Blueprint





 






EXHIBIT
10.1

 


 

 


SECURITIES
PURCHASE AGREEMENT

 


This
Securities Purchase Agreement (this “Agreement”) is dated as
of March 26, 2019, between DropCar, Inc., a Delaware corporation
(the “Company”), and each
purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

 


WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to an effective registration statement under the Securities Act (as
defined below), the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires
to purchase from the Company, securities of the Company as more
fully described in this Agreement.

 


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

 



ARTICLE I.


 DEFINITIONS

 


1.1           
Definitions.
In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:

 


“Acquiring
Person” shall have the
meaning ascribed to such term in Section 4.4.

 


“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 authorized or required by
law or other governmental action to close.

 


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

 


“Closing Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to
pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Shares, in each case, have been
satisfied or waived, but in no event later than the second
(2nd)
Trading Day following the date hereof.

 


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

 


 




 








 






 

 


 

 


“Common Stock” means the
common stock of the Company, 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
Mintz Levin Cohn, Ferris, Glovsky and Popeo, P.C..

 


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

 


“Disclosure Time” means,
(i) if this Agreement is signed on a day that is not a Trading Day
or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time)
on the Trading Day immediately following the date hereof, and (ii)
if this Agreement is signed between midnight (New York City time)
and 9:00 a.m. (New York City time) on any Trading Day, no later
than 9:01 a.m. (New York City time) on the date
hereof.

 


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

 


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


 


“Exempt Issuance” means
the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the
non-employee members of the Board of Directors or a majority of the
members of a committee of non-employee directors established for
such purpose for services rendered to the Company, (b) securities
upon the exercise or exchange of or conversion of securities
exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement,
provided that such securities have not been amended since the date
of this Agreement to increase the number of such securities or to
decrease the exercise price, exchange price or conversion price of
such securities (other than in connection with stock splits or
combinations) or to extend the term of such securities, and (c)
securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors
of the Company, provided that such securities are issued as
“restricted securities” (as defined in Rule 144), and
provided that any such issuance shall only be to a Person (or to
the equityholders of a Person) which is, itself or through its
subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the
investment of funds, but shall not 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.

 


 




 

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

 


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

 


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

 


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

 


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

 


“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(n).

 


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

 


“Permitted Indebtedness”
means (i) any accounts receivable factoring arrangement; (ii)
capital lease obligations and purchase money indebtedness of up to
$400,000, in the aggregate, incurred in connection with the
acquisition of capital assets up to the purchase price of such
assets and lease obligations with respect to newly acquired or
leased assets; and (iii) any asset-backed credit line or similar
facility which does not include the issuance of any
securities.

 


“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 Lien, and (C) Liens incurred
prior to or subsequent to the Closing Date in connection with
Permitted Indebtedness.

 


“Per Share Purchase Price”
equals $4.18, 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.

 


 




 

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“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.

 


“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.

 


“Prospectus” means the
final prospectus filed for the Registration Statement.

 


“Prospectus Supplement”
means the supplement to the Prospectus complying with Rule 424(b)
of the Securities Act that is filed with the Commission and
delivered by the Company to each Purchaser at the
Closing.

 


“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.7.

 


“Registration Statement”
means the effective registration statement with Commission file No.
333-227858 which registers the sale of the Shares.

 


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

 


“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 424” means Rule 424
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.

 


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

 


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

 


“Shares” means the shares
of Common Stock issued or issuable to each Purchaser pursuant to
this Agreement.

 


“Short Sales” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not
be deemed to include locating and/or borrowing shares of Common Stock). 

 


 “Subscription
Amount” means, as to each Purchaser, the aggregate
amount to be paid for Shares 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.

 


 




 

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“Subsidiary” means any
subsidiary of the Company as set forth in the SEC Reports, and
shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date
hereof.

 


“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
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).

 


“Transaction Documents”
means this 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
Issuer Direct Corporation with a mailing address of 1981 Murray
Holladay Road, Suite 100, Salt Lake City, UT 84117, the current
transfer agent of the Company, and any successor transfer agent of
the Company.

 


“Variable Rate
Transaction” shall have the meaning ascribed to such
term in Section 4.10(b).

 



ARTICLE II.


 PURCHASE
AND SALE

 


2.1           Closing.
On the 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 Purchasers, severally and not jointly,
agree to purchase, up to an aggregate of $2,000,000 of Shares. Each
Purchaser’s Subscription Amount as set forth on the signature
page hereto executed by such Purchaser shall be made available for
“Delivery Versus Payment” settlement with the Company
or its designee. The Company shall deliver to each Purchaser its
respective Shares, 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 EGS or such other location as the parties shall mutually
agree. Settlement of the Shares shall occur via “Delivery
Versus Payment” (“DVP”).

 


2.2           Deliveries.

 


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

 


(i)           this
Agreement duly executed by the Company;

 


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

 


 




 

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(iii)           subject
to the last sentence of Section 2.1, the Company shall have
provided each Purchaser with the Company’s wire instructions,
on Company letterhead and executed by the Chief Executive Officer
or Chief Financial Officer;

 


(iv)           subject
to the last sentence of Section 2.1, a copy of the irrevocable
instructions to the Transfer Agent instructing the Transfer Agent
to deliver on an expedited basis via The Depository Trust Company
Deposit or Withdrawal at Custodian system (“DWAC”) Shares equal to
such Purchaser’s Subscription Amount divided by the Per Share
Purchase Price, registered in the name of such Purchaser;
and

 


(v)           the
Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 under the Securities Act).

 


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

 


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

 


(ii)           such
Purchaser’s Subscription Amount, which shall be made
available for “Delivery Versus Payment” settlement with
the Company or its designee.

 


2.3           Closing
Conditions.

 


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

 


(i)           the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) on the Closing Date of
the representations and warranties of the Purchasers 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 each Purchaser required to
be performed at or prior to the Closing Date shall have been
performed; and

 


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

 


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

 


 




 

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(i)           the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) when made and on the
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 Closing Date shall have been
performed;

 


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

 


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

 


(v)           from
the date hereof to the 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 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 Shares at the
Closing.

 



ARTICLE III.


 REPRESENTATIONS
AND WARRANTIES

 


3.1           Representations
and Warranties of the Company.
Except as disclosed in the SEC Reports, the Company hereby makes
the following representations and warranties to each Purchaser as
of the Closing Date:

 


(a)           Subsidiaries.
All of the direct and indirect subsidiaries of the Company are as
disclosed in the SEC Reports. Except as set forth in the SEC
Reports, the Company owns, directly or indirectly, a majority of
the capital stock or other equity interests of each Subsidiary free
and clear of any Liens, other than Permitted Liens, subject to
restrictions under applicable laws, 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.

 


 




 

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(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 or default of any of the provisions of
its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and
the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the
case may be, would not have or reasonably be expected to result in:
(i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business or 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.

 


(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 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, insolvency,
reorganization, moratorium, liquidation and other laws of general
application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies
and (iii) insofar as indemnification and contribution provisions
may be limited by applicable law.

 


(d)           No
Conflicts. The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Shares and the
consummation by it of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time
or both would become a default) under, result in the creation of
any Lien 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 enforceable commitment to which the Company or any
Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to
the Required Approvals, conflict with or result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse
Effect.

 


 




 

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(e)           Filings,
Consents and Approvals. Except as disclosed in the SEC
Reports, 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 4.4 of this Agreement, (ii) the filing with the
Commission of the Prospectus Supplement, (iii) application(s) to
each applicable Trading Market for the listing of the Shares for
trading thereon in the time and manner required thereby, (iv) the
filings as are required to be made under applicable state
securities laws, and (v) such consents, waivers and authorizations
that shall be obtained prior to Closing (collectively, the
“Required
Approvals”).

 


(f)           Issuance
of the Shares; Registration. The Shares 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 the maximum number of shares of Common Stock issuable
pursuant to this Agreement. The Company has prepared and filed the
Registration Statement in conformity with the requirements of the
Securities Act, which became effective on November 9, 2018 (the
“Effective Date”), including the Prospectus, and such
amendments and supplements thereto as may have been required to the
date of this Agreement. The Registration Statement is effective
under the Securities Act and no stop order preventing or suspending
the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted
or, to the knowledge of the Company, are threatened by the
Commission. The Company, if required by the rules and regulations
of the Commission, shall file the Prospectus with the Commission
pursuant to Rule 424(b). At the time the Registration Statement and
any amendments thereto became effective, at the date of this
Agreement and at the Closing Date, the Registration Statement and
any amendments thereto conformed and will conform in all material
respects to the requirements of the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading; and the Prospectus
and any amendments or supplements thereto, at the time the
Prospectus or any amendment or supplement thereto was issued and at
the Closing Date, conformed and will conform in all material
respects to the requirements of the Securities Act and did not and
will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The Company was at the time of the filing of
the Registration Statement eligible to use Form S-3. The Company is
eligible to use Form S-3 under the Securities Act and it meets the
transaction requirements with respect to the aggregate market value
of securities being sold pursuant to this offering and during the
twelve (12) months prior to this offering, as set forth in General
Instruction I.B.6 of Form S-3.

 


 




 

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(g)           Capitalization.
The capitalization of the Company is as set forth in the SEC
Reports. The number of shares of Common Stock issued and
outstanding as of the date hereof is 3,439,967. The Company has not
issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise
of employee stock options under the Company’s stock incentive
plans, the issuance of shares of Common Stock to employees pursuant
to the Company’s employee stock purchase plans, pursuant to
the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic
report under the Exchange Act or as otherwise disclosed in the SEC
Reports. 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.
There are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock or the
capital stock of any Subsidiary, or material 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 or capital stock of any
Subsidiary. The issuance and sale of the Shares will not obligate
the Company or any Subsidiary 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. No further approval
or authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the Shares. Except
as disclosed in the SEC Reports, 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.

 


(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 Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (the foregoing
materials, including the exhibits thereto and documents
incorporated by reference therein, and any prospectus, prospectus
supplement, amendment or supplement filed in relation thereto,
together with the Prospectus and the Prospectus Supplement, 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 latest audited financial statements of
the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP and are subject to normal,
immaterial year-end audit adjustments, and fairly present in all
material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 


(i)           Material
Changes; Undisclosed Events, Liabilities or Developments.
Except as set forth in the SEC Reports, since the date of the
latest financial statements included within the SEC Reports, (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 liabilities
(contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent
with past practice, (B) transaction expenses incurred in connection
with the Transaction Documents, and (C) liabilities not required to
be reflected in the Company’s financial statements pursuant
to GAAP or disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing
Company stock option plans. Except as may be set forth in the SEC
Reports, the Company does not have pending before the Commission
any request for confidential treatment of information. Except for
the issuance of the Shares contemplated by this Agreement, 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 on or prior to
the date that this representation is made.

 


 




 

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(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”) that would, if
there were an unfavorable decision, have or reasonably be expected
to result in a Material Adverse Effect, nor to the knowledge of the
Company is there any reasonable basis for any such Action that
would, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, to the Company’s knowledge, 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.
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, to the knowledge of the Company, 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 would reasonably be expected to result in a
Material Adverse Effect. Except as disclosed in the SEC Reports,
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 relationship with their employees, taken together, are
good. To the knowledge of the Company, no executive officer of the
Company or any Subsidiary, is, or is now expected by the Company 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 which could
reasonably be expected to result in a Material Adverse Effect, 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 applicable 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 would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 


(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
would 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 actually conducted and as
described in the SEC Reports, except where the failure to possess
such permits would 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.

 


 




 

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(n)           Title
to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them
and good and marketable title in all tangible 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 Permitted Liens. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with which the Company and
the Subsidiaries are in compliance, except where non-compliance
would not reasonably be expected to result in a Material Adverse
Effect.

 


(o)           Intellectual
Property.

 


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

 


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

 


2. all
patents and patent applications (collectively, “Patents”);

 


3. all
copyrights in both published works and unpublished works
(collectively, “Copyrights”);

 


4. all
rights in mask works (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 as licensee or
licensor.

 


(ii)           Agreements.
The SEC Reports contain a complete and accurate list of all
material contracts relating to the Company’s Intellectual
Property Rights to which the Company is a party or by which the
Company is bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $10,000 under which the
Company is the licensee. There are no outstanding and, to the
Company’s knowledge, no threatened disputes or disagreements
with respect to any such agreement.

 


(iii)           Know-How
Necessary for the Business. To the Company’s
knowledge: the Company’s Intellectual Property Rights are all
those necessary for the operation of the Company’s businesses
as it is currently conducted or as represented, in writing, to the
Purchasers to be conducted. To the Company’s knowledge, the
Company is the owner of all right, title, and interest in and to
each of the Intellectual Property Rights, free and clear of all
liens, security interests, charges, encumbrances, equities, and
other adverse claims, and has the right to use all of the
Intellectual Property Rights, subject in each case to Permitted
Liens. To the Company’s knowledge, no employee of the Company
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 of the
Company.

 


(iv)           Know-How
Necessary for the Business. To the extent the Company owns
any Patents: (A) the SEC Reports contain a complete and accurate
list of all of the Company’s Patents; (B) the Company is the
owner of all right, title and interest in and to each of the
Patents, free and clear of all Liens and other adverse claims other
than Permitted Liens; (C) 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, except as set forth in the
SEC Reports, are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date; (D)
no Patent has been or is now involved in any interference, reissue,
reexamination, or opposition proceeding; and (E) 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
infringes or is alleged to infringe any patent or other proprietary
right of any other Person.

 


 




 

12








 






 

 


 

 


(v)           Trademarks.
To the extent the Company owns any Marks: (A) the SEC Reports
contain a complete and accurate list and summary description of all
Marks; (B) the Company is the owner of all right, title, and
interest in and to each of the Marks, free and clear of all Liens
and other adverse claims other than Permitted Liens; (C) 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; (D) except as set forth in the SEC Reports, 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 and (E) 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 infringes or is alleged to infringe any trade name,
trademark, or service mark of any third party.

 


(vi)           Copyrights.
To the extent the Company owns any Copyrights: (A) the SEC Reports
contain a complete and accurate list of all Copyrights; (B) the
Company is the owner of all right, title, and interest in and to
each of the Copyrights, free and clear of all Liens and other
adverse claims other than Permitted Liens; (C) except as set forth
in the SEC Reports, 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 date of the
Closing; (D) no Copyright is infringed or, to the Company’s
knowledge, has been challenged or threatened in any way; (E) 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; and (F) all works encompassed by the Copyrights have been
marked with the proper copyright notice.

 


(vii)           Trade
Secrets. With respect to each Trade Secret of the Company,
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 has good title and an
absolute (but not necessarily exclusive) right to use the
Company’s Trade Secrets subject to Permitted Liens. The
Company’s 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 than the Company) or to the detriment of the Company.
Except as set forth in the SEC Reports, no Trade Secret of the
Company is subject to any adverse claim or has been challenged or
threatened in any way.

 


(p)           Insurance.
The Company and the Subsidiaries are currently insured by insurers
of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged.
Neither the Company nor any Subsidiary believes that it will not be
able to acquire insurance coverage at a reasonable cost 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
$120,000 other than for (i) payment of salary or consulting fees
for services rendered, (ii) reimbursement for expenses incurred on
behalf of the Company and (iii) other employee benefits, including
stock option agreements under any stock or equity incentive plan of
the Company.

 


 




 

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

 


(s)           Certain
Fees. Except as set forth in the Prospectus Supplement, no
brokerage or finder’s fees or commissions 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. To the knowledge of the Company, the
Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section 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 Shares, 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. 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.

 


 




 

14








 






 

 


 

 


(v)           Listing
and Maintenance Requirements. The Common Stock is listed on
the Nasdaq Capital Market under the symbol “DCAR.”
Except as set forth in the SEC Reports, the Company has not, in the
12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading
Market.

 


(w)           Application
of Takeover Protections. The Company’s Board of
Directors has approved the Transaction Documents under Section
203(a)(1) of the General Corporation Law of the State of Delaware
(the “DGCL”) in order to render
the restrictions on “business combinations” (as defined
in Section 203 of the DGCL) inapplicable to the execution, delivery
or performance of the Transaction Documents, including without
limitation as a result of the Company’s issuance of the
Shares and each Purchaser’s ownership of the
Shares.

 


(x)           Disclosure.
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf
has provided each Purchaser or its agents or counsel with any
information that it believes constitutes or might constitute
material, non-public information which is not otherwise disclosed
in the Prospectus Supplement. 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, is
true and correct in all material respects as of the date made 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 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.

 


(y)           No
Integrated Offering. Assuming the accuracy of each
Purchaser’s representations and warranties set forth in
Section 3.2, neither the Company, nor, to the knowledge of the
Company, any of its Affiliates, nor any Person acting on its or, to
the knowledge of the Company, 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 this offering of the Shares by the Company 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.

 


 




 

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(z)           Solvency.
Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Shares hereunder, (i) the fair
saleable value of the assets of the Company and its Subsidiaries
taken as a whole 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) of the
Company and its Subsidiaries as they mature, (ii) the assets of the
Company and its Subsidiaries 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 and its Subsidiaries, consolidated and projected capital
requirements and capital availability thereof, and (iii) the
current cash flow of the Company and its Subsidiaries, together
with the proceeds the Company would receive, were they to liquidate
all of their assets, after taking into account all anticipated uses
of the cash, would be sufficient to pay all amounts on or in
respect of their 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 SEC Reports set forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement,
“Indebtedness” means (x) any liabilities for borrowed
money or amounts owed in excess of $400,000 (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 $400,000 due under
leases required to be capitalized in accordance with GAAP. The
Company is not in default with respect to any
Indebtedness.

 


(aa)           Tax
Status. Except as disclosed in the SEC Reports and 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
required 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. Except as disclosed in the SEC
Reports, 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 reasonable
basis for any such claim.

 


(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 EisnerAmper LLP. To the
knowledge and belief of the Company, such accounting firm is
registered with the Public Company Accounting Oversight Board and
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, 2018.

 


 




 

16








 






 

 


 

 


(dd)           Acknowledgment
Regarding Purchasers’ Purchase of Shares. The Company
acknowledges and agrees that the Purchasers are acting solely in
the capacity of an arm’s length purchaser with respect to the
Transaction Documents and the transactions contemplated thereby.
The Company further acknowledges that the Purchasers are not acting
as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by the
Purchasers or any of their respective representatives or agents in
connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to each Purchaser’s
purchase of the Shares. The Company further represents to the
Purchasers 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)           Acknowledgement
Regarding Purchasers’ Trading Activity. Anything in
this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f) and 4.11 hereof), it is understood and
acknowledged by the Company that: (i) the Purchasers have not been
asked by the Company to agree, nor have the Purchasers 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 Shares for any
specified term; (ii) past or future open market or other
transactions by the Purchasers, 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) the Purchasers,
and counter-parties in “derivative” transactions to
which any Purchaser is a party, directly or indirectly, presently
may have a “short” position in the Common Stock, and
(iv) the Purchasers 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) the Purchasers may engage in
hedging activities in accordance with all applicable laws at
various times during the period that the Shares are outstanding,
including, without limitation, during the periods that the value of
the Shares 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.

 


(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 Shares, (ii) sold, bid
for, purchased, or, paid any compensation for soliciting purchases
of, any of the Shares, or (iii) paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii)
and (iii), as set forth in the Prospectus Supplement.

 


 




 

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(gg)           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 or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).

 


(hh)           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.

 


3.2           Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows (unless as of a
specific date therein, in which case they shall be accurate as of
such date):

 


(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 such
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 such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding
obligation of such 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.

 


(b)           Understandings
or Arrangements. Such Purchaser
is acquiring the Shares as principal for its own account and has no
direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such Shares
(this representation and warranty not limiting such
Purchaser’s right to sell the Shares pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the
Shares hereunder in the ordinary course of its
business.

 


 




 

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(c)           Purchaser
Status. At the time such
Purchaser was offered the Shares, it was, and as of the date hereof
it is 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.

 


(d)           Experience
of Such Purchaser. Such
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 Shares, and has so
evaluated the merits and risks of such investment. Such Purchaser
is able to bear the economic risk of an investment in the Shares
and, at the present time, is able to afford a complete loss of such
investment.


 


(e)           Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such
Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during
the period commencing as of the time that such Purchaser first
received a term sheet (written or oral) from the Company or any
other Person representing the Company setting forth the material
pricing terms of the transactions contemplated hereunder and ending
immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets,
the representation set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made
the investment decision to purchase the Shares covered by this
Agreement. Other than to other Persons party to this Agreement or
to such Purchaser’s representatives, including, without
limitation, its officers, directors, partners, legal and other
advisors, employees, agents and Affiliates, such Purchaser has
maintained the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms
of this transaction). Notwithstanding the foregoing, for the
avoidance of doubt, nothing contained herein shall constitute a
representation or warranty, or preclude any actions, with respect
to locating or borrowing shares in order to effect Short Sales or
similar transactions in the future.

 


The
Company acknowledges and agrees that the representations contained
in this 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 transactions contemplated hereby. Notwithstanding the
foregoing, for the avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any
actions, with respect to locating or borrowing shares in order to
effect Short Sales or similar transactions in the
future.

 



ARTICLE IV.


 OTHER
AGREEMENTS OF THE PARTIES

 


4.1           Furnishing
of Information. Until the time
that no Purchaser owns Shares, the Company covenants to timely file
(or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if
the Company is not then subject to the reporting requirements of
the Exchange Act.

 


4.2           Integration.
The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Shares 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
unless shareholder approval is obtained before the closing of such
subsequent transaction.

 


 




 

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4.3           Securities
Laws Disclosure; Publicity. The
Company shall (a) by the Disclosure Time, issue a press release
disclosing the material terms of the transactions contemplated
hereby, and (b) 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. From and after the
issuance of such press release, the Company represents to the
Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers 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. In
addition, effective upon the issuance of such press release, the
Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral,
between the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates on
the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate. The Company and each Purchaser
shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each 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 any Purchaser, or
include the name of any Purchaser in any filing with the Commission
or any regulatory agency or Trading Market, without the prior
written consent of such 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 Purchasers with prior
notice of such disclosure permitted under this clause
(b).

 


4.4           Shareholder
Rights Plan. No claim will be
made or enforced by the Company or, with the consent of the
Company, any other Person, that any 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 any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Shares under
the Transaction Documents or under any other agreement between the
Company and the Purchasers.

 


4.5           Non-Public
Information. Except with
respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, which shall be disclosed
pursuant to Section 4.3, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that
constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto such
Purchaser shall have consented to the receipt of such information
and agreed with the Company to keep such information confidential.
The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in
securities of the Company. To the extent that the Company delivers
any material, non-public information to a Purchaser without such
Purchaser’s consent, the Company hereby covenants and agrees
that such Purchaser shall not have any duty of confidentiality to
the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates not to trade
on the basis of, such material, non-public information, provided
that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the
Company.

 


4.6           Use
of Proceeds. The Company shall
use the net proceeds from the sale of the Shares hereunder for
working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (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.

 


 




 

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4.7           Indemnification
of Purchasers. Subject to the
provisions of this Section 4.7, the Company will indemnify and hold
each 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 the Purchaser Parties in any
capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is
solely based upon a material 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 is finally judicially determined to
constitute fraud, gross negligence or willful misconduct). If any
action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in
such action there is, in the reasonable 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 any of the
representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification
required by this Section 4.7 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.

 


4.8           Listing
of Common Stock. The Company
hereby agrees to use best efforts to maintain the listing or
quotation of the Common Stock on the Trading Market on which it is
currently listed, and concurrently with the Closing, the Company
shall apply to list or quote all of the Shares on such Trading
Market and promptly secure the listing of all of the Shares on such
Trading Market. The Company further agrees, if the Company applies
to have the Common Stock traded on any other Trading Market, it
will then include in such application all of the Shares, and will
take such other action as is necessary to cause all of the Shares
to be listed or quoted on such other Trading Market as promptly as
possible. The Company will then take all action reasonably
necessary to continue the listing and trading of its Common Stock
on a Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the
bylaws or rules of the Trading Market. The Company agrees to
maintain the eligibility of the Common Stock for electronic
transfer through the Depository Trust Company or another
established clearing corporation, including, without limitation, by
timely payment of fees to the Depository Trust Company or such
other established clearing corporation in connection with such
electronic transfer.

 


 




 

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4.9           RESERVED.

 


4.10           Subsequent
Equity Sales.

 


(a)           From
the date hereof until 30 days after the Closing Date, neither the
Company nor any Subsidiary shall issue, enter into any agreement to
issue or announce the issuance or proposed issuance of any shares
of Common Stock or Common Stock Equivalents.

 


(b)           Notwithstanding
the foregoing, this Section 4.10 shall not apply in respect of an
Exempt Issuance, except that no Variable Rate Transaction shall be
an Exempt Issuance.

 


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

 


4.12           Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with
the other Purchasers, 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 the initial press release as described in
Section 4.3.  Each Purchaser, severally and not jointly with
the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company pursuant to the initial press release as described
in Section 4.3, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information
included in 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 the initial press release as described in Section 4.3,
(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 the initial press release as described in
Section 4.3 and (iii) no Purchaser shall have any duty of
confidentiality or duty not to trade in the securities of the
Company to the Company or its Subsidiaries after the issuance of
the initial press release as described in Section 4.3. 
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 Shares covered by this
Agreement.

 


 




 

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ARTICLE V.


 MISCELLANEOUS

 


5.1           Termination. 
This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before the fifth
(5th)
Trading Day following the date hereof; provided,
however,
that no such termination will 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 reimburse Alpha Capital Anstalt the
non-accountable sum of $15,000 for its legal fees. Accordingly, in
lieu of the foregoing payments, the aggregate amount that Alpha is
to pay for the Shares at the Closing shall be reduced by $15,000 in
lieu thereof. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance
of this Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company),
stamp taxes and other taxes and duties levied in connection with
the delivery of any Shares to the Purchasers.

 


5.3           Entire
Agreement. The Transaction
Documents, together with the exhibits and schedules thereto, the
Prospectus and the Prospectus Supplement, 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.

 


5.4           Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the time of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email attachment at the email
address as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
email attachment at the email address as set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd)Trading
Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by
the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the
signature pages attached hereto. To the extent that any notice
provided pursuant to any Transaction Document constitutes, or
contains, material, non-public information regarding the Company or
any Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form
8-K.

 


 




 

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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 Purchasers which purchased at least 50.1% in interest
of the Shares based on the initial Subscription Amounts hereunder
or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought, provided that if any
amendment, modification or waiver disproportionately and adversely
impacts a Purchaser (or group of Purchasers), the consent of such
disproportionately impacted Purchaser (or group of Purchasers)
shall also be required. 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. Any proposed amendment or waiver that
disproportionately, materially and adversely affects the rights and
obligations of any Purchaser relative to the comparable rights and
obligations of the other Purchasers shall require the prior written
consent of such adversely affected Purchaser. Any amendment
effected in accordance with this Section 5.5 shall be binding upon
each Purchaser and holder of Shares and the
Company.

 


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 each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any
Shares, provided that such transferee agrees in writing to be
bound, with respect to the transferred Shares, 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
4.7.

 


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 or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such 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 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 any 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 4.7, the prevailing
party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.

 


 




 

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

 


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.

 


5.14           Replacement
of Shares. If any certificate
or instrument evidencing any Shares 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 Shares.

 


 




 

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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           Independent
Nature of Purchasers’ Obligations and
Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance or non-performance of
the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce
its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an
additional party in any Proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in its
review and negotiation of the Transaction Documents. The Company
has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by any of the
Purchasers. It is expressly understood and agreed that each
provision contained in this Agreement and in each other Transaction
Document is between the Company and a Purchaser, solely, and not
between the Company and the Purchasers collectively and not between
and among the Purchasers.

 


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

 


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

 


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

 


 

 



(Signature Pages Follow)

 


 




 

26








 






 

 


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.

 


 


	


DROPCAR, INC.


 


 

	


Address for Notice:


	

By:
/s/ Spencer
Richardson


     Name:
Spencer Richardson


     Title:
Chief Executive Officer


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

	

E-Mail:


Fax:


	
 

	
 







 


 


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]


 




 

27








 






 


[PURCHASER
SIGNATURE PAGES TO DCAR 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: Alpha Capital Anstalt


 


Signature of Authorized Signatory of
Purchaser: /s/
Nicola Feuerstein


 


Name of
Authorized Signatory: Nicola Feuerstein


 


Title
of Authorized Signatory: Director


 


Email
Address of Authorized Signatory:


 


Facsimile Number of
Authorized Signatory:


 


Address
for Notice to Purchaser:


 


 


 


 


 


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


DWAC
Participant:


 


Account
No.:


 


 


 


 


Subscription
Amount: $1,250,000


 


Shares:
299,043


 


EIN
Number: N/A


 


 


[SIGNATURE
PAGES CONTINUE]


 




 

28








 






 

 


[PURCHASER
SIGNATURE PAGES TO DCAR 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: Iroquois Capital Investment Group LLC


 


Signature of Authorized Signatory of
Purchaser: /s/
Richard Abbe


 


Name of
Authorized Signatory: Richard Abbe


 


Title
of Authorized Signatory: Managing Member


 


Email
Address of Authorized Signatory: rabbe@icfund.com


 


Facsimile Number of
Authorized Signatory:


 



Address for Notice
to Purchaser:     


125 Park Avenue
25th
Floor







 

New York, New York
10017










 


 


 


 


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


DWAC
Participant:


 


Account
No.:


 


 


 


 


Subscription
Amount: $375,000.34


 


Shares:
89,713


 


EIN
Number: 472779272


 


 


 


[SIGNATURE
PAGES CONTINUE]


 




 

29








 






 

 


[PURCHASER
SIGNATURE PAGES TO DCAR 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: Iroquois Master Fund Ltd.


 


Signature of Authorized Signatory of
Purchaser: /s/
Kimberly Page


 


Name of
Authorized Signatory: Kimberly Page


 


Title
of Authorized Signatory: Director


 


Email
Address of Authorized Signatory: kpage@icfund.com


 


Facsimile Number of
Authorized Signatory:


 



Address for Notice
to Purchaser:  


125 Park Avenue
25th
Floor







 

New York, New York
10017










 


 


 


 


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


DWAC
Participant:


 


Account
No.:


 


 


 


 


Subscription
Amount: $375,000.34


 


Shares:
89,713


 


EIN
Number: 980445485


 


 


 


[SIGNATURE
PAGES CONTINUE]


 


 




 

30