Escrow Agent of the items set
forth in Section 2.5(a) of this Agreement;


 


(iv)     
there shall have been no Material Adverse Effect with respect to
the Company since the date hereof;


 


(v)   
  the Escrow Agent shall have received the Subsequent Closing
Subscription Amount from Purchaser in good funds in the amount
designated on such Purchaser’s signed signature page to this
Agreement;


 

(vii)
from the date
hereof to the Subsequent Closing Date, trading in securities in the
United States generally as reported by Bloomberg L.P. shall not
have been suspended or limited, nor shall a banking moratorium have
been declared either by the United States or New York State
authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the
reasonable judgment of such Purchaser, makes it impracticable or
inadvisable to purchase the Securities at the Subsequent
Closing;

 

(viii) there
has not occurred an Event of Default nor an event which with the
giving of notice or the passage of time could be or become an Event
of Default;

 

(ix) the
full unqualified completion of the Fan Pass Intellectual Property
Software and technology as described on Schedule 2.6(b)(ix);
and

 



 11

11







 





 

(x) not later than nine
(9) months after the Initial Closing Date, the Company will have
filed a registration statement on Form S-1, Form 10 or such other
form acceptable to Purchasers in order to register the shares of
Common Stock of Fan Pass, Inc. pursuant to the terms and time
frames described on Exhibit H pursuant to Section
12(g) of the Exchange Act.

 


2.7           Purchaser’s
Right To Terminate. Anything in any of the
Transaction Documents to the contrary notwithstanding, Purchaser
has the right to demand and receive from the Escrow Agent such
Purchaser’s Subscription Amount at any time until a Closing
takes place in connection with such Subscription Amount. The
Company and Purchaser acknowledges that the Escrow Agent is acting
as agent and representative for the Purchaser with respect to the
Purchaser’s Subscription Amount and at no time is or will be
holding any funds on behalf of Palladium Capital Advisors LLC nor
on behalf of the Company until a Closing. UNDER NO CIRCUMSTANCES WILL THE
PURCHASER’S SUBSCRIPTION AMOUNT BE DELIVERED TO OR UNDER THE
CONTROL OR AUTHORITY OF ANY PLACEMENT AGENT OR BROKER INCLUDING BUT
NOT LIMITED TO PALLADIUM CAPITAL ADVISORS LLC.

 


ARTICLE
III.


REPRESENTATIONS
AND WARRANTIES

 


3.1 Representations
and Warranties of the Company. Except as set forth in the SEC Reports or
the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation made
herein only to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company
hereby makes the following representations and warranties to each
Purchaser where the context allows all representations made in this
Section 3.1 by, on behalf or with regard to the Company are also
made with respect to each Subsidiary, mutatis mutandis:

 


(a) Subsidiaries. All of the direct
and indirect subsidiaries of the Company and the Company’s
ownership interests therein are set forth on Schedule 3.1(a). The Company
owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary including but not limited to
Fan Pass, Inc., free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities. Entities in existence as of the Closing Date which
would otherwise be deemed Subsidiaries as of the Closing Date but
which are identified on Schedule 3.1(a) as inactive and
which have nominal assets and liabilities will not be deemed
Subsidiaries until such entities have or acquire material assets or
liabilities.

 


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

 



 

12







 





 


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

 


(d) No Conflicts. The execution,
delivery and performance by the Company of this Agreement and the
other Transaction Documents, the issuance and sale of the
Securities and the consummation by it of the transactions
contemplated hereby and thereby to which it is a party do not and
will not: (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the
properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to
which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or
asset of the Company or a Subsidiary is bound or affected; except
in the case of each of clauses (ii) and (iii), such as could not
have or reasonably be expected to result in a Material Adverse
Effect.

 


(e) Filings, Consents and
Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.6 of this Agreement, (ii) the notice
and/or application(s) to each applicable Trading Market for the
issuance and sale of the Notes and the listing of the Underlying
Shares for trading thereon in the time and manner required thereby,
(iii) the filing of Form D with the Commission and such filings as
are required to be made under applicable state securities laws, and
(iv) all filings required to be made in connection with Fan Pass,
Inc., and the Fan Pass Transaction (collectively, the
“Required
Approvals”).

 


(f) Issuance of the Securities. The
Securities are duly authorized and, when issued and paid for in
accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company. The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock
for issuance of the Underlying Shares at least equal to the
Required Minimum on the date hereof.

 



 13

13







 






 


(g) Capitalization. The
capitalization of the Company is as set forth on Schedule 3.1(g) included
in the SEC Reports. The Company has not issued any capital stock
since its most recently filed periodic
report. Except as set forth on Schedule 3.1(g), no Person has
any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as
disclosed in the SEC Reports or on Schedule 3.1(g), there are no
outstanding options, employee or incentive stock option plans,
warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares
of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common
Stock Equivalents. Except as set forth on Schedule 3.1(g), the issuance
and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange
or reset price under any of such securities. All of the outstanding
shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in material
compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities.
Except as contemplated by Section 3.1(e), no further approval or
authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities. There are
no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders. The
Company is not a party to any Variable Rate Transaction and as of
Closing, there will not be outstanding any Equity Line of Credit
nor Variable Priced Equity Linked Instruments.

 


(h) SEC Reports; Financial
Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including
pursuant to Sections 12(b), 12(g), 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein filed not later than
ten (10) days prior to the date hereof, being collectively referred
to herein as the “SEC Reports”) on a timely
basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with
United States generally accepted accounting principles
(“GAAP”) applied on a
consistent basis during the periods involved except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements included in
the SEC Reports may not contain all footnotes required by GAAP, and
fairly present in all material respects the financial position of
the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments. The Company is,
and has no reason to believe that it will not in the foreseeable
future continue to be in compliance with all its reporting
requirements under the Securities Act and Exchange
Act.


 



 

14







 






 


(i) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the date of the latest
audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report or on
Schedule 3.1(i):
(i) there has been no event, occurrence or development that has had
or that would reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any material
liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to
be reflected in the Company’s financial statements pursuant
to GAAP or disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate except pursuant to the Stock
Option Plans as set forth on Schedule 3.1(i). The Company
does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of
the Securities contemplated by this Agreement, or as set forth on
Schedule 3.1(i), no
event, liability, fact, circumstance, occurrence or development has
occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective
businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least two
Trading Days prior to the date that this representation is
made.

 


(j) Litigation. Except as set forth
in the SEC Reports, there is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge
of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. Except as set forth in the SEC Reports, neither the Company
nor any Subsidiary, nor any director or officer thereof, is or has
been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty. Except as set forth in the SEC Reports,
there has not been, and to the knowledge of the Company, there is
not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer
of the Company. The Commission has not issued any stop order or
other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.

 


(k) Labor Relations. No labor
dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company, which could
reasonably be expected to result in a Material Adverse Effect. None
of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the
Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the
knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition
agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment
of each such executive officer does not subject the Company or any
of its Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms
and conditions of employment and wages and hours, except where the
failure to be in compliance could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.


 



 

15







 






 


(l)    
Compliance. Neither the Company
nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or
any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it
is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it
or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any judgment,
decree or order of any court, arbitrator or other governmental
authority or (iii) is or has been 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 taxes, environmental protection, occupational
health and safety, product quality and safety and employment and
labor matters, except in each case as could not have or reasonably
be expected to result in a Material Adverse Effect.

 


(m) Regulatory Permits. The Company
and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the
failure to possess such permits could not reasonably be expected to
result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any
Material Permit.

 


(n) Title to Assets. The Company
and the Subsidiaries have good and marketable title in fee simple
to all real property (if any) owned by them and good and marketable
title in all personal property owned by them that is material to
the business of the Company and the Subsidiaries, in each case free
and clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company and the Subsidiaries and (ii) Liens for the payment of
federal, state or other taxes, for which appropriate reserves have
been made in accordance with GAAP and, the payment of which is
neither delinquent nor subject to penalties. Any real property and
facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with
which the Company and the Subsidiaries are in
compliance.

 


(o) Intellectual Property. All of
the Company’s and Subsidiary’s Intellectual Property
Rights, if any, are described in the SEC Reports and on
Schedule
3.1(o).

 

(i) The term
“Intellectual
Property Rights” includes:

 

1. the name of the
Company and each Subsidiary, all fictional business names, trading
names, registered and unregistered trademarks, service marks, and
applications of the Company and each Subsidiary (collectively,
“Marks'');

 

2. all patents and
patent applications of the Company and each Subsidiary
(collectively, “Patents'');

 

3. all copyrights in
both published works and unpublished works of the Company and each
Subsidiary (collectively, “Copyrights”);

 

4. all rights in mask
works of the Company and each Subsidiary (collectively,
“Rights in Mask
Works''); and

 

5. all know-how, trade
secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings,
and blue prints (collectively, “Trade Secrets''); owned, used,
or licensed by the Company and each Subsidiary as licensee or
licensor.

 



 

16







 





 

(ii) Agreements.
Except as set forth in the SEC Reports, there are no outstanding
and, to Company’s knowledge, no threatened disputes or
disagreements with respect to any agreements relating to any
Intellectual Property Rights to which the Company is a party or by
which the Company is bound.

 

(iii) Know-How
Necessary for the Business. Except as set forth in the SEC
Reports, the Intellectual Property Rights are all those necessary
for the operation of the Company’s and Subsidiaries’
businesses as currently conducted or as represented to the
Purchaser to be conducted. Each of the Company and each Subsidiary
is the owner of all right, title, and interest in and to each of
their respective Intellectual Property Rights, free and clear of
all Liens, and adverse claims, and has the right to use all of the
Intellectual Property Rights. To the Company’s knowledge, no
employee of the Company or any Subsidiary has entered into any
contract that restricts or limits in any way the scope or type of
work in which the employee may be engaged or requires the employee
to transfer, assign, or disclose information concerning his work to
anyone other than the Company or a Subsidiary.

 

(iv) Patents.
Except as set forth in the SEC Reports, the Company and each
Subsidiary is the owner of all right, title and interest in and to
each of the Patents, free and clear of all Liens and adverse
claims. All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use),
are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the
Closing Date. No Patent has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding.
Except as set forth in the SEC Reports, to the Company’s
knowledge: (1) there is no potentially interfering patent or patent
application of any third party, and (2) no Patent is infringed or
has been challenged or threatened in any way. To the
Company’s knowledge, none of the products manufactured and
sold, nor any process or know-how used, by the Company or any
Subsidiary infringes or is alleged to infringe any patent or other
proprietary right of any other Person.

 

(v) Trademarks. The Company and
each Subsidiary is the owner of all right, title, and interest in
and to each of the Marks, free and clear of all Liens and adverse
claims. All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to
any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date. No Mark has been or is now involved in
any opposition, invalidation, or cancellation and, to the
Company’s knowledge, no such action is threatened with
respect to any of the Marks. To the Company’s knowledge: (1)
there is no potentially interfering trademark or trademark
application of any third party, and (2) no Mark is infringed or has
been challenged or threatened in any way. To the Company’s
knowledge, none of the Marks used by the Company and each
Subsidiary infringes or is alleged to infringe any trade name,
trademark, or service mark of any third party.

 

(vi) Copyrights.
The Company and each Subsidiary is the owner of all right, title,
and interest in and to each of the Copyrights, free and clear of
all Liens and adverse claims. All the Copyrights have been
registered and are currently in compliance with formal
requirements, are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety days
after the Closing Date. To the Company’s knowledge, no
Copyright is infringed or has been challenged or threatened in any
way. To the Company’s knowledge, none of the subject matter
of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the
work of a third party. All works encompassed by the Copyrights have
been marked with the proper copyright notice.

 



 17

17







 





 

(vii) Trade
Secrets. With respect to each Trade Secret, the
documentation relating to such Trade Secret is current, accurate,
and sufficient in detail and content to identify and explain it and
to allow its full and proper use without reliance on the knowledge
or memory of any individual. The Company has taken all reasonable
precautions to protect the secrecy, confidentiality, and value of
its Trade Secrets. The Company and each Subsidiary has good title
and an absolute (but not necessarily exclusive) right to use the
Trade Secrets. The Trade Secrets are not part of the public
knowledge or literature, and, to the Company’s knowledge,
have not been used, divulged, or appropriated either for the
benefit of any Person (other the Company and each Subsidiary) or to
the detriment of the Company and each Subsidiary. No Trade Secret
is subject to any adverse claim or has been challenged or
threatened in any way.

 


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

 


(q) Transactions With Affiliates and
Employees. Except as set forth in the SEC Reports, none of
the officers or directors of the Company or any Subsidiary and, to
the knowledge of the Company, none of the employees of the Company
or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from,
providing for the borrowing of money from or lending of money to or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $50,000 other than for: (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company or any
Subsidiary, and (iii) other employee benefits, including stock
option agreements under the Stock Option Plans or any other plan of
the Company except as disclosed on Schedule 3.1(g).

 


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


 



 

18







 






 


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

 


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

 


(u) Registration Rights. Except as
set forth and described on Schedule 3.1(u), no Person has
any right to cause the Company or any Subsidiary to effect the
registration under the Securities Act of any securities of the
Company or any Subsidiary, except for the Purchasers.

 


(v) Reporting Company/Shell
Company. The Company is a publicly-held company subject to
reporting obligations pursuant to Sections 12(g), 13 and 15(d) of
the Exchange Act. Pursuant to the provisions of the Exchange Act,
the Company has timely filed all reports and other materials
required to be filed by the Company thereunder with the SEC during
the twelve months preceding the date of this Agreement. The Company
has no reason to believe that it will not in the year following the
Closing continue to be in compliance with all listing and reporting
requirements applicable to the Company as of each of the Closing
Dates and thereafter. As of the date of this Agreement and the
Closing Date, the Company is not a “shell company” nor
a former “shell company” (as defined in Rule 405 of the
Securities Act).

 


(w) Application of Takeover
Protections. The Company and the Board of Directors will
have taken as of the Closing Date 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 certificate of incorporation (or similar
charter documents) or the laws of its state of incorporation that
is or could become applicable to the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including
without limitation as a result of the Company’s issuance of
the Securities and the Purchasers’ ownership of the
Securities.

 


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


 



 

19







 






 


(y) No Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, neither the Company, nor any
of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause the Offering of the Securities to be
integrated with prior offerings by the Company for purposes of: (i)
the Securities Act which would require the registration of any such
securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any
of the securities of the Company are listed or
designated.

 


(z) Solvency. Based on the
consolidated financial condition of the Company and Subsidiaries as
of each Closing Date, and the Company’s good faith estimate
of the fair market value of its assets, after giving effect to the
receipt by the Company of the proceeds from the sale of the
Securities hereunder: (i) the fair saleable value of the
Company’s assets exceeds the amount that will be required to
be paid on or in respect of the Company’s existing debts and
other liabilities (including known contingent liabilities) as they
mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now
conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of
the business conducted by the Company, consolidated and projected
capital requirements and capital availability thereof, and (iii)
the current cash flow of the Company, together with the proceeds
the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its
liabilities when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts
as they mature (taking into account the timing and amounts of cash
to be payable on or in respect of its debt). The Company has no
knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one
year from the Closing Date. The SEC Reports discloses, as of the
date hereof all outstanding secured and unsecured Indebtedness of
the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness” means (x)
any liabilities for borrowed money or amounts owed in excess of
$50,000 in the aggregate (other than trade accounts payable
incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be
reflected in the Company’s consolidated balance sheet (or the
notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business; and (z) the present value of any
lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness. Neither
the Company nor any Subsidiary is in default with respect to any
Indebtedness.

 


(aa) Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i)
has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside
on its books provision reasonably adequate for the payment of all
material taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any
Subsidiary know of no basis for any such claim.


 



 

20







 






 


(bb) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary,
has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) 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, (iii) 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 is aware) which is
in violation of law or (iv) violated in any material respect any
provision of FCPA.

 


(cc) Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(cc) of the
Disclosure Schedules. To the knowledge and belief of the Company,
such accounting firm: (i) is a registered public accounting firm as
required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the
Company’s Annual Report for the fiscal year ending December
31, 2016. There are no disagreements
of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and such
accountants.

 


(dd) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm’s length purchaser
with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no
Purchaser 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 Purchaser or any of their respective
representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the Securities. The
Company further represents to each Purchaser that the
Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company
and its representatives.

 


(ee) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein
to the contrary notwithstanding (except for Section 4.16 hereof),
it is understood and acknowledged by the Company that: (i) none of
the Purchasers has been asked by the Company to agree, nor has any
Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the
Securities for any specified term, (ii) past or future open market
or other transactions by any Purchaser, specifically including,
without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of
the Company’s publicly-traded securities, (iii) any
Purchaser, and counter-parties in “derivative”
transactions to which any such Purchaser is a party, directly or
indirectly, may presently have a “short” position in
the Common Stock and (iv) each Purchaser shall not be deemed to
have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction.
The Company further understands and acknowledges that (y) one or
more Purchasers may engage in hedging activities at various times
during the period that the Securities are outstanding, including,
without limitation, during the periods that the value of the
Underlying Shares deliverable with respect to Securities are being
determined, and (z) such hedging activities (if any) could reduce
the value of the existing stockholders' equity interests in the
Company at and after the time that the hedging activities are being
conducted.  The Company acknowledges that such aforementioned
hedging activities do not constitute a breach of any of the
Transaction Documents. The Company
acknowledges that anything to the contrary in the Transaction
Documents notwithstanding, Purchaser may sell long any Underlying
Shares it anticipates receiving after conversion of any part of a
Note.


 



 

21







 






 


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

 


(gg) Money
Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any Subsidiary with respect to the Money Laundering
Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened.

 


(hh) Stock
Option Plans. Each stock option and similar security granted
by the Company was granted (i) in accordance with the terms of such
any applicable stock option plans and (ii) with an exercise price
at least equal to the fair market value of the Common Stock on the
date such stock option would be considered granted under GAAP and
applicable law. No stock option granted under any stock option plan
has been backdated. The Company has not knowingly granted, and
there is no and has been no Company policy or practice to knowingly
grant, stock options prior to, or otherwise knowingly coordinate
the grant of stock options with, the release or other public
announcement of material information regarding the Company or its
Subsidiaries or their financial results or prospects.

 


(ii) Office
of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company is currently subject to
any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”).

 


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

 


(kk) No
General Solicitation. Neither the Company nor any person
acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only
to the Purchasers and certain other Accredited
Investors.

 


(ll) Indebtedness
and Seniority. As of the date hereof, all Indebtedness and
Liens of the Company and the principal terms thereof are set forth
in the SEC Reports. Except as set forth on Schedule 3.1(ll), as of the
Closing Date, no Indebtedness or other equity of the Company is or
will be pari passu or
senior to the Notes in right of payment, whether with respect to
interest or upon liquidation or dissolution, or otherwise, other
than indebtedness secured by purchase money security interests
(which is senior only as to underlying assets covered thereby) and
capital lease obligations (which is senior only as to the property
covered thereby).


 



 

22







 






 


(mm) Listing
and Maintenance Requirements.  The Common Stock is listed on the OTC Pink
Marketplace maintained by the OTC Markets Group, Inc. under the
symbol FDBL. Except as disclosed in the Reports, the Company has
not, in the twenty-four (24) months preceding the date hereof,
received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of
such Trading Market.

 


(nn) FDA. 
The Company has no applications pending before the jurisdiction of
the U.S. Food and Drug Administration (“FDA”).

 


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

 


(pp) Other
Covered Persons. Except as set forth on Schedule 3.1(s) or to attorneys
for legal services, the Company is not aware of any person that has
been or will be paid (directly or indirectly) remuneration in
connection with the sale of any Regulation D Securities pursuant to
this Agreement.

 


(qq) Securities
may be purchased by Affiliates of the Company or other parties with
a financial interest in the Offering. Purchaser acknowledges that Securities may be
purchased by Affiliates of the Company or by other persons who will
receive fees or other compensation or gain which is dependent upon
the success of the Offering. Such purchases may be made at any
time, and will be counted in determining whether the level of
purchases has been met for a Closing of the Offering. Purchasers
acknowledges that the sale of Securities to any Person does not
indicate that such sales have been made to Purchasers who have no
financial or other interest in the Offering, or who otherwise are
exercising independent investment discretion.

 


(rr) Survival.
The foregoing representations and warranties shall survive the
Closing.

 


3.2 Representations and Warranties of the
Purchaser. Purchaser hereby represents and warrants as of
the date hereof and as of the Closing Date to the Company with
respect to itself, the Securities, the Fan Pass Securities, as
follows (unless as of a specific date therein):

 


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


 



 

23







 






 


(b) Understandings or Arrangements.
Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the
Securities as principal for its own account and not with a view to
or for distributing or reselling such Securities or any part
thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any
applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of
the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Purchaser’s
right to sell the Securities pursuant to a registration statement
or otherwise in compliance with applicable federal and state
securities laws). Purchaser is acquiring the Securities hereunder
in the ordinary course of its business.

 


(c) Purchaser Status. At the time
Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it converts any Notes it
will be either: (i) an “accredited investor” as defined
in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities Act.
Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act. Purchaser has the authority and is
duly and legally qualified to purchase and own the Securities.
Purchaser is able to bear the risk of such investment for an
indefinite period and to afford a complete loss thereof. Purchaser
has provided the information in the Accredited Investor
Questionnaire attached hereto as Exhibit E (the
“Investor
Questionnaire”). The information set forth on the
signature pages hereto and the Investor Questionnaire regarding
Purchaser is true and complete in all respects. Except as disclosed
in the Investor Questionnaire, Purchaser has had no position,
office or other material relationship within the past three years
with the Company or Persons (as defined below) known to Purchaser
to be affiliates of the Company, and is not a member of the
Financial Industry Regulatory Authority or an “associated
person” (as such term is defined under the FINRA Membership
and Registration Rules Section 1011).

 


(d) Experience of Such Purchaser.
Purchaser, either alone or together with its representatives, has
such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Purchaser is
able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such
investment.

 


(e) Information on Company.
Purchaser has been furnished with or has had access to the SEC
Reports. Purchaser is not deemed to have any knowledge of any
information not included in the SEC Reports unless such information
is delivered in the manner described in the next
sentence.  In addition, Purchaser may have received in
writing from the Company such other information concerning its
operations, financial condition and other matters as Purchaser has
requested, identified thereon as OTHER WRITTEN INFORMATION (such
other information is collectively, the “Other Written
Information”), and considered all factors Purchaser
deems material in deciding on the advisability of investing in the
Securities.   Purchaser was afforded (i) the opportunity to
ask such questions as Purchaser deemed necessary of, and to receive
answers from, representatives of the Company concerning the merits
and risks of acquiring the Securities; (ii) the right of access to
information about the Company and its financial condition, results
of operations, business, properties, management and prospects
sufficient to enable Purchaser to evaluate the Securities; and
(iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision
with respect to acquiring the Securities.


 



 

24







 






 


(f) Compliance with Securities Act;
Reliance on Exemptions. Purchaser understands and agrees
that the Securities have not been registered under the 1933 Act or
any applicable state securities laws, by reason of their issuance
in a transaction that does not require registration under the 1933
Act, and that such Securities must be held indefinitely unless a
subsequent disposition is registered under the 1933 Act or any
applicable state securities laws or is exempt from such
registration. Purchaser understands and agrees that the Securities
are being offered and sold to Purchaser in reliance on specific
exemptions from the registration requirements of United States
federal and state securities laws and regulations and that the
Company is relying in part upon the truth and accuracy of, and
Purchaser’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Purchaser set
forth herein in order to determine the availability of such
exemptions and the eligibility of such Purchaser to acquire the
Securities.

 


(g) Communication of Offer.
Purchaser is not purchasing the Securities as a result of any
“general solicitation” or “general
advertising,” as such terms are defined in Regulation D,
which includes, but is not limited to, any advertisement, article,
notice or other communication regarding the Securities published in
any newspaper, magazine or similar media or on the internet or
broadcast over television, radio or the internet or presented at
any seminar or any other general solicitation or general
advertisement.

 


(h) No Governmental Review.
Purchaser understands that no United States federal or state agency
or any other governmental or state agency has passed on or made
recommendations or endorsement of the Securities or the suitability
of the investment in the Securities nor have such authorities
passed upon or endorsed the merits of the Offering.

 


(i) No Conflicts. The execution,
delivery and performance of this Agreement and performance under
the other Transaction Documents and the consummation by Purchaser
of the transactions contemplated hereby and thereby or relating
hereto or thereto do not and will not (i) result in a violation of
Purchaser’s charter documents, bylaws or other organizational
documents, if applicable, (ii) conflict with nor constitute a
default (or an event which with notice or lapse of time or both
would become a default) under any agreement to which Purchaser is a
party, nor (iii) result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or
governmental agency applicable to Purchaser or its properties
(except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a material adverse effect on
Purchaser). Purchaser is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or
perform under the other Transaction Documents nor to purchase the
Securities in accordance with the terms hereof, provided that for
purposes of the representation made in this sentence, Purchaser is
assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.

 


(j)    Certain Transactions
and Confidentiality. Other
than consummating the transactions contemplated hereunder,
Purchaser has not directly or indirectly, nor has any Person acting
on behalf of or pursuant to any understanding with Purchaser,
executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing as of the
time that Purchaser first received a written term sheet from the
Company or any other Person representing the Company setting forth
the material terms of the transactions contemplated hereby and
ending immediately prior to the execution
hereof.

 


(k)   The
sale of Securities does not indicate Purchaser’s investment
decision is shared by other unaffiliated
Purchaser. Because
there may be substantial purchases by Affiliates of the Company, or
other Persons who will receive fees or other compensation or gain
dependent upon the success of the Offering, Purchaser acknowledges
that Purchaser is not placing any reliance on such sales as an
indication of the merits of the Offering.


 



 

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(l)  
Survival. The
foregoing representations and warranties shall survive the
Closing.

 


The
Company acknowledges and agrees that the representations contained
in Section 3.2 shall not modify, amend or affect such
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.


 


ARTICLE
IV.


OTHER
AGREEMENTS OF THE PARTIES

 


4.1           Transfer
Restrictions.

 


(a)           The
Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of
Securities other than: (i) pursuant to an effective registration
statement, (ii) pursuant to Rule 144, (iii) a transfer to the
Company, (iv) a transfer to an Affiliate of a Purchaser, or (v) in
connection with a pledge as contemplated in Section 4.1(b), the
Company may require the transferor thereof to provide to the
Company, at the Company’s expense, an opinion of counsel
selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms
of this Agreement and the Registration Rights Agreement and shall
have the rights and obligations of a Purchaser under this Agreement
and the other Transaction Documents.

 


(b)           The
Purchaser agrees to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following
form:

 


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

 



 26

26







 





 


(c)           Pledge.
The Company acknowledges and agrees that a Purchaser may from time
to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
Accredited Investor and who agrees to be bound by the provisions of
this Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledge or secure
Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are
subject to registration pursuant to a registration rights
agreement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend
the list of selling stockholders thereunder.

 


(d)           Legend
Removal. Certificates evidencing the Underlying Shares shall
not contain any legend (“Unlegended
Shares”) (including the legend set forth in Section
4.1(b) hereof): (i) while a registration statement covering the
resale of such security is effective under the Securities Act, (ii)
following any sale of such Underlying Shares pursuant to Rule 144,
(iii) if such Underlying Shares are eligible for sale under Rule
144, without the requirement for the Company to be in compliance
with the current public information required under Rule 144 as to
such Underlying Shares and without volume or manner-of-sale
restrictions or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal
opinion to the Transfer Agent promptly after the effective date of
a registration statement if required by the Transfer Agent to
effect the removal of the legend hereunder. If all or any Notes are
converted at a time when there is an effective registration
statement to cover the resale of the Underlying Shares, or if such
Underlying Shares may be sold under Rule 144 or if such legend is
not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such
Underlying Shares shall be issued free of all legends. The Company
agrees that following such time as such legend is no longer
required under this Section 4.1(d), it will, no later than five
Trading Days following the delivery by a Purchaser to the Company
or the Transfer Agent of a certificate representing Underlying
Shares, as applicable, issued with a restrictive legend (such fifth
Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and
other legends (however, the Corporation shall use reasonable best
efforts to deliver such shares within three (3) Trading Days). The
Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section 4. Certificates for Underlying
Shares subject to legend removal hereunder shall be transmitted by
the Transfer Agent to the Purchaser by crediting the account of the
Purchaser’s prime broker with the Depository Trust Company
System as directed by Purchaser.

 


(e)           Legend
Removal Default. In addition to Purchaser’s other
available remedies, provided the conditions for legend removal set
forth in Section 4.1(d) exist, the Company shall pay to Purchaser,
in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Underlying Shares (based on the higher of the actual
purchase price or VWAP of the Common Stock on the date such
Securities are submitted to the Transfer Agent) delivered for
removal of the restrictive legend and subject to Section 4.1(d),
$10 per Trading Day for each Trading Day after the Legend Removal
Date (increasing to $20 per Trading Day after the fifth Trading
Day) until such certificate is delivered without a legend. Nothing
herein shall limit Purchaser’s right to pursue actual damages
for the Company’s failure to deliver certificates
representing any Securities as required by the Transaction
Documents, and Purchaser shall have the right to pursue all
remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief.

 



 

27







 





 


(f)           DWAC.
In lieu of delivering physical certificates representing the
Unlegended Shares, upon request of Purchaser, so long as the
certificates therefor do not bear a legend and the Purchaser is not
obligated to return such certificate for the placement of a legend
thereon, the Company shall cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the
account of Purchaser’s prime broker with the Depository Trust
Company through its Deposit Withdrawal At Custodian system,
provided that the Company’s Common Stock is DTC eligible and
the Company’s transfer agent participates in the Deposit
Withdrawal at Custodian system. Such delivery must be made on or
before the Legend Removal Date.

 


(g)           Injunction.
In the event Purchaser shall request delivery of Unlegended Shares
as described in this Section 4.1 and the Company is required to
deliver such Unlegended Shares, the Company may not refuse to
deliver Unlegended Shares based on any claim that such Purchaser or
anyone associated or affiliated with Purchaser has not complied
with Purchaser’s obligations under the Transaction Documents,
or for any other reason, unless, an injunction or temporary
restraining order from a court, on notice, restraining and or
enjoining delivery of such Unlegended Shares shall have been sought
and obtained by the Company and the Company has posted a surety
bond for the benefit of Purchaser in the amount of the greater of
(i) 120% of the amount of the aggregate purchase price of the
Underlying Shares to be subject to the injunction or temporary
restraining order, or (ii) the VWAP of the Common Stock on the
trading day before the issue date of the injunction multiplied by
the number of Unlegended Shares to be subject to the injunction,
which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which
shall be payable to Purchaser to the extent Purchaser obtains
judgment in Purchaser’s favor.

 


(h)           Buy-In.
In addition to any other rights available to Purchaser,
if the Company fails to deliver to a
Purchaser Unlegended Shares as required pursuant to this Agreement
and after the Legend Removal Date the Purchaser, or a broker on the
Purchaser’s behalf, purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by such Purchaser of the shares of Common Stock which the
Purchaser was entitled to receive in unlegended form from the
Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in
addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total
purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (B) the aggregate
purchase price of the shares of Common Stock delivered to the
Company for reissuance as Unlegended Shares together with interest
thereon at a rate of 15% per annum accruing until such amount and
any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if a
Purchaser purchases shares of Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to $10,000 of
purchase price of Underlying Shares delivered to the Company for
reissuance as Unlegended Shares, the Company shall be required to
pay the Purchaser $1,000, plus interest, if any. The Purchaser
shall provide the Company written notice indicating the amounts
payable to the Purchaser in respect of the
Buy-In.

 


(i)           Plan
of Distribution. Purchaser agrees with the Company that
Purchaser will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a
registration statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the
removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance upon this understanding.

 



 

28







 





 


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

 

4.3            
Furnishing of Information;
Public Information.

 


(a) Until no Purchaser
owns Securities, the Company covenants to file all periodic reports
with the Commission pursuant to Section 15(d) of the Exchange Act
and maintains the registration of the Common Stock under Section
12(b) or 12(g) of the Exchange Act, after such time as the Company
initially becomes subject to such requirements, and to timely file
(or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act and
timely file all reports that would be required to be filed by an
issuer subject to Section 12(b) or 12(g) of the Exchange Act even
if the Company is not then subject to the reporting requirements of
the Exchange Act.

 


(b) At any time
commencing on the Closing Date and ending at such time that all of
the Securities may be sold without the requirement for the Company
to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company
shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information
Failure”) then, in addition to such Purchaser’s other
available remedies, the Company shall pay to Purchaser, in cash, as
partial liquidated damages and not as a penalty, by reason of any
such delay in or reduction of its ability to sell the Securities,
an amount in cash equal to two percent (2.0%) of the aggregate
principal amount of Notes and accrued interest held by such
Purchaser on the day of a Public Information Failure and on every
thirtieth (30th) day (pro-rated for periods totaling less than
thirty days) thereafter until the earlier of (a) the date such
Public Information Failure is cured and (b) such time that such
public information is no longer required for the Purchasers to
transfer the Underlying Shares pursuant to Rule 144. The payments
to which a Purchaser shall be entitled pursuant to this Section
4.2(b) are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred
and (ii) the third (3rd) Business Day after the event or failure
giving rise to the Public Information Failure Payments is cured. In
the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure
Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full. Nothing herein
shall limit Purchaser’s right to pursue actual damages for
the Public Information Failure, and Purchaser shall have the right
to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief.

 


4.4           Integration.
The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities
or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the
closing of such other transaction or to effectuate such other
transaction unless shareholder approval is obtained before the
earlier of the closing of such subsequent transaction or
effectuation of such other transaction.

 



 

29







 





 


4.5           Conversion
and Exercise Procedures. The form of Notice of Conversion
included in the Notes set forth the totality of the procedures
required of the Purchaser in order to convert the Notes. No
additional legal opinion, other information or instructions shall
be required of the Purchaser to convert their Notes. The Company
shall honor conversions of the Notes and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods
set forth in the Transaction Documents.

 


4.6           Securities
Laws Disclosure; Publicity. The Company shall, by 9:30 a.m.
(New York City time) on the fourth Trading Day following the
Closing Date, file a Current Report on Form 8-K including the
Transaction Documents as exhibits thereto with the Commission
within the time required by the Exchange Act (“Form 8-K”). A form of the
Form 8-K is annexed hereto as Exhibit G. Such Exhibit G will be identical to
the Form 8-K which will be filed with the Commission except for the
omission of signatures thereto by the Company and auditors
providing the financial statements. From and after the filing of
the Form 8-K, the Company represents to the Purchaser that it shall
have publicly disclosed all material, non-public information
delivered to the Purchaser by the Company or any of its
Subsidiaries, or any of their respective officers, directors,
employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and
Purchaser shall consult with each other in issuing any press
releases with respect to the transactions contemplated hereby, and
neither the Company nor Purchaser shall issue any press release nor
otherwise make any such public statement without the prior consent
of the Company, with respect to any press release of Purchaser, or
without the prior consent of Purchaser, with respect to any press
release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law,
in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly
disclose the name of Purchaser, or include the name of Purchaser in
any filing with the Commission or any regulatory agency or Trading
Market unless the name of Purchaser is already included in the body
of the Transaction Documents, without the prior written consent of
Purchaser, except: (a) as required by federal securities law in
connection with the filing of final Transaction Documents with the
Commission and (b) to the extent such disclosure is required by law
or Trading Market regulations, in which case the Company shall
provide the Purchaser with prior notice of such disclosure
permitted under this clause (b). The Company may file a Form 10-Q
in lieu of the Form 8-K provided such filing contains the content
required to be included in the Form 8-K and the Form 10-Q is filed
not later than the Trading Day after the Closing Date.

 


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

 


4.8           Non-Public
Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction
Documents, the Company covenants and agrees that neither it, nor
any other Person acting on its behalf, will provide Purchaser or
its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior
thereto Purchaser shall have entered into a written agreement with
the Company regarding the confidentiality and use of such
information. The Company understands and confirms that Purchaser
shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.

 


4.9           Use
of Proceeds. The Company shall use the net proceeds from the
sale of the Offering hereunder for the purposes set forth on
Schedule 4.9 and
the expenses of the Offering and shall not use such proceeds: (a)
for the satisfaction of any portion of the Company’s debt
except as disclosed on Schedule 4.9 (other than
payment of trade payables in the ordinary course of the
Company’s business and prior practices), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of
FCPA or OFAC regulations.

 



 

30







 





 


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

 


4.11           Reservation
and Listing of Securities.

 

(a) The Company shall
maintain a reserve from its duly authorized shares of Common Stock
for issuance pursuant to the Transaction Documents in such amount
as may then be required to fulfill its obligations in full under
the Transaction Documents, but not less than the Required
Minimum.

 

(b) If, on any date,
the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than the Required Minimum on such
date, then the Board of Directors shall amend the Company’s
certificate or articles of incorporation to increase the number of
authorized but unissued shares of Common Stock to at least the
Required Minimum at such time, as soon as possible and in any event
not later than the 60th day after such
date.

 



 

31







 





 

(c) The Company shall,
if applicable: (i) in the time and manner required by the principal
Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a number of shares
of Common Stock at least equal to the Required Minimum on the date
of such application, (ii) take all steps necessary to cause such
shares of Common Stock to be approved for listing or quotation on
such Trading Market as soon as possible thereafter, (iii) provide
to the Purchasers evidence of such listing or quotation and (iv)
maintain the listing or quotation of such Common Stock on any date
at least equal to the Required Minimum on such date on such Trading
Market or another Trading Market. The
Company will then take all action necessary to continue the listing
or quotation and trading of its Common Stock on a Trading Market
until the later of (i) at least six (6) years after the Closing
Date, and (ii) for so long as the Notes are outstanding, and will
comply in all respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of the Trading
Market. In the event the aforedescribed listing is not
continuously maintained for six (6) years after the Closing Date
and for so long as Notes are outstanding (a “Listing Default”), then
in addition to any other rights the Purchasers may have hereunder
or under applicable law, on the first day of a Listing Default and
on each monthly anniversary of each such Listing Default date (if
the applicable Listing Default shall not have been cured by such
date) until the applicable Listing Default is cured, the Company
shall pay to each Purchaser an amount in cash, as partial
liquidated damages and not as a penalty, equal to 2% of the
aggregate Subscription Amount of Notes, and Conversion Price of the
Conversion Shares held by such Purchaser on the day of a Listing
Default and on every thirtieth day (pro-rated for periods less than
thirty days) thereafter until the date such Listing Default is
cured. If the Company fails to pay any liquidated damages pursuant
to this Section in a timely manner, the Company will pay interest
thereon at a rate of 1.5% per month (pro-rated for partial months)
to the Purchaser.

 


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

 


4.13           Subsequent
Equity Sales. From the date hereof until the Notes are no
longer outstanding, the Company and its Subsidiaries will not,
without the consent of the Purchasers, enter into any Equity Line
of Credit or similar agreement, issue or agree to issue floating or
Variable Priced Equity Linked Instruments nor issue or agree to
issue any of the foregoing or equity with price reset rights
(subject to adjustment for stock splits, distributions, dividends,
recapitalizations and the like) (collectively, a
“Variable Rate
Transaction”). For purposes hereof,
“Equity Line of
Credit” shall include any transaction involving a
written agreement between the Company, its Subsidiaries and an
investor or underwriter whereby the Company or its Subsidiaries has
the right to “put” its securities to the investor or
underwriter over an agreed period of time and at an agreed price or
price formula, and “Variable Priced Equity Linked
Instruments” shall include: (A) any debt or equity
securities which are convertible into, exercisable or exchangeable
for, or carry the right to receive additional shares of Common
Stock or Common Stock Equivalents or any of the foregoing at a
price that can be reduced either (1) at any conversion, exercise or
exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for Common Stock at any time
after the initial issuance of such debt or equity security, or (2)
with a fixed conversion, exercise or exchange price that is subject
to being reset at some future date at any time after the initial
issuance of such debt or equity security due to a change in the
market price of the Company’s or its Subsidiaries’
Common Stock since date of initial issuance, or upon the issuance
of any debt, equity or Common Stock Equivalent, and (B) any
amortizing convertible security which amortizes prior to its
maturity date, where the Company or its Subsidiaries is required or
has the option to (or any investor in such transaction has the
option to require the Company or its Subsidiaries to make such
amortization payments in shares of Common Stock which are valued at
a price that is based upon and/or varies with the trading prices of
or quotations for Common Stock at any time after the initial
issuance of such debt or equity security (whether or not such
payments in stock are subject to certain equity conditions).
 For purposes of determining the total consideration for a
convertible instrument (including a right to purchase equity of the
Company or its Subsidiaries) issued, subject to an original issue
or similar discount or which principal amount is directly or
indirectly increased after issuance, the consideration will be
deemed to be the actual net cash amount received by the Company in
consideration of the original issuance of such convertible
instrument. For so long as the Notes are outstanding, the Company
or its Subsidiaries will not, without the consent of the Purchasers
issue any Common Stock or Common Stock Equivalents to officers,
directors, and employees of the Company or its Subsidiaries unless
such issuance is an Exempt Issuance or in the amounts and on the
terms set forth on Schedule 4.13. For so long as
any Notes are outstanding, the Company or its Subsidiaries will not
amend the terms of any securities or Common Stock Equivalents or of
any agreement outstanding or in effect as of the date of this
Agreement pursuant to which same were or may be acquired without
the consent of the Purchasers, if the result of such amendment
would be at an effective price per share of Common Stock less than
the Conversion Price in effect at the time of such amendment.
Except for Exempt Issuances for so long as the Notes are
outstanding, the Company or its Subsidiaries will not issue any
Common Stock or Common Stock Equivalents, without the consent of
the Purchasers. The restrictions and limitations in this Section
4.13 are in addition to and shall apply whether or not a Purchaser
exercises its rights pursuant to Section 4.17 and Section
4.23.

 



 

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4.14           Reserved.

 


4.15           Capital
Changes. Until the one year anniversary of the Closing Date,
the Company or its Subsidiaries shall not undertake a reverse or
forward stock split or reclassification of the Common Stock without
10 days prior written notice to the Purchaser.

 


4.16           Certain
Transactions and Confidentiality. Purchaser covenants that
neither it, nor any Affiliate acting on its behalf or pursuant to
any understanding with it will execute any purchases or sales,
including Short Sales, of any of the Company’s securities
during the period commencing with the execution of this Agreement
and ending at such time that the transactions contemplated by this
Agreement are first publicly announced pursuant to a press release
or Form 8-K as described in Section 4.6.  Purchaser covenants
that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company pursuant to a press
release or Form 8-K as described in Section 4.6, such Purchaser
will maintain the confidentiality of the existence and terms of
this transaction and the information included in the Transaction
Documents and the Disclosure Schedules. Notwithstanding the
foregoing, and notwithstanding anything contained in this Agreement
to the contrary, the Company expressly acknowledges and agrees that
(i) no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in effecting transactions in any
securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced
pursuant to a press release or Form 8-K as described in Section
4.6, (ii) no Purchaser shall be restricted or prohibited from
effecting any transactions in any securities of the Company in
accordance with applicable securities laws from and after the time
that the transactions contemplated by this Agreement are first
publicly announced pursuant to a press release or Form 8-K, and
(iii) no Purchaser shall have any duty of confidentiality to the
Company or its Subsidiaries after the filing of the Form 8-K. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement.

 

 

 

 

 

 

 

 

 

 

 



 

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4.17           Participation
in Future Financing.

 

(a) Until thirty-six
(36) months after the final Closing Date, upon any proposed
issuance by the Company or any of its Subsidiaries of Common Stock,
Common Stock Equivalents, or equity linked debt obligations other
than (i) a rights offering to all holders of Common Stock (which
may include extending such rights offering to holders of Notes) or
(ii) an Exempt Issuance, (each a “Subsequent Financing”),
the Purchaser shall have the right to participate in up to an
amount of the Subsequent Financing equal to 100% of the Subsequent
Financing (the “Participation Maximum”)
pro rata to each other in proportion to its Subscription Amounts on
the same terms, conditions and price provided for in the Subsequent
Financing, unless the Subsequent Financing is an underwritten
public offering, in which case the Company shall offer Purchaser
the right to participate in such public offering when it is lawful
for the Company to do so, but no Purchaser shall be entitled to
purchase any particular amount of such public offering. For the
avoidance of doubt, an Additional Offering is a Subsequent
Financing.

 

(b) At least ten (10)
Trading Days prior to the closing of the Subsequent Financing, the
Company shall deliver to each Purchaser a written notice of its
intention to effect a Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask such Purchaser if it wants to review the
details of such financing (such additional notice, a
“Subsequent
Financing Notice”). Upon the request of a Purchaser,
and only upon a request by such Purchaser, for a Subsequent
Financing Notice, the Company shall promptly, but no later than one
(1) Trading Day after such request, deliver a Subsequent Financing
Notice to such Purchaser. The requesting Purchaser shall be deemed
to have acknowledged that the Subsequent Financing Notice may
contain material non-public information. The Subsequent Financing
Notice shall describe in reasonable detail the proposed terms of
such Subsequent Financing, the amount of proceeds intended to be
raised thereunder and the Person or Persons through or with whom
such Subsequent Financing is proposed to be effected and shall
include a term sheet or similar document relating thereto as an
attachment.

 

(c) Any Purchaser
desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York
City time) on the tenth (10th) Trading Day after
all of the Purchasers have received the Pre-Notice that the
Purchaser is willing to participate in the Subsequent Financing,
the amount of such Purchaser’s participation, and
representing and warranting that such Purchaser has such funds
ready, willing, and available for investment on the terms set forth
in the Subsequent Financing Notice. If the Company receives no such
notice from a Purchaser as of such fifth (5th) Trading Day, such
Purchaser shall be deemed to have notified the Company that it does
not elect to participate.

 

(d) If by 5:30 p.m.
(New York City time) on the tenth (10th ) Trading Day after
the Purchaser has received the Pre-Notice, notifications by the
Purchaser of its willingness to participate in the Subsequent
Financing (or to cause their designees to participate) is, in the
aggregate, less than the total amount of the Subsequent Financing,
then the Company may affect the remaining portion of such
Subsequent Financing on the terms and with the Persons set forth in
the Subsequent Financing Notice and the Purchasers shall
simultaneously affect their portion of such Subsequent Financing as
set forth in their notification to the Company consistent with the
terms set forth in the Subsequent Financing Notice.

 

(e) If by 5:30 p.m.
(New York City time) on the fifteenth (15th) Trading Day after
the Purchaser has received the Pre-Notice, the Company receives
responses to a Subsequent Financing Notice from Purchasers seeking
to purchase more than the aggregate amount of the Participation
Maximum, such Purchaser shall have the right to purchase its Pro
Rata Portion (as defined below) of the Participation Maximum. 
“Pro Rata
Portion” means the ratio of (x) the principal amount
of Notes purchased hereunder by Purchaser participating under this
Section 4.17 and (y) the sum of the aggregate principal amounts of
Notes purchased hereunder by Purchaser participating under this
Section 4.17.

 



 

34







 





 

(f) The Company must
provide the Purchaser with a second Subsequent Financing Notice,
and the Purchaser will again have the right of participation set
forth above in this Section 4.18, if the Subsequent Financing
subject to the initial Subsequent Financing Notice is not
consummated for any reason on the terms set forth in such
Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.

 

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

 


(h)    Notwithstanding anything to the contrary in this
Section 4.17 and unless otherwise agreed to by Purchaser, the
Company shall either confirm in writing to such Purchaser that the
transaction with respect to the Subsequent Financing has been
abandoned or shall publicly disclose its intention to issue the
securities in the Subsequent Financing, in either case in such a
manner such that such Purchaser will not be in possession of any
material, non-public information, by the tenth (10th) Business Day
following delivery of the Subsequent Financing Notice. If by such
tenth (10th) Business Day, no public disclosure regarding a
transaction with respect to the Subsequent Financing has been made,
and no notice regarding the abandonment of such transaction has
been received by Purchaser, such transaction shall be deemed to
have been abandoned and Purchaser shall not be deemed to be in
possession of any material, non-public information with respect to
the Company or any of its Subsidiaries.

 


4.18           Purchaser’s
Exercise Limitations. Each of the Company and Fan Pass, Inc.
shall not effect exercise of the rights granted in Sections 4.17
and 4.23 of this Agreement, and a Purchaser shall not have the
right to exercise any portion of such rights granted in Sections
4.17 and 4.23 only to the extent that after giving effect to such
exercise, the Purchaser, would beneficially own in excess of the
Beneficial Ownership Limitation (as defined in the Note), applied
in the manner set forth in the Note. In such event the right by
Purchaser to benefit from such rights or receive shares in excess
of the Beneficial Ownership Limitation shall be held in abeyance
until such times as such excess shares shall not exceed the
Beneficial Ownership Limitation, provided the Purchaser complies
with the Purchaser’s other obligations in connection with the
exercise by Purchaser of its rights pursuant to Sections 4.17 and
4.23.

 


4.19           Maintenance
of Property. The Company and Fan Pass, Inc. shall keep all
of its property, which is necessary or useful to the conduct of its
business, in good working order and condition, ordinary wear and
tear excepted.

 


4.20           Preservation
of Corporate Existence. The Company and Fan Pass, Inc. shall
each preserve and maintain its corporate existence, rights,
privileges and franchises in the jurisdiction of its incorporation,
and qualify and remain qualified, as a foreign corporation in each
jurisdiction in which such qualification is necessary in view of
its business or operations and where the failure to qualify or
remain qualified might reasonably have a Material Adverse Effect
upon the financial condition, business or operations of the Company
taken as a whole.


 



 

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4.21           
Most Favored National
Provision. From the date hereof and for so long as Purchaser
holds any Securities, in the event that the Company or Fan Pass,
Inc. issues or sells any Common Stock or Common Stock Equivalents,
if Purchaser then holding outstanding Securities reasonably
believes that any of the terms and conditions appurtenant to such
issuance or sale are more favorable to such investors than are the
terms and conditions granted to the Purchaser hereunder, upon
notice to the Company or Fan Pass, Inc., as applicable, by
Purchaser within five (5) Trading Days after disclosure of such
issuance or sale, the Company or Fan Pass, Inc., as applicable,
shall amend the terms of this transaction as to Purchaser only so
as to give Purchaser the benefit of such more favorable terms or
conditions. This Section 4.21 shall not apply with respect to an
Exempt Issuance. The Company or Fan Pass, Inc., as applicable,
shall provide Purchaser with notice of any such issuance or sale
not later than ten (10) Trading Days before such issuance or
sale.


 

4.22           
DTC
Program. At all times that
Securities are outstanding, each of the Company and Fan
Pass, Inc. shall use its best efforts
to employ as the transfer agent for the Common Stock a participant
in the Depository Trust Company Automated Securities Transfer
Program and cause the Common Stock to be transferable pursuant to
such program.


 

4.23           
Consent to Offering,
Waiver of Rights and Amendment of Beneficial Ownership
Limitation. Solely in connection with this Offering, Alpha
Capital Anstalt, and Palladium Capital Advisors LLC each consents
to this Offering, Alpha Capital Anstalt and Palladium Capital
Advisors LLC waive the prohibitions against the Company contained
in Section 4.13 of the Securities Purchase Agreement, the rights
and protections granted to each of Alpha Capital Anstalt and
Palladium Capital Advisors LLC pursuant to Section 4.21 of the
Securities Purchase Agreement, Section 5(e) of the Notes and
Section 3 of the Warrants, each dated August 5, 2015, March 8, 2016
as amended pursuant to Allonges 1-8, October 7, 2016 and its
subsequent closings dated November 7, 2016, December 16, 2016 and
January 20, 2017, and the rights and protections granted to each of
Alpha Capital Anstalt and Palladium Capital Advisors LLC pursuant
to Section 5(e) of the Notes and Section 3 of the Warrants each
dated August 5, 2015, March 8, 2016 as amended pursuant to Allonges
1-8, October 7, 2016 and its subsequent closings dated November 7,
2016, December 16, 2016 and January 20, 2017 (“Subsequent Closing Note and
Warrant”). Furthermore, Purchaser and the Company
agree that the Beneficial Ownership Limitation contained in all of
the prior agreements between the Company and the Purchaser is
amended to 4.99%.


 


4.24           Reimbursement.
If any Purchaser becomes involved in any capacity in any Proceeding
by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar
transactions by such Purchaser to or with any current stockholder),
solely as a result of such Purchaser’s acquisition of the
Securities under this Agreement, the Company will reimburse such
Purchaser for its reasonable legal and other expenses (including
the cost of any investigation preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are
incurred. The reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company
may otherwise have, shall extend upon the same terms and conditions
to any Affiliates of the Purchasers who are actually named in such
action, proceeding or investigation, and partners, directors,
agents, employees and controlling persons (if any), as the case may
be, of the Purchasers and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Purchasers and any
such Affiliate and any such Person. The Company also agrees that
neither the Purchasers nor any such Affiliates, partners,
directors, agents, employees or controlling persons shall have any
liability to the Company or any Person asserting claims on behalf
of or in right of the Company solely as a result of acquiring the
Securities under this Agreement.


 


4.25           Further
Registration Statements. From the date hereof until 24
months after the Closing Date, the Company will not, without the
consent of the Purchaser, file with the Commission or with state
regulatory authorities any registration statements, shares reserved
for outside securities counsel, or amend any already filed
registration statement to increase the amount of Common Stock
registered therein, or reduce the price of which such company
securities are registered therein, until the expiration of the
“Exclusion
Period,” which shall be defined as the sooner of (i)
the date all the Underlying Shares have been registered in an
effective registration statement that has been effective for not
less than six months, or (ii) until all the Underlying Shares may
be resold by the Subscribers pursuant to a registration statement
or Rule 144b(l)(i), without regard to volume limitations for a
period of not less than six months. The Exclusion Period will be
tolled or reinstated, as the case may be, during the pendency of an
Event of Default as defined in the Note.


 



 

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4.26         
Indebtedness. For
so long as a majority in original principal amount of the Notes is
outstanding, the Company nor Fan Pass, Inc. will not incur any
Indebtedness other than Permitted Indebtedness, without the consent
of the Purchaser.


 


4.27           Notice
of Disqualification Events. The Company will notify the
Purchaser in writing, prior to the Closing Date of (i) any
Disqualification Event relating to any Issuer Covered Person and
(ii) any event that would, with the passage of time, become a
Disqualification Event relating to any Issuer Covered Person not
otherwise disclosed herein or in the SEC Reports.


 


4.28         
Duration of
Undertakings. Unless otherwise stated in this Article IV,
all of the Company’s and Fan Pass, Inc.’s undertakings,
obligations and responsibilities set forth in Article IV of this
Agreement shall remain in effect for so long as any Securities
remain outstanding.


 


4.29           Non-Dilutability
Equity Interest. For a period of one (1) year commencing
from the date that Fan Pass, Inc. has common stock registered
pursuant to Section 12(g) of the Exchange Act, neither the Company
nor Fan Pass, Inc. will issue any equity in Fan Pass Inc. which
would cause a dilution of Purchaser’s equity interest in Fan
Pass Inc.


 


4.30           Piggy-Back
Registrations. For a period of one hundred and eighty (180)
days following the Closing Date or at
a time when Rule 144b(1)(i) is unavailable for the resale of the
Underlying Shares, if the Company determines to prepare and file
with the Commission a registration statement relating to an
offering for its own account or the account of others under the
Securities Act of any of its equity securities, but excluding Forms
S-4 or S-8 and similar forms which do not permit such registration,
then the Company shall send to each holder of any of the issued
Securities written notice of such determination and, if within
fifteen calendar days after receipt of such notice, any such holder
shall so request in writing, the Company shall include in such
registration statement all or any part of the Underlying Shares,
such holder requests to be registered and which inclusion of such
Underlying Shares will be subject to customary underwriter cutbacks
applicable to all holders of registration rights and minimum
cutbacks in accordance with guidance provided by the Securities and
Exchange Commission (including, but not limited to, Rule 415). The
obligations of the Company under this Section may be waived by any
holder of any of the Securities entitled to registration rights
under this Section 4.30. The holders whose Underlying Shares are
included or required to be included in such registration statement
are granted the same rights, benefits, liquidated or other damages
and indemnification granted to other holders of securities included
in such registration statement. In no event shall the liability of
any holder of Securities or permitted successor in connection with
any Underlying Shares included in any such registration statement
be greater in amount than the dollar amount of the net proceeds
actually received by Purchaser upon the sale of the Underlying
Shares sold pursuant to such registration or such lesser amount in
proportion to all other holders of Securities included in such
registration statement. All
expenses incurred by the Company in complying with Section 4.30,
including, without limitation, all registration and filing fees,
printing expenses (if required), fees and disbursements of counsel
and independent public accountants for the Company, fees and
expenses (including reasonable counsel fees) incurred in connection
with complying with state securities or “blue sky”
laws, fees of the FINRA, transfer taxes, and fees of transfer
agents and registrars, are called “Registration
Expenses.” All
underwriting discounts and selling commissions applicable to the
sale of Registrable Securities are called "Selling
Expenses." The Company will pay
all Registration Expenses in connection with the registration
statement under Section 4.30. Selling Expenses in connection with
each registration statement under Section 4.30 shall be borne by
the holder and will be apportioned among such holders in proportion
to the number of Shares included therein for a holder relative to
all the securities included therein for all selling holders, or as
all holders may agree. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to
this Agreement with respect to the Underlying Shares of a
particular Purchaser that such Purchaser shall furnish to the
Company in writing such information and representation letters,
including a completed form of a securityholder questionnaire, with
respect to itself and the proposed distribution by it as the
Company may reasonably request to assure compliance with federal
and applicable state securities laws. The identical rights as to
the foregoing are granted to Purchasers with respect to Fan Pass,
Inc. for a period of one year.


 



 

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4.31           
Seniority. Except
for Permitted Liens and as pursuant to the terms of this Agreement,
until the Notes are fully satisfied or converted, the Company shall
not grant nor allow any security interest to be taken in any assets
of Fan Pass, Inc.; nor issue any debt, equity or other instrument
which would give the holder thereof directly or indirectly, a right
in any assets of Fan Pass, Inc. or any right to payment equity to
or superior to any right of the Purchaser as holder of the Notes in
or to such assets or payment, nor issue or incur any
debt.


 

4.32           
Fan Pass
Transaction. The Company undertakes to consummate the Fan
Pass Transaction, the terms of which, including but not limited to
those set forth on Exhibit
H may not be modified or amended without the consent of
Purchaser.


 

4.33           
Exchange of Fan Pass
Securities. Purchaser has the absolute right, at
Purchaser’s sole option, to exchange any or all of its Fan
Pass Securities for convertible preferred stock of Fan Pass, Inc.
convertible into common stock of Fan Pass on terms acceptable to
Purchaser, which preferred stock will be subject to a beneficial
ownership limitation of between 4.99% up to 9.99% at
Purchaser’s election.


 


ARTICLE
V.


MISCELLANEOUS

 


5.1  
Termination.  This
Agreement may be terminated by Purchaser, as to Purchaser’s
obligations hereunder by written notice to the Company, if the
Initial Closing has not been consummated on or before August 4,
2017; provided,
however, that such
termination will not affect the right of any party to sue for any
breach by any other party (or parties).

 


5.2  
Fees and Expenses. At the
Closing, the Company has agreed to pay G&M for the legal fees
in connection with G&M’s representation of Alpha Capital
Anstalt in the amount of $140,000 payable as follows: $50,000 on
the Initial Closing Date, $50,000 on the Subsequent Closing Date,
and $40,000 within thirty (30) days that Fan Pass, Inc. has a class
of common stock registered pursuant to Section 12(g) of the
Exchange Act. Except as expressly set forth in the Transaction
Documents and on Schedule
3.1(s), each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any conversion or
exercise notice delivered by a Purchaser), stamp taxes and other
taxes and duties levied in connection with the delivery of any
Securities to the Purchasers. The Company shall be responsible for
all wire fees incurred by the Escrow Agent for the receipt and
disbursement of Subscription Amounts. Such fees may be disbursed by
the Escrow Agent from any funds deliverable to or for the benefit
of the Company. Purchaser acknowledges that it has been advised to
seek the advice of its own attorneys.

 


5.3  
Entire Agreement. The
Transaction Documents, together with the exhibits and schedules
thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.

 



 

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5.4           Notices.
All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, facsimile,
or electronic mail, addressed as set forth below or to such other
address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number
designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to
be received), or (b) upon receipt, when sent by electronic mail
(provided confirmation of transmission is electronically
generatedand keep on file by the sending party), or (c) on the
second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be: (i) if to Borrower,
to: Friendable, Inc.,
125 East Campbell Avenue, 2nd Floor, Campbell CA
95008, Attn: Robert Rositano, CEO, fax: (408) 547-0110, email:
robert@friendable.com, with a copy by fax or email only to: Lucosky
Brookman LLP, 101 Wood Avenue South, Woodbridge, NJ 08830, Attn:
Steven A. Lipstein, Esq., fax: (732) 395-4401, email:
slipstein@lucbro.com, and (ii) if to the Holder, to: the address
and fax number indicated on the front page of this Note, with an
additional copy by fax only to (which shall not constitute notice):
Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream,
New York 11581, fax: (212) 697-3575, email:
counslers@gmail.com.

 


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

 


5.6    
       Headings. The headings herein
are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

 


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

 


5.8           No
Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.10.

 

 

 



 

39







 





 


5.9  
Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense
of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of
New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any action, suit or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of the
Transaction Documents, then, in addition to the obligations of the
Company under Section 4.10, the prevailing party in such action,
suit or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding.

 


5.10  
Survival. The representations
and warranties contained herein shall survive the Closing and the
delivery of the Securities.

 


5.11  
Execution. This Agreement may
be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to each other party, it being understood that the
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “.pdf” signature
page were an original thereof.

 


5.12  
Severability. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

 


5.13  
Rescission and Withdrawal
Right. Notwithstanding anything
to the contrary contained in (and without limiting any similar
provisions of) any of the other Transaction Documents, whenever any
Purchaser exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its
future actions and rights.

 



 

40







 





 


5.14  
Replacement of Securities. If
any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and
substitution therefor, a new certificate or instrument, but only
upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction. The applicant for a new
certificate or instrument under such circumstances shall also pay
any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement
Securities.

 


5.15  
Remedies. In addition to being
entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each of the Purchasers 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 contained in the Transaction Documents and
hereby agree to waive and not to assert in any action for specific
performance of any such obligation the defense that a remedy at law
would be adequate.

 


5.16  
Payment Set Aside. To the
extent that the Company makes a payment or payments to any
Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.

 


5.17  
Usury. To the extent it may
lawfully do so, the Company hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force,
in connection with any claim, action or proceeding that may be
brought by any Purchaser in order to enforce any right or remedy
under any Transaction Document. Notwithstanding any provision to
the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under
the Transaction Documents for payments in the nature of interest
shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and,
without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with
any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of
interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the Closing Date thereof forward,
unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum
Rate is paid by the Company to any Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess
shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner
of handling such excess to be at such Purchaser’s
election.

 

5.18  
    Reserved.

 


5.19 
Liquidated Damages. The
Company’s obligations to pay any partial liquidated damages
or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until
all unpaid partial liquidated damages and other amounts have been
paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.

 



 

41







 





 


5.20  
Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such
right may be exercised on the next succeeding Business
Day.

 


5.21  
Construction. The parties agree
that each of them and/or their respective counsel have reviewed and
had an opportunity to revise the Transaction Documents and,
therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation of the Transaction Documents or
any amendments thereto. In addition, each and every reference to
share prices and shares of Common Stock in any Transaction Document
shall be subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this
Agreement.

 


5.22  

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

 


5.23  
Equitable Adjustment. Trading
volume amounts, price/volume amounts and similar figures in the
Transaction Documents shall be equitably adjusted (but without
duplication) to offset the effect of stock splits, similar events
and as otherwise described in this Agreement.

 



(Signature Pages Follow)

 


 


 


 


 


 


 


 


 


 


 


 


 




 

42








 






 


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

 


	

FRIENDABLE,
INC.


 


 

	

Address for
Notice:


 


125
East Campbell Avenue


Campbell, CA
95008


Fax:
(408) 547-0110


	

 



          /s/
Robert Rositano


By:__________________________________________


    Name:
Robert A. Rositano, Jr.


   Title: Chief Executive
Officer


 

	
 


	

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


 


Lucosky
Brookman LLP


101
Wood Avenue South


Woodbridge, NJ
08830


Attn:
Steven A. Lipstein, Esq.


Fax:
(732) 395-4401

	
 







 


 


[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR
PURCHASER FOLLOWS]

 


 


 


 


 


 


 




 

43








 






 


[PURCHASER
SIGNATURE PAGE TO FRIENDABLE, INC.


SECURITIES PURCHASE
AGREEMENT]


 


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

 


Name of
Purchaser:
________________________________________________________


 


Signature of Authorized Signatory of
Purchaser: __________________________________


 


Name of
Authorized Signatory:
____________________________________________________


 


Title
of Authorized Signatory:
_____________________________________________________


 


Email
Address of Authorized Signatory:
_____________________________________________


 


Facsimile Number of
Authorized Signatory:
__________________________________________


 


State
of Residence of Purchaser:
_________________________________________________


 


Address
for Notice to Purchaser:


 


 


 


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


 


 


 


Subscription
Amount: US$________________


 


Note
principal amount: ___________________


 


 


EIN
Number, if applicable, will be provided under separate cover.
________________________


 


Date:
___________________________


 


 


 


[SIGNATURE PAGES
CONTINUE]


 


 


 


 


 




 

44








 






 



EXHIBITS AND SCHEDULES


 



Exhibit A
                           



Form of
Note







Exhibit B
                           



Escrow
Agreement







Exhibit C
                           



Form of Legal
Opinion







Exhibit D
                           



Stock Pledge
Agreement







Exhibit E
                            



Form of Investor
Questionnaire







Exhibit F
                            



Rule 506 Bad Actor
Disqualification Questionnaire







Exhibit G
                           



Form of Form
8-K







Exhibit H
                           



Fan Pass
Transaction







Exhibit I
                            



Fan Pass Security
Agreement






 


 


Schedule
2.1


Schedule
2.6(b)(ix)


Schedule
3.1(a)


Schedule
3.1(g)


Schedule
3.1(i)


Schedule
3.1(o)


Schedule
3.1(s)


Schedule
3.1(u)


Schedule
3.1(cc)


Schedule
3.1(ll)


Schedule
4.9


Schedule
4.13


 


 




 

45








 










 



EXHIBIT E


 


ACCREDITED
INVESTOR QUESTIONNAIRE


IN
CONNECTION WITH INVESTMENT IN CONVERTIBLE NOTE


FRIENDABLE,
INC.,


A
NEVADA CORPORATION


PURSUANT
TO SECURITIES PURCHASE AGREEMENT DATED JUNE [RC], 2017

 


 




TO :

Palladium Capital
Advisors LLC    








 

10 Rockefeller
Plaza, Suite 909    








 

New York, NY
10020





 



INSTRUCTIONS

 


PLEASE
ANSWER ALL QUESTIONS. If the appropriate answer is
“None” or “Not Applicable”, so state.
Please print or type your answers to all questions. Attach
additional sheets if necessary to complete your answers to any
item.

 


Your
answers will be kept strictly confidential at all times. However,
Palladium Capital Advisors LLC (the “Company”) may
present this Questionnaire to such parties as it deems appropriate
in order to assure itself that the offer and sale of securities of
the Company will not result in a violation of the registration
provisions of the Securities Act of 1933, as amended, or a
violation of the securities laws of any state.

 


	


1.

	


Please provide the following information:


	


 

	
 

	


 


	


Name:

	
 

	
 


	


 

	
 

	
 


	


Name of additional purchaser:

	
 


	


(Please complete information in Question 5)
   


	
 

	


 


	


Date of birth, or if other than an individual, year of organization
or incorporation:


	


 


	


 


	


 


	


 


	


 


	


2.

	


Residence address, or if other than an individual, principal office
address:


	


 

	
 

	
 


	


 

	
 

	
 


	


 

	
 

	
 


	


 

	
 

	
 


	


 

	
 

	
 


	


 

	
 

	
 


	


 

	
 

	
 


	


Telephone number:  

	
 


	


 

	
 

	
 


	


Social Security Number:  

	
 


	


 

	
 

	
 


	


Taxpayer Identification Number:  

	
 






 



 

46







 





 


	

3.

	

Business
address:

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	

Business
telephone number: 

	
 







 



4. Send mail 
to:


Residence
______                                     



Business
_______





 


	
5.

	

With respect to tenants in common,
joint tenants and tenants by the entirety, complete only if
information differs from that above:



	
 

	
 

	
 


	


Residence
address:


	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
Telephone
number: 


	
 


	
   


	
 


	
Social Security
Number: 

	
 


	
   


	
 


	
Taxpayer
Identification
Number:     

	
 


	
   


	
 


	
Business
address:  

	
 


	
   

	
 


	
   

	
 


	
   

	
 


	
   

	
 


	
   

	
 


	Business telephone
number:
	
 







 



Send Mail
to:                               



Residence
_______                                   



Business
_______





 

6.            
Please describe your present or most recent business or occupation
and indicate such information as the nature of your employment, how
long you have been employed there, the principal business of your
employer, the principal activities under your management or
supervision and the scope (e.g. dollar volume, industry rank, etc.)
of such activities:

 


	
 


	
 


	
 


	
 


	
 






 

7.            
Please state whether you (i) are associated with or affiliated with
a member of the Financial Industry Regulatory Association, Inc.
(“FINRA”), (ii) are an owner of stock or other
securities of FINRA member (other than stock or other securities
purchased on the open market), or (iii) have made a subordinated
loan to any FINRA member:

                                     
 



 

47







 





 


	
 

	
 

	
 


	
 Yes

	
 

	
 No







 


If you
answered yes to any of (i) – (iii) above, please indicate the
applicable answer and briefly describe the facts
below:


 


	
 


	
 


	
 


	
 


	
 






 

8A.           
Applicable to Individuals ONLY. Please answer the following
questions concerning your financial condition as an Accredited
Investor (within the meaning of Rule 501 of Regulation D). If the
purchaser is more than one individual, each individual must initial
an answer where the question indicates a “yes” or
“no” response and must answer any other question fully,
indicating to which individual such answer applies. If the
purchaser is purchasing jointly with his or her spouse, one answer
may be indicated for the couple as a whole:

 

8.1            
Does your net worth* (or joint net worth with your spouse) exceed
$1,000,000?

 


	
 

	
 

	
 


	
 Yes

	
 

	
 No






 

8.2            
Did you have an individual income** in excess of $200,000 or joint
income together with your spouse in excess of $300,000 in each of
the two most recent years and do you reasonably expect to reach the
same income level in the current year?

 


	
 

	
 

	
 


	

Yes

	
 

	

No







 

8.3            
Are you an executive officer of the Company?

 


	
 

	
 

	
 


	

Yes

	
 

	

No







 


* For
purposes hereof, net worth shall be deemed to include ALL of your
assets, liquid or illiquid MINUS any liabilities.

 


** For
purposes hereof, the term “income” is not limited to
“adjusted gross income” as that term is defined for
federal income tax purposes, but rather includes certain items of
income which are deducted in computing “adjusted gross
income”. For investors who are salaried employees, the gross
salary of such investor, minus any significant expenses personally
incurred by such investor in connection with earning the salary,
plus any income from any other source including unearned income, is
a fair measure of “income” for purposes hereof. For
investors who are self-employed, “income” is generally
construed to mean total revenues received during the calendar year
minus significant expenses incurred in connection with earning such
revenues.

 

8.B            
Applicable to Corporations, Partnerships, Trusts, Limited Liability
Companies and other Entities ONLY:

 



 

48







 





 


The
purchaser is an Accredited Investor because the purchaser falls
within at least one of the following categories (Check all
appropriate lines):

 



___

(i) a bank as
defined in Section 3(a)(2) of the Act or a savings and loan
association or other institution as defined in Section 3(a)(5)(A)
of the Act whether acting in its individual or fiduciary
capacity;





 



___

(ii) a
broker-dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended;





 



___

(iii) an insurance
company as defined in Section 2(13) of the Act;





 



___

(iv) an investment
company registered under the Investment Company Act of 1940, as
amended (the “Investment Act”) or a business
development company as defined in Section 2(a)(48) of the
Investment Act;





 



___

(v) a Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958, as amended;





 



___

(vi) a plan
established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, where such plan has
total assets in excess of $5,000,000;





 



___

(vii) an employee
benefit plan within the meaning of Title 1 of the Employee
Retirement Income Security Act of 1974, as amended (the
“Employee Act”), where the investment decision is made
by a plan fiduciary, as defined in Section 3(21) of the Employee
Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or an employee
benefit plan that has total assets in excess of $5,000,000, or a
self-directed plan the investment decisions of which are made
solely by persons that are Accredited Investors;





 



___

(viii) a private
business development company, as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940, as amended;





 



___      



(ix) an
organization described in Section 501(c)(3) of the Internal Revenue
Code, a corporation, a Massachusetts or similar business trust, or
a partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of
$5,000,000;





 



___

(x) a trust, with
total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is
directed by a “sophisticated” person, as described in
Rule 506(b)(2)(ii) promulgated under the Act, who has such
knowledge and experience in financial and business matters that he
or she is capable of evaluating the merits and risks of the
prospective investment;





 



___

(xi) an entity in
which all of the equity investors are persons or entities described
above (“Accredited Investors”). ALL EQUITY OWNERS MUST
COMPLETE “EXHIBIT A” ATTACHED HERETO.





 



 

49







 





 

9.A            
Do you have sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and
risks associated with investing in the Company?


 


	
 

	
 

	
 


	

Yes

	
 

	

No







 


ANSWER
QUESTION 9B ONLY IF THE ANSWER TO QUESTION 9A WAS
“NO.”

 

9.B            
If the answer to Question 9A was “NO,” do you have a
financial or investment adviser (a) that is acting in the capacity
as a purchaser representative and (b) who has sufficient knowledge
and experience in financial and business matters so as to be
capable of evaluating the merits and risks associated with
investing in the Company?

 


	
 

	
 

	
 


	

Yes

	
 

	

No






 


If you
have a financial or investment adviser(s), please identify each
such person and indicate his or her business address and telephone
number in the space below. (Each such person must complete, and you
must review and acknowledge, a separate Purchaser Representative
Questionnaire which will be supplied at your request).


 


	
 


	
 


	
 







 

10.            
You have the right, will be afforded an opportunity, and are
encouraged to investigate the Company and review relevant factors
and documents pertaining to the officers of the Company, and the
Company and its business and to ask questions of a qualified
representative of the Company regarding this investment and the
properties, operations, and methods of doing business of the
Company.

 


Have
you or has your purchaser representative, if any, conducted any
such investigation, sought such documents or asked questions of a
qualified representative of the Company regarding this investment
and the properties, operations, and methods of doing business of
the Company?

 


	
 

	
 

	
 


	

Yes

	
 

	

No







 


	
If so, briefy describe:


	
 


	
 


	
 


	
 

	
 







 


If so,
have you completed your investigation and/or received satisfactory
answers to your questions?


 


	
 

	
 

	
 


	

Yes

	
 

	

No







 

11.            
Do you understand the nature of an investment in the Company and
the risks associated with such an investment?

 


	
 

	
 

	
 


	

Yes

	
 

	

No






 



 

50







 





 

12.            
Do you understand that there is no guarantee of any financial
return on this investment and that you will be exposed to the risk
of losing your entire investment?

 


	
 

	
 

	
 


	
Yes

	
 

	
No







 

13.            
Do you understand that this investment is not liquid

 


	
 

	
 

	
 


	
 Yes

	
 

	
No







 

14.            
Do you have adequate means of providing for your current needs and
personal contingencies in view of the fact that this is not a
liquid investment?

 


	
 

	
 

	
 


	
Yes

	
 

	
No






 

15.            
Are you aware of the Company’s business affairs and financial
condition, and have you acquired all such information about the
Company as you deem necessary and appropriate to enable you to
reach an informed and knowledgeable decision to acquire the
Interests?

 


	
 

	
 

	
 


	
Yes

	
 

	
No






 

16.            
Do you have a “pre-existing relationship” with the
Company or any of the officers of the Company?

 


	
 

	
 

	
 


	
Yes

	
 

	
No







 


(For
purposes hereof, “pre-existing relationship” means any
relationship consisting of personal or business contacts of a
nature and duration such as would enable a reasonably prudent
investor to be aware of the character, business acumen, and general
business and financial circumstances of the person with whom such
relationship exists.)

 


If so,
please name the individual or other person with whom you have a
pre-existing relationship and describe the
relationship:


 


	
 


	
 


	
 






 

 

 

 

 

 

 




 

51








 






 

17.            
Exceptions to the representations and warranties made in Section
3.2 of the Securities Purchase Agreement (if no exceptions, write
“none” – if left blank, the response will be
deemed to be “none”):


 


	
 






 


Dated:
__________________, 2017

 


If
purchaser is one or more individuals (all individuals must
sign):


 






	
 


	


(Type
or print name of prospective purchaser)




	


 




	


 




	


Signature of
prospective purchaser




	


 




	


 




	


Social
Security Number




	


 




	


 




	


(Type
or print name of additional purchaser)




	


 




	


 




	



Signature of
spouse, joint tenant, tenant in common or other signature, if
required  






	


 




	


 




	


Social
Security Number 








 


 


 


 


 


 


 


 


 


 


 


 




 

52








 









 


Annex
A

 


Definition
of Accredited Investor

 


The
securities will only be sold to investors who represent in writing
in the Securities Purchase Agreement that they are Accredited
Investors, as defined in Regulation D, Rule 501 under the Act which
definition is set forth below:

 



1.            

A natural person
whose net worth, or joint net worth with spouse, at the time of
purchase exceeds $1 million (excluding home); or





 



2.            

A natural person
whose individual gross income exceeded $200,000 or whose joint
income with that person’s spouse exceeded $300,000 in each of
the last two years, and who reasonably expects to exceed such
income level in the current year; or





 



3.            

A trust with total
assets in excess of $5 million, not formed for the specific purpose
of acquiring the securities offered, whose purchase is directed by
a sophisticated person described in Regulation D; or





 



4.            

A director or
executive officer of the Company; or





 



5.            

The investor is an
entity, all of the owners of which are Accredited Investors;
or





 



6.            

(a) bank as defined
in Section 3(a)(2) of the Act, or any savings and loan association
or other institution as defined in Section 3(a)(5)(A) of the Act,
(b) any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, (c) an insurance Company as
defined in Section 2(13) of the Act, (d) an investment Company
registered under the Investment Company Act of 1940 or a business
development Company as defined in Section 2(a)(48) of such Act, (e)
a Small Business Investment Company licensed by the United States
Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958, (f) an employee benefit plan
established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political
subdivisions, if such plan has total assets in excess of $5
million, (g) an employee benefit plan within the meaning of Title I
of the Employee Retirement Income Securities Act of 1974, and the
employee benefit plan has assets in excess of $5 million, or the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such act, that is either a bank, savings and loan
institution, insurance Company, or registered investment advisor,
or, if a self-directed plan, with an investment decisions made
solely by persons that are Accredited Investors, (h) a private
business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940, or (i) an organization
described in Section 501(c)(3) of the Internal Revenue code,
corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with assets in excess of $5
million.





 


 


 




 

53








 





 


EXHIBIT
“A” TO ACCREDITED INVESTOR QUESTIONNAIRE

 


ACCREDITED
CORPORATIONS, PARTNERSHIPS, LIMITED LIABILITY COMPANIES, TRUSTS OR
OTHER ENTITIES INITIALING QUESTION 8B(xi) MUST PROVIDE THE
FOLLOWING INFORMATION.

 


I
hereby certify that set forth below is a complete list of all
equity owners in __________________ [NAME OF ENTITY], a
  [TYPE OF
ENTITY] formed pursuant to the laws of the State of . I also certify that
EACH SUCH OWNER HAS
INITIALED THE SPACE OPPOSITE HIS OR HER NAME and that each
such owner understands that by initialing that space he or she is
representing that he or she is an accredited individual investor
satisfying the test for accredited individual investors indicated
under “Type of Accredited Investor.”

 


	
 

	
 

	
 

	


 


	
 

	
 

	
 

	


signature of authorized corporate officer, general partner or
trustee


	
 

	
 

	
 

	
 


	
 

	

Name
of Equity Owner

	

Type
of Accredited Investor1

	
 


	
 


	





	
 

	
 


	
1.


	





	
 

	
 


	
2.


	





	
 

	
 


	
3.


	





	
 

	
 


	
4.


	





	
 

	
 


	
5.


	





	
 

	
 


	
6.


	





	
 

	
 


	
7.


	





	
 

	
 


	
8.


	





	
 

	
 


	
9.


	





	
 

	
 


	
10.


	





	
 

	
 






 

 
__________________________________



1            

Indicate which
Subparagraph of 8.1 - 8.3 the equity owner satisfies.








 

54








 






 


EXHIBIT
F


 


RULE
506 BAD ACTOR DISQUALIFICATION QUESTIONNAIRE


 



____________________________________                                                                                                                      

______________
___, 2017






Name


 


Friendable, Inc.
(the “Company”) is about to close a private placement
of convertible Notes pursuant to the terms of a Securities Purchase
Agreement. Under an SEC Rule effective September 23, 2013, the
Company is requesting each director and executive officer to
complete and execute this questionnaire. Please answer yes or no to
all questions listed below.


 


	

DEFINITION
OF PROMOTERS


 


Under
the Securities Act of 1933 (the “Act”) Rule 405 defines
a promoter as any person—individual or legal
entity—that either alone or with others, directly or
indirectly takes initiative in founding the business or enterprise
of the issuer, or, in connection with such founding or
organization, directly or indirectly receives 10% or more of any
class of issuer securities or 10% or more of the proceeds from the
sale of any class of issuer securities (other than securities
received solely as underwriting commissions or solely in exchange
for property).  The test considers activities “alone or
together with others, directly or indirectly”; therefore, the
result does not change if there are other legal entities (which may
themselves be promoters) in the chain between that person and the
issuer.


 


DEFINITION
OF INVESTMENT MANAGERS AND PRINCIPALS OF POOLED INVESTMENT FUND
ISSUERS


 


For
issuers that are pooled investment funds, the rule covers
investment advisers and other investment managers of the fund; the
directors, general partners, managing members, executive officers
and other officers participating in the offering of such investment
managers; and the directors, executive officers and other officers
participating in the offering of the investment managers’
general partners or managing members.


 


DEFINITION
OF COMPENSATED SOLICITORS


 


Persons
compensated for soliciting investors as well as their directors,
general partners, managing members, executive officers and officers
participating in the offering.  This category covers any
persons compensated for soliciting investors but will typically
involve broker-dealers and other intermediaries.


 


DEFINITION
OF DIRECTORS, GENERAL PARTNERS AND MANAGING MEMBERS OF THE
ISSUER


 


Members
of the Board of Directors (for issuers that are corporations),
general partners (for issuers that are partnerships) and managing
members (for issuers that are limited liability
companies).


 


DEFINITION
OF EXECUTIVE OFFICERS AND PARTICIPATING OFFICERS OF THE
ISSUER


 


The
term “executive officer” means a company’s
president, any vice president in charge of a principal business
unit, division or function (such as sales, administration or
finance), any other officer who performs a policy-making function
or any other person who performs similar policy-making functions.
The term “officer” means a president, vice president,
secretary, treasurer or principal financial officer, comptroller or
principal accounting officer, as well as any person who routinely
performs corresponding functions.  Participation in an
offering would have to be more than transitory or incidental
involvement, and could include activities such as participation or
involvement in due diligence activities, involvement in the
preparation of disclosure documents, and communication with the
issuer, prospective investors or other offering
participants.


 


DEFINITION
OF 20% BENEFICIAL OWNERS OF THE ISSUER


 


Beneficial owners
of 20% or more of the issuer’s outstanding equity securities,
calculated on the basis of total voting power rather than on the
basis of ownership of any single class of securities.


 


NOTE
ON REFERENCES TO THE COMPANY


 


All
references to the Company made herein include its predecessors and
affiliated issuers.







 



 

55







 






 


1.      
     Criminal
Convictions: Within the past 10 years (or five years, in the
of case the Company), have you or the Company been convicted of any
felony or misdemeanor

 


(a)         
In connection with the purchase or sale of a security

 



YES _______
        


NO  _______
      






 

(b)         
Involving the making of a false filing with the Securities and
Exchange Commission (the “SEC”)

 



YES _______
        


NO _______
       






 

(c)         
Arising out of the conduct of the business of an underwriter,
broker, dealer, municipal securities dealer, investment adviser or
paid solicitor of purchasers of securities.

 



YES _______
     


NO _______
        






 

 

2.           
Court injunctions and restraining
orders: Within the past five years, have you or the Company been the
subject of a court injunction or restraining order

 

(a)         
In connection with the purchase or sale of a security

 



YES _______
        


NO _______
        






 

(b)         
Involving the making of a false filing with the SEC

 



YES  _______
       


NO  _______
       






 

(c)         
Arising out of the conduct of the business of an underwriter,
broker, dealer, municipal securities dealer, investment adviser or
paid solicitor of purchasers of securities.

 



YES _______
       


NO _______
        






 

 

3.           
Final orders of certain state and
federal regulators: Have you or the Company been the subject
of any final orders of state regulators of securities, insurance,
banking, savings associations or credit unions; federal banking
agencies; the Commodity Futures Trading Commission and the National
Credit Union Administration that

 

(a)         
Bar you or the Company from associating with a regulated entity,
engaging in the business of securities, insurance or banking, or
engaging in savings association or credit union activities
or

 



YES  
_______       


NO  _______
       






 


 




 

56








 






 


(b)        
Are based on a violation of a law or regulation that prohibits
fraudulent, manipulative, or deceptive conduct and were issued
within the last 10 years


 



YES  _______
       


NO  _______
       






 

 

4.           
SEC disciplinary orders: Are you or
the Company currently the subject of any SEC disciplinary
orders relating to brokers, dealers, municipal securities dealers,
investment companies, and investment advisers and their associated
persons under Section 15(b) or 15B(c) of the Securities Exchange
Act of 1934, or Section 203(e) or (f) of the Investment Advisers
Act that


 


(a)
         Suspends or revokes your or
the Company’s registration as a broker, dealer, municipal
securities dealer or investment adviser


 



YES  _______
       


NO  _______
       






 


(1)
Places limitations on your or the Company’s activities,
functions or operations


 



YES _______
        


NO  _______
       






 


(2)
Bars you or the Company from being associated with any entity or
from participating in the offering of any penny stock


 



YES _______
        


NO _______
        






 


 

5.           
SEC cease-and-desist orders: Within
the last five years, have you or the Company been the subject
of SEC orders to cease and desist from committing or causing
a violation or future violations of

 


(a)         
The scienter-based anti-fraud provisions of the federal securities
laws

 



YES _______
        


NO  _______
       






 


(b)
         Section 5 of the Act

 



YES _______
        


NO  _______
      






 


 


6.           Suspension
or expulsion from membership in an SRO or from association with an
SRO member: Have you or the Company been suspended or
expelled from membership in, or suspended or barred from
association with a member of, a securities self-regulatory
organization or “SRO” (i.e., a registered national securities
exchange or national securities association, such as FINRA) for any
act or omission to act constituting conduct inconsistent with just
and equitable principles of trade.


 







YES _______
        


NO  _______
      






 

  





7.           
SEC stop orders:

 


(a)
Within the last five years, have you, as an officer or director of
an issuer, or the Company filed a registration statement or
Regulation A offering statement that was the subject of a SEC
refusal order, stop order or order suspending the Regulation A
exemption, or are you now the subject of an investigation or
proceeding to determine whether such an order should be
issued.

 











YES _______
        


NO  _______
      






 



  





 

57







 






 


(b)
Within the last five years, have you or the Company been, or been
named as, an underwriter of securities under a registration
statement or Regulation A offering statement that was the subject
of a Commission refusal order, stop order or order suspending the
Regulation A exemption, or are you now the subject of an
investigation or proceeding to determine whether such an order
should be issued.

 











YES _______
        


NO  _______
      






 



  


8.           U.S.
Postal Service false representation orders: Within the last
five years have you or the Company been subject to a U. S Postal
Service false representation order, temporary restraining order or
preliminary injunction with respect to conduct alleged by the U.S.
Postal Service to constitute a scheme or device for obtaining money
or property through the mail by means of false
representations.

 













YES _______
        


NO  _______
      













 


 


The
foregoing answers are true and correct in all respects. I
understand that a “yes” answer will disqualify the
issuer from relying on exemption under Rule 506 under the
Securities Act of 1933.


 


	Dated:                               
, 201 
	
 


	
 

	Signature





 




 


 


 


 


 


 


 


 


 




 

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