ex101-phunwareinc2020spa






                                                              EXECUTION COPY                       SECURITIES PURCHASE AGREEMENT         This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of July  14, 2020, is by and among Phunware, Inc., a Delaware corporation with offices located at 7800  Shoal Creek Blvd, Suite 230-S, Austin, Texas 78757 (the “Company”), and each of the investors  listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the  “Buyers”).                                    RECITALS         A.    On March 19, 2020 the Company and the Buyers entered into that certain Securities  Purchase  Agreement  (the  “March  Agreement”),  pursuant  to  which,  among  other  things, the  Company issued to a Buyer (in such capacity, the “March Holder”) a Senior Convertible Note  (the “March Note”).         B.    The  Company  and  each  Buyer  is  executing  and  delivering  this  Agreement  in  reliance  upon  the  exemption  from  securities  registration  afforded  by  Section  4(a)(2)  of  the  Securities  Act  of  1933,  as  amended  (the “1933  Act”),  and  Rule  506(b)  of  Regulation  D  (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the  “SEC”) under the 1933 Act.         C.    The Company has authorized two new series of convertible notes with an aggregate  principal amount of $21,600,000 as follows: (i) a new series of senior convertible notes of the  Company,  in  the  aggregate  original  principal  amount  of  $4,320,000,  substantially  in  the  form  attached hereto as Exhibit A-1 (the “Series A Notes”), which Series A Notes shall be convertible  into shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant  to the terms of the Series A Notes, including, without limitation, upon conversion of any principal,  interest, late charges or additional amount or otherwise thereunder, collectively, the “Series A  Conversion Shares”), in accordance with the terms of the Series A Notes; and (ii) a new series of  senior secured convertible notes of the Company, in the aggregate original principal amount of  $17,280,000, substantially in the form attached hereto as Exhibit A-2 (the “Series B Notes”, and  together with the Series A Notes, the “Notes”), which Series B Notes shall be convertible into  shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant to  the terms of the Series B Notes, including, without limitation, upon conversion of any principal,  interest, late charges or additional amount or otherwise thereunder, collectively, the “Series B  Conversion  Shares”,  and  together  with  the  Series  A  Conversion  Shares,  the “Conversion  Shares”), in accordance with the terms of the Series B Notes.         D.    Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms  and conditions stated in this Agreement, (i) a Series A Note in the aggregate original principal  amount set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, (ii) a Series  B Note in the aggregate original principal amount set forth opposite such Buyer’s name in column  (4) on the Schedule of Buyers, and (iii) a warrant to initially acquire up to that aggregate number  of additional shares of Common Stock set forth opposite such Buyer’s name in column (5) on the     





 






   Schedule of Buyers, substantially in the form attached hereto as Exhibit B (the “Warrants”) (as  exercised, collectively, the “Warrant Shares”).         E.    At the Closing, the parties hereto shall execute and deliver a Registration Rights  Agreement, in the form attached hereto as Exhibit C (the “Registration Rights Agreement”),  pursuant to which the Company has agreed to provide certain registration rights with respect to  the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act  and the rules and regulations promulgated thereunder, and applicable state securities laws.         F.    The  Notes,  the  Conversion  Shares,  the  Warrants  and  the  Warrant  Shares  are  collectively referred to herein as the “Securities.”         G.    The Company has engaged Canaccord Genuity LLC as the sole placement agent  (the “Placement Agent”) for the offering of the Notes on a “best efforts” basis.         H.    Concurrently herewith the Company and each Buyer, separately, have entered into  a Note Securities Purchase Agreement in the form attached hereto as Exhibit D (each as amended,  modified, supplemented, extended, renewed, restated or replaced from time to time, collectively,  the “Note  Purchase  Agreements”)  pursuant  to  which  the  Company  shall  acquire  a  secured  promissory note issued by the applicable Buyer (each, an “Investor Note”, and collectively, the  “Investor Notes”) as payment of the Series B Purchase Price (as defined below) hereunder.         I.    Concurrently herewith, the Company and each Buyer, separately, are entering into  that certain Master Netting Agreement, in substantially the form attached hereto as Exhibit E (the  “Master Netting Agreement”), to provide further clarification of their rights (but not, in the case  of each such Buyer only, its obligation) to Net (as defined below) certain Obligations (as defined  in the Master Netting Agreement) arising under and across this Agreement, the Investor Note, the  Series B Notes and the Note Purchase Agreement (collectively, the “Underlying Agreements”)  and to treat the Master Netting Agreement, this Agreement and the other Underlying Agreements  as a single agreement for the purposes set forth herein and to treat this Agreement and the Note  Purchase Agreement each as a “securities contract” (11 U.S.C. § 741) or other similar agreements.                                   AGREEMENT         NOW, THEREFORE, in consideration of the premises and the mutual covenants contained  herein and for other good and valuable consideration, the receipt and sufficiency of which are  hereby acknowledged, the Company and each Buyer hereby agree as follows:   1.    PURCHASE AND SALE OF NOTES AND WARRANTS.         (a)   Purchase  of Notes  and  Warrants.  Subject  to  the  satisfaction  (or  waiver)  of  the  conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer,  and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing  Date (as defined below) (a) a Series A Note in the original principal amount as is set forth opposite  such Buyer’s name in column (3) on the Schedule of Buyers, (b) a Series B Note in the aggregate  original principal amount as is set forth opposite such Buyer’s name in column (4) on the Schedule  of Buyers and (c) Warrants to initially acquire up to that aggregate number of Warrant Shares as  is set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers.                                         2   





 






         (b)   Closing.  The closing (the “Closing”) of the purchase of the Notes and the Warrants  by the Buyers shall occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New  York, NY 10178. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New  York time, on the first (1st) Business Day on which the conditions to the Closing set forth in  Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the  Company and each Buyer).  As used herein “Business Day” means any day other than a Saturday,  Sunday  or  other  day  on  which  commercial  banks  in  The  City  of  New  York,  New  York are  authorized or required by law to remain closed; provided, however, for clarification, commercial  banks shall not be deemed to be authorized or required by law to remain closed due to “stay at  home”, “shelter-in-place”, “non-essential employee”  or any other similar orders or restrictions or  the closure of any physical branch locations at the direction of any governmental authority so long  as the electronic funds transfer systems (including for wire transfers) of commercial banks in The  City of New York, New York generally are open for use by customers on such day.         (c)   Purchase Price.  The aggregate purchase price for the Notes and Warrants to be  purchased by each Buyer (the “Purchase Price”) shall be (i) the aggregate amount as set forth  opposite such Buyer’s name in column (6) on the Schedule of Buyers, consisting of (A) a payment  in cash of such aggregate amount as set forth opposite such Buyer’s name in column (7) on the  Schedule of Buyers (the “Series A Cash Purchase Price”) (less, in the case of any Buyer, the  amounts  withheld  pursuant  to  Section 4(g))  to  the  Company  for  the Series  A  Notes  and  the  Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately  available  funds  in  accordance  with  the  Flow  of  Funds  Letter  (as  defined  below)  and  (B)  the  aggregate amount as set forth opposite such Buyer’s name in column (8) on the Schedule of Buyers  (the “Series B Purchase Price”) for the Series B Notes to be satisfied, in full, by the issuance by  such Buyer of an Investor Note pursuant to the Note Purchase Agreement in the aggregate original  principal amount equal to the Series B Purchase Price.  In addition, at the Closing, an authorized  person of such Buyer shall certify in a written certificate in the form attached hereto as Exhibit F  (the “Investor Collateral  Certificate”) that as  of the Closing Date the accounts described on  Schedule  I  to  such  Investor  Note,  which  secures such  Investor  Note  in  accordance  therewith,  contains at least the Series B Purchase Price of Eligible Assets (as defined in the Investor Note) as  of the Closing Date.  For the avoidance of doubt, each Buyer shall pay (x) approximately $925.93  for each $1,000 of principal amount of Series A Notes and related Warrants to be purchased by  such Buyer at the Closing and (y) approximately $925.93 for each $1,000 of principal amount of  Series B Notes to be purchased by such Buyer at the Closing.  Each Buyer and the Company agree  that the Notes and the Warrants constitute an “investment unit” for purposes of Section 1273(c)(2)  of the Internal Revenue Code of 1986, as amended (the “Code”).  The Buyers and the Company  mutually agree that the allocation of the issue price of such investment unit between the Notes and  the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury Regulation Section  1.1273-2(h) shall be an aggregate amount of $270,000 allocated to the Warrants and the balance  of the Purchase Price allocated to the Notes, and neither the Buyers nor the Company shall take  any position inconsistent with such allocation in any tax return or in any judicial or administrative  proceeding in respect of taxes.           (d)   Form of Payment.  On the Closing Date, (i) each Buyer shall (x) pay its respective  Series A Cash Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to  Section 4(g)) to the Company for the Series A Notes and the Warrants to be issued and sold to  such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the                                         3   





 






   Flow  of  Funds  Letter  (as  defined  below) and (y)  in  accordance  with  the  instructions  of  the  Company in the Flow of Funds Letter, maintain physical possession of a duly executed Investor  Note of such Buyer as Collateral (as defined in the Series B Note) securing the Series B Note, in  such original principal amount as set forth across from such Buyer’s name in column (8) of the  Schedule  of  Buyers,  issued  pursuant  to  the  Note  Purchase  Agreement  of  such  Buyer,  both  as  payment for, and as Collateral (as defined in such Buyer’s Series B Note) securing, such Buyer’s  Series B Note to be issued and sold to such Buyer at the Closing and (ii) the Company shall deliver  to each Buyer (A) a Series A Note in the aggregate original principal amount as is set forth opposite  such  Buyer’s  name  in  column  (3)  of  the  Schedule  of  Buyers,  and  (B)  a  Series  B  Note  in  the  aggregate original principal amount as is set forth opposite such Buyer’s name in column (4) on  the Schedule of Buyers and (C) a Warrant pursuant to which such Buyer shall have the right to  initially  acquire  up  to  such  aggregate  number  of  Warrant  Shares  as  is  set  forth  opposite  such  Buyer’s name in column (5) of the Schedule of Buyers, in each case, duly executed on behalf of  the Company and registered in the name of such Buyer or its designee.         (e)   Securities Contract; Netting Safe Harbor.  The Company hereby acknowledges and  agrees that the rights and obligations of each Buyer under the Note Purchase Agreement of such  Buyer, under the Investor Note of such Buyer, under the Series B Note to be issued hereunder to  such Buyer and the rights and obligations of the Company hereunder, under each such Investor  Note, under each such Series B Note and under each such Note Purchase Agreement, respectively,  arise in a single integrated transaction and constitute related and interdependent obligations within  such transaction.  The Company and each Buyer, severally, hereby acknowledge and agree that  this Agreement and the Note Purchase Agreement each are a “securities contract” as defined in 11  U.S.C.  §  741  and  that  each  such  Buyer  shall  have  all  rights in  respect  of  the  Master  Netting  Agreement, this Agreement and the other Underlying Agreements as are set forth in 11 U.S.C. §  555 and 11 U.S.C. § 362(b)(6), including, without limitation, all rights of credit, deduction, setoff,  offset, recoupment, and netting (each, a “Net”, and collectively, “Netting”) as are available under  the  Master  Netting  Agreement,  this  Agreement  and  the  other  Underlying  Agreements,  and  all  Netting provisions of the Master Netting Agreement, each Series B Note and each Investor Note,  including without limitation the provisions set forth in Section 7 of each Investor Note, are hereby  incorporated in this Agreement and made a part hereof as if such provisions were set forth herein.         (f)   March Limited Waiver.  Effective as of the Closing Date, the March Holder, hereby  waives any term or condition of any Transaction Document (as defined in the March Agreement)  that would otherwise restrict or prohibit the issuance of the Notes hereunder or pursuant to the  terms of the Notes, as applicable, and not with respect to any other issuance or transaction.  For  the avoidance of doubt, after giving effect to such limited waiver and consent on the Closing Date,  each of the Notes shall constitute “Permitted Indebtedness” under the March Note.    2.    BUYER’S REPRESENTATIONS AND WARRANTIES.         Each Buyer, severally and not jointly, represents and warrants to the Company and the  Placement Agent with respect to only itself that, as of the date hereof and as of the Closing Date:         (a)   Organization; Authority.  Such Buyer is an entity duly organized, validly existing  and in good standing under the laws of the jurisdiction of its organization with the requisite power  and authority to enter into and to consummate the transactions contemplated by the Transaction                                         4   





 






   Documents (as defined below) to which it is a party and otherwise to carry out its obligations  hereunder and thereunder.         (b)   No Public Sale or Distribution.  Such Buyer (i) is acquiring its Notes and Warrants,  (ii) upon conversion of its Notes will acquire the Conversion Shares issuable upon conversion  thereof, and (iii) upon exercise of its Warrants (other than pursuant to a Cashless Exercise (as  defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise thereof, in each  case, for its own account and not with a view towards, or for resale in connection with, the public  sale  or  distribution  thereof  in  violation  of  applicable  securities  laws,  except  pursuant  to  sales  registered or exempted under the 1933 Act; provided, however, by making the representations  herein, such Buyer does not agree, or make any representation or warranty, to hold any of the  Securities for any minimum or other specific term and reserves the right to dispose of the Securities  at  any  time  in  accordance  with  or  pursuant  to  a  registration  statement  or  an  exemption  from  registration  under  the  1933  Act.   Such  Buyer  does  not  presently  have  any  agreement  or  understanding, directly or indirectly, with any Person to distribute any of the Securities in violation  of applicable securities laws.  For purposes of this Agreement, “Person” means an individual, a  limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated  organization, any other entity and any Governmental Entity (as defined below) or any department  or agency thereof.         (c)   Accredited Investor Status.  Such Buyer is an “accredited investor” as that term is  defined in Rule 501(a) of Regulation D.         (d)   Reliance on Exemptions.  Such Buyer understands  that the Securities are being  offered and sold to it in reliance on specific exemptions from the registration requirements of  United States federal and state securities laws and that the Company is relying in part upon the  truth  and  accuracy  of,  and  such  Buyer’s  compliance  with,  the  representations,  warranties,  agreements,  acknowledgments  and  understandings  of  such  Buyer  set  forth  herein  in  order  to  determine  the  availability  of  such  exemptions  and  the  eligibility  of  such  Buyer  to  acquire  the  Securities.         (e)   Information.  Such Buyer and its  advisors, if any, have been  furnished  with  all  materials relating to the business, finances and operations of the Company and materials relating  to the offer and sale of the Securities that have been requested by such Buyer.  Such Buyer and its  advisors, if any, have been afforded the opportunity to ask questions of the Company.  Neither  such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors,  if  any,  or  its  representatives  shall  modify,  amend  or  affect  such  Buyer’s  right  to  rely  on  the  Company’s  representations  and  warranties  contained  herein.   Such  Buyer  understands  that  its  investment  in  the  Securities  involves  a  high  degree  of  risk.   Such  Buyer  has  sought  such  accounting, legal and tax advice as it has considered necessary to make an informed investment  decision with respect to its acquisition of the Securities.  Such Buyer hereby acknowledges and  agrees that it has independently evaluated the merits of its decision to purchase the Securities, and  that (i) the Placement Agent is acting solely as placement agent in connection with the execution,  delivery  and  performance  of  this  Agreement  and  is  not  acting  as  underwriter  or  in  any  other  capacity and is not and shall not be construed as a fiduciary for such Buyer, the Company or any  other Person in connection with the execution, delivery and performance of this Agreement, and  (ii)  such  Buyer  has  not  relied  on  the  Placement  Agent  or  its  officers,  directors,  employees,                                         5   





 






   attorneys or affiliates with respect to the negotiation, execution or performance of this Agreement  or  any  representation  or  warranty  made  in,  in  connection  with,  or  as  an  inducement  to  this  Agreement.         (f)   No Governmental Review.  Such Buyer understands that no United States federal  or  state  agency  or  any  other  government  or  governmental  agency  has  passed  on  or  made  any  recommendation or endorsement of the Securities or the fairness or suitability of the investment  in the Securities nor have such authorities passed upon or endorsed the merits of the offering of  the Securities.         (g)   Transfer  or  Resale.   Such  Buyer  understands  that  except  as  provided  in  the  Registration Rights Agreement and Section 4(h) hereof:  (i) the Securities have not been and are  not being registered under the 1933 Act or any state securities laws, and may not be offered for  sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer  shall have delivered to the Company (if requested by the Company) an opinion of counsel, in a  form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned  or transferred may be sold, assigned or transferred pursuant to an exemption from such registration,  or (C) such Buyer provides the Company with reasonable assurance that such Securities can be  sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act  (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in  reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if  Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or  the Person through whom the sale is made) may be deemed to be an underwriter (as that term is  defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act  or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor  any other Person is under any obligation to register the Securities under the 1933 Act or any state  securities  laws  or  to  comply  with  the  terms  and  conditions  of  any  exemption  thereunder.   Notwithstanding  the  foregoing,  the  Securities  may  be  pledged  in  connection  with  a  bona fide  margin account or other loan or financing arrangement secured by the Securities and such pledge  of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder,  and no Buyer effecting a pledge of Securities shall be required to provide the Company with any  notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any  other  Transaction  Document  (as  defined  in  Section 3(b)),  including,  without  limitation,  this  Section 2(g).         (h)   Validity; Enforcement.  The Transaction Documents (as defined below) to which  such Buyer is a party, in each case, have been duly and validly authorized, executed and delivered  on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer  enforceable  against  such  Buyer  in  accordance  with  their  respective  terms,  except  as  such  enforceability  may  be  limited  by  general  principles  of  equity  or  to  applicable  bankruptcy,  insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting  generally, the enforcement of applicable creditors’ rights and remedies.         (i)   No  Conflicts.   The  execution,  delivery  and  performance  by  such  Buyer  of the  Transaction Documents (as defined below) to which such Buyer is a party, in each case, and the  consummation  by  such Buyer  of  the  transactions  contemplated  thereby  will  not  (i)  result  in  a  violation of the organizational documents of such Buyer, or (ii) conflict with, or constitute a default                                         6   





 






   (or an event which with notice or lapse of time or both would become a default) under, or give to  others  any  rights  of  termination,  amendment,  acceleration  or  cancellation  of,  any  agreement,  indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule,  regulation, order, judgment or decree (including federal and state securities laws) applicable to  such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or  violations which could not, individually or in the aggregate, reasonably be expected to have a  material adverse effect on the ability of such Buyer to perform its obligations hereunder.         (j)   Residency.  Such Buyer is a resident of that jurisdiction specified below its address  on the Schedule of Buyers.   3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.         The Company represents and warrants to each of the Buyers and the Placement Agent that,  as of the date hereof and as of the Closing Date (except for representations and warranties that  speak as of a specific date, which shall be true and correct as of such specific date):         (a)   Organization and Qualification.  Each of the Company and each of its Subsidiaries  are entities  duly  organized  and  validly  existing  and  in  good  standing  under  the  laws  of  the  jurisdiction in which they are formed, and have the requisite power and authority to own their  properties and to carry on their business as now being conducted and as presently proposed to be  conducted.  Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity  to do business and is in good standing in every jurisdiction in which its ownership of property or  the nature of the business conducted by it makes such qualification necessary, except to the extent  that the failure to be so qualified or be in good standing would not reasonably be expected to have  a Material Adverse Effect (as defined below).  As used in this Agreement, “Material Adverse  Effect” means  any  material  adverse  effect  on  (i)  the  business,  properties,  assets,  liabilities,  operations  (including  results  thereof),  condition  (financial  or  otherwise)  or  prospects  of  the  Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated  hereby or in any of the other Transaction Documents or any other agreements or instruments to be  entered into in connection herewith or therewith or (iii) the authority or ability of the Company or  any of its Subsidiaries to perform any of their respective obligations under any of the Transaction  Documents  (as  defined  below).   Other  than  the  Persons (as  defined  below) set  forth  on  Schedule 3(a), the Company has no Subsidiaries.  “Subsidiaries” means any Person in which the  Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity  or  similar  interest  of  such  Person  or  (II)  controls  or  operates  all  or  any  part  of  the  business,  operations or administration of such Person, and each of the foregoing, is individually referred to  herein as a “Subsidiary.”         (b)   Authorization; Enforcement; Validity.  The Company has the requisite power and  authority to enter into and perform its obligations under this Agreement and the other Transaction  Documents  and  to  issue  the  Securities  in  accordance  with  the  terms  hereof  and  thereof.   The  execution and delivery of this Agreement and the other Transaction Documents by the Company,  and  the  consummation  by  the  Company  of  the  transactions  contemplated  hereby  and  thereby  (including,  without  limitation,  the  issuance  of  the  Notes  and  the  reservation  for  issuance  and  issuance of the Conversion Shares issuable upon conversion of the Notes and the issuance of the  Warrants  and  the  reservation for  issuance  and  issuance  of  the  Warrant  Shares  issuable  upon                                         7   





 






   exercise of the Warrants) have been duly authorized by the Company’s board of directors and  (other than the filing with the SEC of one or more Registration Statements in accordance with the  requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings  as may be required by any state securities agencies) no further filing, consent or authorization is  required by the Company, it board of directors or stockholders or other governing body.  This  Agreement has been, and the other Transaction Documents to which it is a party will be prior to  the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid  and binding obligations of the Company, enforceable against the Company in accordance with its  respective terms, except as such enforceability may be limited by general principles of equity or  applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating  to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except  as rights to indemnification and to contribution may be limited by federal or state securities law.     “Transaction Documents” means, collectively, this Agreement, the Notes, the Warrants, the Note  Purchase  Agreements,  the  Master  Netting  Agreement, the  Registration  Rights  Agreement, the  Investor Note, the Irrevocable Transfer Agent Instructions (as defined below) and each of the other  agreements and instruments entered into or delivered by any of the parties hereto in connection  with the transactions contemplated hereby and thereby, as may be amended from time to time.         (c)   Issuance  of  Securities.   The  issuance  of  the  Notes  and  the  Warrants  are  duly  authorized and upon issuance in accordance with the terms of the Transaction Documents shall be  validly  issued,  fully  paid  and  non-assessable  and  free  from  all  preemptive  or  similar  rights,  mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances,  security  interests  and  other  encumbrances  (collectively “Liens”)  with  respect  to  the  issuance  thereof.  As of the Closing, the Company shall have reserved from its duly authorized capital stock  not less than (x) 200% of the sum of (i) the maximum number of Conversion Shares issuable upon  conversion of the Notes (assuming for purposes hereof that (i) the Notes are convertible at the  Alternate Conversion Price (as defined in the Notes) assuming an Alternate Conversion Date (as  defined  in the  Note) as  of  the date  hereof,  (ii) interest  on  the  Notes  shall  accrue  through the  applicable Maturity Date of such Notes (or portions thereof, as applicable) (except, with respect  to any Restricted Principal, accrue through December 31, 2023) and will be converted in shares of  Common  Stock  at a conversion  price  equal  to  the Alternate Conversion  Price assuming an  Alternate Conversion Date as of the date hereof and (iii) any such conversion shall not take into  account any limitations on the conversion of the Notes set forth in the Notes), and (y) 100% of the  maximum number of Warrant Shares initially issuable upon exercise of the Warrants (without  taking  into  account  any  limitations  on  the  exercise  of  the  Warrants  set  forth  therein).   Upon  issuance or conversion in accordance with the Notes or exercise in accordance with the Warrants  (as the case may be), the Conversion Shares and the Warrant Shares, respectively, when issued,  will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights  or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to  a holder of Common Stock.  Subject to the accuracy of the representations and warranties of the  Buyers in this Agreement, the offer and issuance by the Company of the Securities is exempt from  registration under the 1933 Act.           (d)   No  Conflicts.   The  execution,  delivery  and  performance  of  the  Transaction  Documents by the Company and its Subsidiaries and the consummation by the Company and its  Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation,  the issuance of the Notes, the Warrants, the Conversion Shares and the Warrant Shares and the                                         8   





 






   reservation for issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a  violation of the Certificate of Incorporation (as defined below) (including, without limitation, any  certificate of designation contained therein), Bylaws (as defined below), certificate of formation,  memorandum of association, articles of association, bylaws or other organizational documents of  the Company or any of its Subsidiaries, or any capital stock or other securities of the Company or  any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or  lapse of time or both would become a default) in any respect under, or give to others any rights of  termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument  to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law,  rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state  securities laws and regulations and the rules and regulations of the Nasdaq Capital Market (the  “Principal  Market”)  and  including  all  applicable  foreign,  federal  and  state  laws,  rules  and  regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset  of the Company or any of its Subsidiaries is bound or affected, and, solely with respect to clauses  (ii) and (iii), which violation, conflict, breach or default, individually or in the aggregate, would  have a Material Adverse Effect.         (e)   Consents.   Neither  the  Company  nor  any  Subsidiary  is required  to  obtain  any  consent from, authorization or order of, or make any filing or registration with (other than the filing  with the SEC of one or more Registration Statements in accordance with the requirements of the  Registration Rights Agreement, a Form D with the SEC and any other filings as may be required  by any state securities agencies), any Governmental Entity (as defined below) or any regulatory or  self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its  respective  obligations  under  or  contemplated  by  the  Transaction  Documents,  in  each  case,  in  accordance  with  the  terms  hereof  or  thereof.   All  consents,  authorizations,  orders,  filings  and  registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding  sentence  have  been  or  will  be  obtained  or  effected  on  or  prior  to  the  Closing  Date,  and  the  Company is  not aware of any facts  or circumstances  which might  prevent  the Company from  obtaining  or  effecting  any  of  the  registration,  application  or  filings  contemplated  by  the  Transaction Documents.  The Company is not in violation of the requirements of the Principal  Market  and  has  no  knowledge  of  any  facts  or  circumstances  which  could  reasonably  lead  to  delisting or suspension of the Common Stock in the foreseeable future.  “Governmental Entity”  means any nation, state, county, city, town, village, district, or other political jurisdiction of any  nature,  federal,  state,  local,  municipal,  foreign,  or  other  government,  governmental or  quasi- governmental authority of any nature (including any governmental agency, branch, department,  official, or entity and any court or other tribunal), multi-national organization or body; or body  exercising,  or  entitled  to  exercise,  any  administrative,  executive,  judicial,  legislative,  police,  regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing,  including any entity or enterprise owned or controlled by a government or a public international  organization or any of the foregoing.         (f)   Acknowledgment  Regarding  Buyer’s  Purchase  of  Securities.   The  Company  acknowledges  and  agrees  that  each  Buyer  is  acting  solely  in  the  capacity  of  an  arm’s  length  purchaser with respect to the Transaction Documents and the transactions contemplated hereby  and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries,  (ii) an “affiliate” (as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its  knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined                                         9   





 






   for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)).   The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of  the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction  Documents  and  the  transactions  contemplated  hereby  and  thereby,  and  any  advice  given  by  a  Buyer or any of its representatives or agents in connection with the Transaction Documents and  the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of  the Securities.  The Company further represents to each Buyer that the Company’s decision to  enter  into  the  Transaction  Documents  to  which  it  is  a  party  has  been  based  solely  on  the  independent evaluation by the Company and its representatives.         (g)   No General Solicitation; Placement Agent’s Fees.  Neither the Company, nor any  of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any  form  of  general  solicitation  or  general  advertising  (within  the  meaning  of  Regulation  D)  in  connection with the offer or sale of the Securities.  The Company shall be responsible for the  payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other  than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the  transactions contemplated hereby, including, without limitation, placement agent fees payable to  the Placement Agent in connection with the sale of the Securities.  The fees and expenses of the  Placement Agent to be paid by the Company or any of its Subsidiaries are as set forth on Schedule  3(g) attached hereto.  The Company shall pay, and hold each Buyer harmless against, any liability,  loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising  in connection with any such claim.  The Company acknowledges that it has engaged the Placement  Agent in connection with the sale of the Securities.  Other than the Placement Agent, neither the  Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection  with the offer or sale of the Securities.         (h)   No Integrated Offering.  None of the Company, its Subsidiaries or any of their  affiliates, nor any Person acting on 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 require  registration of the issuance of any of the Securities under the 1933 Act, whether through integration  with prior offerings or otherwise, or cause this offering of the Securities to require approval of  stockholders of the Company for purposes of the 1933 Act or under any applicable stockholder  approval provisions, including, without limitation, under the rules and regulations of any exchange  or  automated  quotation  system  on  which  any  of  the  securities  of  the  Company  are  listed  or  designated for quotation.  None of the Company, its Subsidiaries, their affiliates nor any Person  acting on their behalf will take any action or steps that would require registration of the issuance  of any  of  the  Securities  under  the  1933  Act (other  than  pursuant  to  the  Registration  Rights  Agreement) or cause the offering of any of the Securities to be integrated with other offerings of  securities of the Company.         (i)   Dilutive Effect.  The Company understands and acknowledges that the number of  Conversion  Shares  and  Warrant  Shares  will  increase  in  certain  circumstances.  The  Company  further acknowledges that its obligation to issue the Conversion Shares pursuant to the terms of  the Notes in accordance with this Agreement and the Notes and the Warrant Shares upon exercise  of the Warrants in accordance with this Agreement, the Notes and the Warrants is, in each case,  absolute and unconditional regardless of the dilutive effect that such issuance may have on the  ownership interests of other stockholders of the Company.                                         10   





 






         (j)   Application of Takeover Protections; Rights  Agreement.  The Company and its  board of directors have taken all necessary action, if any, in order to render inapplicable any control  share acquisition, interested stockholder, business  combination, poison pill (including, without  limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti- takeover  provision  under  the Certificate  of  Incorporation,  Bylaws  or  other  organizational  documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become  applicable to any Buyer as a result of the transactions contemplated by this Agreement, including,  without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the  Securities.         (k)   SEC Documents; Financial Statements.  During the two (2) years prior to the date  hereof, the Company has timely filed all reports, schedules, forms, proxy statements, statements  and other documents required to be filed by it with the SEC pursuant to the reporting requirements  of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits and appendices  included therein and financial statements, notes and schedules thereto and documents incorporated  by reference therein being hereinafter referred to as the “SEC Documents”).  The Company has  delivered or has made available to the Buyers or their respective representatives true, correct and  complete copies of each of the SEC Documents not available on the EDGAR system.  As of their  respective dates, the SEC Documents complied in all material respects with the requirements of  the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the  SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC,  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.  As of their respective dates, the financial statements  of the Company included in the SEC Documents complied in all material respects with applicable  accounting requirements and the published rules and regulations of the SEC with respect thereto  as in effect as of the time of filing.  Such financial statements have been prepared in accordance  with generally accepted accounting principles (“GAAP”), consistently applied, during the periods  involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto,  or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may  be  condensed  or  summary  statements)  and  fairly  present  in  all  material  respects  the  financial  position of the Company as of the dates thereof and the results of its operations and cash flows for  the periods then ended (subject, in the case of unaudited statements, to  normal year-end audit  adjustments which will not be material, either individually or in the aggregate).  The reserves, if  any, established by the Company or the lack of reserves, if applicable, are reasonable based upon  facts  and  circumstances  known by  the  Company on  the  date  hereof  and  there  are  no  loss  contingencies that are required to be accrued by the Statement of Financial Accounting Standard  No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in  its  financial  statements  or  otherwise.  No  other  information  provided  by  or  on  behalf  of  the  Company to any of the Buyers which is not included in the SEC Documents (including, without  limitation, information referred to in Section 2(e) of this Agreement or in the disclosure schedules  to this Agreement) contains any untrue statement of a material fact or omits to state any material  fact  necessary  in  order  to  make  the statements  therein  not  misleading,  in  the  light  of  the  circumstance under which they are or were made.  The Company is not currently contemplating  to amend or restate any of the financial statements (including, without limitation, any notes or any  letter of the independent accountants of the Company with respect thereto) included in the SEC  Documents  (the “Financial  Statements”),  nor  is  the  Company  currently  aware  of  facts  or                                         11   





 






   circumstances  which  would  require  the  Company  to  amend  or  restate  any  of  the  Financial  Statements, in each case, in order for any of the Financials Statements to be in compliance with  GAAP and the rules and regulations of the SEC.  The Company has not been informed by its  independent  accountants  that  they  recommend  that  the  Company  amend  or  restate  any  of  the  Financial Statements or that there is any need for the Company to amend or restate any of the  Financial Statements.         (l)   Absence  of  Certain  Changes.  Except  as  otherwise  disclosed  in  the  SEC  Documents, since the date of the Company’s most recent audited financial statements contained  in a Form 10-K, there has been no material adverse change and no material adverse development  in  the  business,  assets,  liabilities,  properties,  operations  (including  results  thereof),  condition  (financial  or  otherwise)  or  prospects  of  the  Company  or  any  of  its  Subsidiaries.  Except  as  otherwise disclosed in the SEC Documents, since the date of the Company’s most recent audited  financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries  has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside  of the ordinary course of business or (iii) made any capital expenditures, individually or in the  aggregate,  outside  of  the  ordinary  course  of  business.   Neither  the  Company  nor  any  of  its  Subsidiaries  has  taken  any  steps  to  seek  protection  pursuant  to  any  law  or  statute  relating  to  bankruptcy,  insolvency,  reorganization,  receivership,  liquidation  or  winding  up,  nor  does  the  Company or any Subsidiary have any knowledge or reason to believe that any of their respective  creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact  which would reasonably lead a creditor to do so.  The Company and its Subsidiaries, individually  and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions  contemplated  hereby  to  occur  at  the  Closing,  will  not  be  Insolvent  (as  defined  below).   For  purposes  of  this  Section 3(l), “Insolvent” means,  (i)  with  respect  to  the  Company  and  its  Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s and its  Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’  total Indebtedness (as defined below), (B) the Company and its Subsidiaries are unable to pay their  debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become  absolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they  will incur debts that would be beyond their ability to pay as such debts mature; and (ii) with respect  to  the  Company  and  each  Subsidiary,  individually,  (A)  the  present  fair  saleable  value  of  the  Company’s or such Subsidiary’s (as the case may be) assets is less than the amount required to  pay its respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is  unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such  debts and liabilities become absolute and matured or (C) the Company or such Subsidiary (as the  case may be) intends to incur or believes that it will incur debts that would be beyond its respective  ability to pay as such debts mature.  Neither the Company nor any of its Subsidiaries has engaged  in  any  business  or  in  any  transaction,  and  is  not  about  to  engage  in  any  business  or  in  any  transaction,  for  which  the  Company’s  or  such  Subsidiary’s  remaining  assets  constitute  unreasonably small capital with which to conduct the business in which it is engaged as such  business is now conducted and is proposed to be conducted.         (m)   No Undisclosed Events, Liabilities, Developments or Circumstances.  Except as  otherwise disclosed in the SEC Documents, no event, liability, development or circumstance has  occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of  its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations                                         12   





 






   (including results thereof) or condition (financial or otherwise), that (i) would be required to be  disclosed by the Company under applicable securities laws on a registration statement on Form S- 1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and  which has not been publicly announced, or (ii) could have a Material Adverse Effect.           (n)   Conduct  of Business; Regulatory Permits.  Neither the Company nor any of its  Subsidiaries is in violation of any term of or in default under its Certificate of Incorporation, any  certificate of designation, preferences or rights of any other outstanding series of preferred stock  of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of  formation, memorandum  of  association,  articles  of  association, Certificate  of  Incorporation  or  certificate  of  incorporation  or  bylaws,  respectively.   Neither  the  Company  nor  any  of  its  Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or  regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any  of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases  for possible violations which could not, individually or in the aggregate, have a Material Adverse  Effect.  Without limiting the generality of the foregoing, the Company is not in violation of any of  the rules, regulations or requirements of the Principal Market and has no knowledge of any facts  or circumstances that could reasonably lead to delisting or suspension of the Common Stock by  the Principal Market in the foreseeable future.  Since December 28, 2018, (i) the Common Stock  has been listed or designated for quotation on the Principal Market, (ii) trading in the Common  Stock has  not  been suspended by the SEC  or the Principal Market  and  (iii) the Company has  received no communication, written or oral, from the SEC or the Principal Market regarding the  suspension  or  delisting of  the  Common  Stock  from  the  Principal  Market,  except  as  otherwise  disclosed  in  the  SEC  Documents.   The  Company  and  each  of  its  Subsidiaries  possess  all  certificates, authorizations and permits issued by the appropriate regulatory authorities necessary  to  conduct  their  respective  businesses,  except  where  the  failure  to  possess  such  certificates,  authorizations or permits would not have, individually or in the aggregate, a Material Adverse  Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings  relating to the revocation or modification of any such certificate, authorization or permit.  There is  no agreement, commitment, judgment, injunction, order or decree binding upon the Company or  any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or  would  reasonably  be  expected  to  have  the  effect  of  prohibiting  or  materially  impairing  any  business practice of the Company or any of its Subsidiaries, any acquisition of property by the  Company  or  any  of  its Subsidiaries  or  the  conduct  of  business  by  the Company  or  any  of  its  Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which  have not had and would not reasonably be expected to have a Material Adverse Effect on the  Company or any of its Subsidiaries.         (o)   Foreign  Corrupt  Practices.   Neither  the  Company, nor any  of the  Company’s  Subsidiaries nor any director, officer, agent, employee, nor any other person acting for or on behalf  of the foregoing (individually and collectively, a “Company Affiliate”) have violated the U.S.  Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption  laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of  any money, or offered, given, promised to give, or authorized the giving of anything of value, to  any officer, employee or any other person acting in an official capacity for any Governmental  Entity to any political party or official thereof or to any candidate for political office (individually  and collectively, a “Government Official”) or to any person under circumstances where such                                         13   





 






   Company Affiliate knew or was aware of a high probability that all or a portion of such money or  thing of value would be offered, given or promised, directly or indirectly, to any Government  Official, for the purpose of:                     (i)   (A) influencing any act or decision of such Government Official in        his/her official capacity, (B) inducing such Government Official to do or omit to do any        act  in  violation  of  his/her  lawful  duty,  (C)  securing  any  improper  advantage,  or  (D)        inducing  such  Government  Official  to  influence  or  affect  any  act  or  decision  of  any        Governmental Entity, or                     (ii)  assisting the Company or its Subsidiaries in obtaining or retaining        business for or with, or directing business to, the Company or its Subsidiaries.         (p)   Sarbanes-Oxley Act.  The Company and each Subsidiary is in compliance with any  and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, and any and all  applicable rules and regulations promulgated by the SEC thereunder.         (q)   Transactions  With  Affiliates.  Except  as  otherwise  disclosed  in  the  SEC  Documents,  no  current  or  former  employee,  partner,  director,  officer  or  stockholder  (direct  or  indirect)  of  the  Company  or  its  Subsidiaries,  or  any  associate,  or,  to  the  knowledge  of  the  Company, any affiliate of any thereof, or any relative with a relationship no more remote than first  cousin of any of the foregoing, is presently, or has ever been, (i) a party to any transaction with the  Company or its Subsidiaries (including any contract, agreement or other arrangement providing  for the furnishing of services by, or rental of real or personal property from, or otherwise requiring  payments  to,  any such director, officer or stockholder or such associate  or affiliate or relative  Subsidiaries (other than for ordinary course services as  employees, officers or directors of the  Company  or  any  of  its  Subsidiaries))  or  (ii)  the  direct  or  indirect  owner  of  an  interest  in  any  corporation, firm, association or business organization which is a competitor, supplier or customer  of the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than  5% of the common stock of a company whose securities are traded on or quoted through an Eligible  Market (as defined in the Notes)), nor does any such Person receive income from any source other  than  the  Company  or  its  Subsidiaries  which  relates  to  the  business  of  the  Company  or  its  Subsidiaries or should properly accrue to the Company or its Subsidiaries.  Except as otherwise  disclosed in the SEC Documents, no employee, officer, stockholder or director of the Company or  any of its Subsidiaries or member of his or her immediate family is indebted to the Company or  its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or  committed to make loans or extend or guarantee credit) to any of them, in each case in excess of  $250,000 other  than  (i)  for  payment  of  salary  for  services  rendered,  (ii)  reimbursement  for  reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee  benefits  made  generally  available  to  all  employees  or  executives  (including  stock  option  agreements outstanding under any stock option plan approved by the Board of Directors of the  Company).         (r)   Equity Capitalization.                 (i)   Definitions:                                            14   





 






                            (A)   “Common  Stock” means  (x) the  Company’s  shares  of  common        stock, $0.0001 par  value  per  share,  and  (y)  any  capital  stock  into  which  such        common  stock  shall  have  been  changed  or  any  share  capital  resulting  from  a        reclassification of such common stock.                 (B)   “Preferred Stock” means (x) the Company’s blank check preferred        stock, $0.0001 par value per share, the terms of which may be designated by the        board of directors of the Company in a certificate of designations and (y) any capital        stock into which such preferred stock shall have been changed or any share capital        resulting from a reclassification of such preferred stock (other than a conversion of        such  preferred  stock  into  Common  Stock  in  accordance  with  the  terms  of  such        certificate of designations).          (ii)  Authorized  and  Outstanding  Capital  Stock.  As  of  the  date  hereof,  the  authorized capital stock of the Company consists of (A) 1,000,000,000 shares of Common  Stock, of which, 43,495,861 are issued and outstanding and 73,236,325 shares are reserved  for issuance pursuant to Convertible Securities (as defined below) (other than the Notes  and the Warrants) exercisable or exchangeable for, or convertible into, shares of Common  Stock and (B) 0 shares of Preferred Stock, none of which are issued and outstanding.           (iii) Valid Issuance; Available Shares; Affiliates.  All of such outstanding shares  are duly authorized and have been, or upon issuance will be, validly issued and are fully  paid and nonassessable.  Schedule 3(r)(iii) sets forth the number of shares of Common  Stock  that  are  (A)  reserved  for  issuance  pursuant  to  Convertible  Securities  (as  defined  below) (other than the Notes and the Warrants) and (B) that are, as of the date hereof,  owned  by  Persons  who  are “affiliates” (as  defined  in  Rule  405  of  the  1933  Act  and  calculated based on the assumption that only officers, directors and holders of at least 10%  of  the  Company’s  issued  and  outstanding  Common  Stock  are “affiliates” without  conceding that any such Persons are “affiliates” for purposes of federal securities laws) of  the Company or any of its Subsidiaries.  To the Company’s knowledge, no Person owns  10%  or  more  of  the  Company’s  issued  and  outstanding  shares  of  Common  Stock  (calculated based on the assumption that all Convertible Securities  (as  defined below),  whether  or  not  presently  exercisable  or  convertible,  have  been  fully  exercised or  converted (as the case may be) taking account of any limitations on exercise or conversion  (including “blockers”) contained therein without conceding that such identified Person is  a 10% stockholder for purposes of federal securities laws).          (iv)  Existing  Securities;  Obligations.   Except  as  disclosed  in  the  SEC  Documents: (A) none of the Company’s or any Subsidiary’s shares, interests or capital  stock  is  subject  to  preemptive  rights  or  any  other  similar  rights  or  Liens  suffered  or  permitted  by  the  Company  or  any  Subsidiary;  (B)  there  are  no  outstanding  options,  warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever  relating to, or securities or rights convertible into, or exercisable or exchangeable for, any  shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts,  commitments,  understandings  or  arrangements  by  which  the  Company  or  any  of  its  Subsidiaries is or may become bound to issue additional shares, interests or capital stock  of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to,                                   15                





 






         calls  or  commitments  of  any  character  whatsoever  relating  to,  or  securities  or  rights        convertible into, or exercisable or exchangeable for, any shares, interests or capital stock        of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements        under which the Company or any of its Subsidiaries is obligated to register the sale of any        of  their  securities  under  the  1933  Act  (except  pursuant  to  the  Registration  Rights        Agreement); (D) there are no outstanding securities or instruments of the Company or any        of its Subsidiaries which contain any redemption or similar provisions, and there are no        contracts, commitments, understandings or arrangements by which the Company or any of        its Subsidiaries is or may become bound to redeem a security of the Company or any of its        Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar        provisions  that  will  be  triggered  by  the  issuance  of  the  Securities;  and  (F)  neither  the        Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans        or agreements or any similar plan or agreement.               (v)   Organizational Documents.  The Company has furnished or made available        by virtue of its SEC Documents to the Buyers true, correct and complete copies of the        Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the        “Certificate of Incorporation”), and the Company’s bylaws, as amended and as in effect        on  the  date  hereof  (the “Bylaws”),  and  the  terms  of  all  Convertible  Securities  and  the        material rights of the holders thereof in respect thereto.          (s)   Indebtedness  and  Other  Contracts.   Neither  the  Company  nor  any  of  its  Subsidiaries, except as disclosed on Schedule 3(s), (i) has any outstanding debt securities, notes,  credit  agreements,  credit  facilities  or  other  agreements,  documents  or  instruments  evidencing  Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its  Subsidiaries is or may become bound, (ii) is a party to any contract, agreement or instrument, the  violation of which, or default under which, by the other party(ies) to such contract, agreement or  instrument  could  reasonably  be  expected  to  result  in  a  Material  Adverse  Effect,  (iii)  has  any  financing statements securing obligations in any amounts filed in connection with the Company  or any of its Subsidiaries; (iv) is in violation of any term of, or in default under, any contract,  agreement or instrument relating to any Indebtedness, except where such violations and defaults  would not result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to  any contract, agreement or instrument relating to any Indebtedness, the performance of which, in  the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect.   Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be  disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than  those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses  and which, individually or in the aggregate, do not or could not have a Material Adverse Effect.   For purposes of this Agreement:  (x) “Indebtedness” of any Person means, without duplication  (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the  deferred purchase price of property or services (including, without limitation, “capital leases” in  accordance with GAAP) (other than trade payables entered into in the ordinary course of business  consistent with past practice), (C) all reimbursement or payment obligations with respect to letters  of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds,  debentures or similar instruments, including obligations so evidenced incurred in connection with  the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any  conditional sale or other title retention agreement, or incurred as financing, in either case with                                         16   





 






   respect to any property or assets acquired with the proceeds of such indebtedness (even though the  rights and remedies of the seller or bank under such agreement in the event of default are limited  to repossession or sale of such property), (F) all monetary obligations under any leasing or similar  arrangement  which,  in  connection  with  GAAP,  consistently  applied  for  the  periods  covered  thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F)  above secured by (or for which the holder of such Indebtedness has an existing right, contingent  or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and  contract rights) owned by any Person, even though the Person which owns such assets or property  has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent  Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses  (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or  indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease,  dividend  or  other  obligation of  another  Person  if  the  primary  purpose  or  intent  of  the  Person  incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such  liability that such liability will be paid or discharged, or that any agreements relating thereto will  be complied with, or that the holders of such liability will be protected (in whole or in part) against  loss with respect thereto.         (t)   Litigation.  Except as otherwise disclosed in the SEC Documents, there is no action,  suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court,  public board, other Governmental Entity, self-regulatory organization or body pending or, to the  knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries,  the Common Stock or any of the Company’s or its Subsidiaries’ officers or directors, whether of  a civil or criminal nature or otherwise, in their capacities as such, that was required to be disclosure  in the Company’s SEC Documents under applicable securities laws.  To the knowledge of the  Company, no director, officer or employee of the Company or any of its subsidiaries has willfully  violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation.  Without  limitation of the foregoing, except as otherwise disclosed in the SEC Documents, there has not  been,  and  to  the  knowledge  of  the  Company,  there  is  not  pending  or  contemplated,  any  investigation by the SEC involving the Company, any of its Subsidiaries or any current or former  director or officer of the Company or any of its Subsidiaries, that was required to be disclosed in  the Company’s SEC Documents under applicable securities laws.  The SEC has not issued any  stop order or other order suspending the effectiveness of any registration statement filed by the  Company under the 1933 Act or the 1934 Act.  Neither the Company nor any of its Subsidiaries is  subject  to  any  order,  writ,  judgment,  injunction,  decree,  determination  or  award  of  any  Governmental Entity.         (u)   Insurance.  The Company and each of its Subsidiaries are insured by insurers of  recognized  financial  responsibility  against  such  losses  and  risks  and  in  such  amounts  as  management of the Company believes to be prudent and customary in the businesses in which the  Company and its Subsidiaries are engaged.  Neither the Company nor any such Subsidiary has  been refused any insurance coverage sought or applied for, and neither the Company nor any such  Subsidiary has any reason to believe that it will be unable to renew its existing insurance coverage  as and when such coverage expires or to obtain similar coverage from similar insurers as may be  necessary to continue its business at a cost that would not have a Material Adverse Effect.                                          17   





 






         (v)   Employee Relations.  Neither the Company nor any of its Subsidiaries is a party to  any collective bargaining agreement or employs any member of a union.  The Company and its  Subsidiaries believe that their relations with their employees are good.  No executive officer (as  defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company  or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends  to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment  with the Company or any such Subsidiary.  No executive officer or other key employee of the  Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term  of  any  employment  contract,  confidentiality,  disclosure  or  proprietary  information  agreement,  non-competition agreement, or any other contract or agreement or any restrictive covenant, and  the continued employment of each such executive officer or other key employee (as the case may  be) 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 federal, state,  local and foreign laws and regulations respecting labor, employment and employment practices  and benefits, terms and conditions of employment and wages and hours, except where failure to  be in compliance would not, either individually or in the aggregate, reasonably be expected to  result in a Material Adverse Effect.         (w)   Title.                (i)   Real Property.  Except as may otherwise disclosed in the SEC Documents,        each of the Company and its Subsidiaries holds good title to all real property, leases in real        property, facilities or other interests in real property owned or held by the Company or any        of its Subsidiaries (the “Real Property”).  The Real Property is free and clear of all Liens        and is not subject to any rights of way, building use restrictions, exceptions, variances,        reservations, or limitations of any nature except for (a) Liens for current taxes not yet due        and  (b)  zoning  laws  and  other  land  use  restrictions  that  do  not  impair  the  present  or        anticipated use of the property subject thereto.  Any Real Property held under lease by the        Company  or  any  of  its  Subsidiaries  are  held  by  them  under  valid,  subsisting  and        enforceable leases with such exceptions as are not material and do not interfere with the        use made and proposed to be made of such property and buildings by the Company or any        of its Subsidiaries.                 (ii)  Fixtures and Equipment.  Except as may otherwise disclosed in the SEC        Documents, each of the Company and its Subsidiaries (as applicable) has good title to, or        a  valid  leasehold  interest  in,  the  tangible  personal  property,  equipment,  improvements,        fixtures, and other personal property and appurtenances that are used by the Company or        its  Subsidiary  in  connection  with  the  conduct  of  its  business  (the “Fixtures  and        Equipment”).  The Fixtures and Equipment are in the reasonable opinion of management,        made in good faith, sufficient for the conduct of the Company’s and/or its Subsidiaries’        businesses (as applicable) in the manner as conducted prior to the Closing.  Each of the        Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all        Liens except for (a) liens for current taxes not yet due and (b) zoning laws and other land        use restrictions that do not impair the present or anticipated use of the property subject        thereto.                                          18   





 






         (x)   Intellectual Property Rights.  The Company and its Subsidiaries own or possess  adequate  rights  or  licenses  to  use  all  trademarks,  trade  names,  service  marks,  service  mark  registrations,  service  names,  original  works  of  authorship,  patents,  patent  rights,  copyrights,  inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual  property rights and all applications and registrations therefor (“Intellectual Property Rights”)  necessary to conduct their respective businesses as now conducted and presently proposed to be  conducted and which the failure to do so could have a Material Adverse Effect.  Each of patents  owned by the Company or any of its Subsidiaries is listed on Schedule 3(x)(i).  Except as set forth  in  Schedule 3(x)(ii),  none  of the  Company’s  Intellectual  Property  Rights  have  expired  or  terminated or have been abandoned or are expected to expire or terminate or are expected to be  abandoned, within three years from the date of this Agreement.  The Company does not have any  knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights  of others.  There is no claim, action or proceeding being made or brought, or to the knowledge of  the  Company  or  any  of  its  Subsidiaries,  being  threatened,  against  the Company  or  any  of  its  Subsidiaries  regarding  its  Intellectual  Property  Rights.   Neither  the  Company  nor  any  of  its  Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing  infringements or claims, actions or proceedings.  The Company and its Subsidiaries have taken  reasonable  security  measures  to  protect  the  secrecy,  confidentiality  and  value  of  all  of  their  Intellectual Property Rights.         (y)   Environmental Laws.  (i) The Company and its Subsidiaries (A) are in compliance  with any and all Environmental Laws (as defined below), (B) have received all permits, licenses  or  other  approvals  required  of  them  under  applicable  Environmental  Laws  to  conduct  their  respective businesses and (C) are in compliance with all terms and conditions of any such permit,  license or approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so  comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse  Effect.  The term “Environmental Laws” means all federal, state, local or foreign laws relating  to  pollution  or  protection  of  human  health  or  the  environment  (including,  without  limitation,  ambient  air,  surface  water,  groundwater,  land  surface  or  subsurface  strata),  including,  without  limitation, laws relating  to emissions, discharges, releases or threatened releases of chemicals,  pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous  Materials”) into  the  environment,  or  otherwise  relating  to  the  manufacture,  processing,  distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as  well  as  all  authorizations,  codes,  decrees,  demands  or  demand  letters,  injunctions,  judgments,  licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated  or approved thereunder.               (ii)  To the knowledge of the Company, no Hazardous Materials:                           (A)   have been disposed of or otherwise released from any Real              Property of  the  Company  or  any  of  its  Subsidiaries  in violation  of  any              Environmental Laws; or                           (B)   are present on, over, beneath, in or upon a Real Property or              any  portion  thereof  in  quantities  that  would  constitute  a  violation  of  any              Environmental Laws.  No prior use by the Company or any of its Subsidiaries of              any Real Property  has  occurred  that  violates  any  Environmental  Laws,  which                                         19   





 






               violation would have a material adverse effect on the business of the Company or              any of its Subsidiaries.               (iii) Neither the Company nor any of its Subsidiaries knows of any other person        who or entity which has stored, treated, recycled, disposed of or otherwise located on any        Real Property asbestos and polychlorinated biphenyls.               (iv)  To the knowledge of the Company, none of the Real Properties are on any        federal or state “Superfund” list or Liability Information System (“CERCLIS”) list or any        state environmental agency list of sites under consideration for CERCLIS, nor subject to        any environmental related Liens.         (z)   Subsidiary Rights.  The Company or one of its Subsidiaries has the unrestricted  right  to  vote,  and  (subject  to  limitations imposed  by  applicable  law)  to  receive  dividends  and  distributions  on,  all  capital  securities  of  its  Subsidiaries  as  owned  by  the  Company  or  such  Subsidiary.         (aa)  Tax Status.  Except for matters that would not, individually or in the aggregate,  have or reasonably be expected to result in a Material Adverse Effect, the Company and each of  its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax  returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely  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, except those being contested in  good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all  taxes for periods subsequent to the periods to which such returns, reports or declarations apply.   There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any  jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such  claim, which has had or would reasonably be expected to have a Material Adverse Effect.  The  Company is not operated in such a manner as to qualify as a passive foreign investment company,  as defined in Section 1297 of the Code.  The net operating loss carryforwards (“NOLs”) for United  States federal income tax purposes of the consolidated group of which the Company is the common  parent,  if  any,  shall  not  be  adversely  effected  by  the  transactions  contemplated  hereby.   The  transactions contemplated hereby do not constitute an “ownership change” within the meaning of  Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.         (bb)  Internal  Accounting  and  Disclosure  Controls.   The  Company  and  each  of  its  Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule  13a-15(f)  under  the  1934  Act)  that  is  effective  to  provide  reasonable  assurance  regarding  the  reliability of financial reporting and the preparation of financial statements for external purposes  in accordance with generally accepted accounting principles, including 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 and liability accountability, (iii) access to assets or incurrence of liabilities is  permitted only in accordance with management’s general or specific authorization and (iv) the  recorded accountability for assets and liabilities is compared with the existing assets and liabilities  at  reasonable  intervals  and  appropriate  action  is  taken  with  respect  to  any  difference.   The  Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e)                                         20   





 






   under the 1934 Act) that are effective in ensuring that information required to be disclosed by the  Company  in  the  reports  that  it  files  or  submits  under  the  1934  Act  is  recorded,  processed,  summarized and reported, within the time periods specified in the rules and forms of the SEC,  including, without limitation, controls and procedures designed to ensure that information required  to  be  disclosed  by  the  Company  in  the  reports that  it  files  or  submits  under  the  1934  Act  is  accumulated and communicated to the Company’s management, including its principal executive  officer or officers and its principal financial officer or officers, as appropriate, to allow timely  decisions  regarding  required disclosure.  Neither the Company nor any of its  Subsidiaries has  received any notice or correspondence from any accountant, Governmental Entity or other Person  relating to any potential material weakness or significant deficiency in any part of the internal  controls over financial reporting of the Company or any of its Subsidiaries.         (cc)  Off Balance Sheet Arrangements.  There is no transaction, arrangement, or other  relationship between the Company or any of its Subsidiaries and an unconsolidated or other off  balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is  not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.         (dd)  Investment Company Status.  The Company is not, and upon consummation of the  sale  of  the  Securities  will  not  be,  an “investment  company,” an  affiliate  of  an “investment  company,” a company controlled by an “investment company” or an “affiliated person” of, or  “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in  the Investment Company Act of 1940, as amended.         (ee)  Acknowledgement  Regarding  Buyers’ Trading  Activity.  Except  as  expressly  provided  otherwise  in  the  Transaction  Documents,  it is  understood  and  acknowledged  by  the  Company  that  (i)  following  the  public  disclosure  of  the  transactions  contemplated  by  the  Transaction Documents, in accordance with the terms thereof, none of the Buyers have been asked  by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company  or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including,  without limitation, purchasing or selling, long and/or short) any securities of the Company, or  “derivative” securities based on securities issued by the Company or to hold any of the Securities  for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any  such Buyer is a party, directly or indirectly, presently may have a “short” position in the Common  Stock which was established prior to such Buyer’s knowledge of the transactions contemplated by  the Transaction Documents; (iii) each Buyer shall not be deemed to have any affiliation with or  control over any arm’s length counterparty in any “derivative” transaction; and (iv) each Buyer  may rely on the Company’s obligation to timely deliver shares of Common Stock upon conversion,  exercise  or  exchange,  as  applicable,  of  the  Securities  as  and  when  required  pursuant  to  the  Transaction Documents for purposes of effecting trading in the Common Stock of the Company.   The Company further understands and acknowledges that following the public disclosure of the  transactions contemplated by the Transaction Documents pursuant to the Press Release (as defined  below) one or more Buyers may engage in hedging and/or trading activities (including, without  limitation, the location and/or reservation of borrowable shares of Common Stock) at various times  during  the  period  that  the  Securities  are  outstanding,  including,  without  limitation,  during  the  periods that the value and/or number of the Warrant Shares or Conversion Shares, as applicable,  deliverable with respect to the Securities are being determined and such hedging and/or trading  activities (including, without limitation, the location and/or reservation of borrowable shares of                                         21   





 






   Common Stock), if any, can reduce the value of the existing stockholders’ equity interest in the  Company both at and after the time the hedging and/or trading activities are being conducted.  The  Company  acknowledges  that  such  aforementioned  hedging  and/or  trading  activities  do  not  constitute a breach of this Agreement, the Notes, the Warrants or any other Transaction Document  or any of the documents executed in connection herewith or therewith.          (ff)  Manipulation of Price.  Neither the Company nor any of its Subsidiaries has, and,  to the knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i)  taken any action designed to cause or to result in the stabilization or manipulation of the price of  any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the  Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any  of the Securities (other than the Placement Agent), (iii) paid or agreed to pay to any Person any  compensation for soliciting another to purchase any other securities of the Company or any of its  Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any  securities of the Company or any of its Subsidiaries.         (gg)  U.S.  Real  Property  Holding  Corporation.   Neither  the  Company  nor  any  of  its  Subsidiaries is, or has ever been, and so long as any of the Securities are held by any of the Buyers,  shall become, a U.S. real property holding corporation within the meaning of Section 897 of the  Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.         (hh)  Registration  Eligibility.   The  Company  is  eligible to  register  the  Registrable  Securities (as defined in the Registration Rights Agreement) for resale by the Buyers using Form  S-3 promulgated under the 1933 Act.         (ii)  Transfer Taxes.  On the Closing Date, all stock transfer or other taxes (other than  income or similar taxes) which are required to be paid in connection with the issuance, sale and  transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid  or provided for by the  Company, and  all laws  imposing  such taxes will be or will have been  complied with.          (jj)  Bank Holding Company Act.  Neither the Company nor any of its Subsidiaries is  subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation  by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).  Neither the  Company  nor  any  of  its  Subsidiaries  or  affiliates  owns  or  controls,  directly  or  indirectly,  five  percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five  percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and  to regulation by the Federal Reserve.  Neither the Company nor any of its Subsidiaries or affiliates  exercises a controlling influence over the management or policies of a bank or any entity that is  subject to the BHCA and to regulation by the Federal Reserve.          (kk)  Illegal or Unauthorized Payments; Political Contributions.  Neither the Company  nor any of its Subsidiaries nor, to the best of the Company’s knowledge (after reasonable inquiry  of  its  officers  and  directors),  any  of  the  officers,  directors,  employees,  agents  or  other  representatives of the Company or any of its Subsidiaries or any other business entity or enterprise  with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or  indirectly, made or authorized any payment, contribution or gift of money, property, or services,                                         22   





 






   whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii)  to any political organization, or the holder of or any aspirant to any elective or appointive public  office except for personal political contributions not involving the direct or indirect use of funds  of the Company or any of its Subsidiaries.         (ll)  Money Laundering.  The Company and its Subsidiaries are in compliance with, and  have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non- U.S.  anti-money  laundering  laws  and  regulations,  including, without  limitation,  the  laws,  regulations  and  Executive  Orders  and  sanctions  programs  administered  by  the  U.S.  Office  of  Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23,  2001  entitled, “Blocking  Property  and  Prohibiting  Transactions  With  Persons  Who  Commit,  Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations  contained in 31 CFR, Subtitle B, Chapter V.         (mm)  Management.  Except as set forth in Schedule 3(mm) hereto, during the past five  year period, to the knowledge of the Company, no current officer or director or current ten percent  (10%) or greater stockholder of the Company or any of its Subsidiaries has been the subject of:               (i)   a petition under bankruptcy laws or any other insolvency or moratorium law        or the appointment by a court of a receiver, fiscal agent or similar officer for such Person,        or any partnership in which such person was a general partner at or within two years before        the filing of such petition or such appointment, or any corporation or business association        of which such person was an executive officer at or within two years before the time of the        filing of such petition or such appointment;               (ii)  a  conviction  in  a  criminal  proceeding  or  a  named  subject  of  a  pending        criminal  proceeding  (excluding  traffic  violations  that  do  not  relate  to  driving  while        intoxicated or driving under the influence);               (iii) any  order,  judgment  or  decree,  not  subsequently  reversed,  suspended  or        vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any        such person from, or otherwise limiting, the following activities:                           (1)   Acting  as  a  futures  commission  merchant,  introducing              broker,  commodity  trading  advisor,  commodity  pool  operator,  floor  broker,              leverage  transaction  merchant,  any  other  person  regulated  by  the  United  States              Commodity Futures Trading Commission or an associated person of any of the              foregoing, or as an investment adviser, underwriter, broker or dealer in securities,              or as an affiliated person, director or employee of any investment company, bank,              savings and loan association or insurance company, or engaging in or continuing              any conduct or practice in connection with such activity;                           (2)   Engaging in any particular type of business practice; or                           (3)   Engaging in any activity in connection with the purchase or              sale of any security or commodity or in connection with any violation of securities              laws or commodities laws;                                         23   





 






               (iv)  any  order,  judgment  or  decree,  not  subsequently  reversed,  suspended  or        vacated, of any authority barring, suspending or otherwise limiting for more than sixty (60)        days the right of any such person to engage in any activity described in the preceding sub        paragraph, or to be associated with persons engaged in any such activity;               (v)   a finding by a court of competent jurisdiction in a civil action or by the SEC        or other authority to have violated any securities law, regulation or decree and the judgment        in such civil action or finding by the SEC or any other authority has not been subsequently        reversed, suspended or vacated; or               (vi)  a finding by a court of competent jurisdiction in a civil action or by the        Commodity Futures Trading Commission to have violated any federal commodities law,        and  the  judgment  in  such  civil  action  or  finding  has  not  been  subsequently  reversed,        suspended or vacated.         (nn)  Stock Option Plans.  Each stock option granted by the Company was granted (i) in  accordance with the terms of the applicable stock option plan of the Company and (ii) with an  exercise price at least equal to the fair market value of the Common Stock on the date such stock  option would be considered granted under GAAP and applicable law.  No stock option granted  under the Company’s stock option plan has been backdated.  The Company has not knowingly  granted, and there is no and has been no policy or practice of the Company to knowingly grant,  stock options  prior to,  or otherwise knowingly  coordinate the grant  of stock options  with,  the  release  or  other  public  announcement  of  material  information  regarding  the  Company  or  its  Subsidiaries or their financial results or prospects.         (oo)  No Disagreements with Accountants and Lawyers.  Other than with Wilson Sonsini  Goodrich & Rosati and Ellenoff Grossman & Schole LLP with respect to the aggregate amount of  fees owed by the Company, there are no material disagreements of any kind presently existing, or  reasonably anticipated by the Company to arise, between the Company and the accountants and  lawyers presently employed by the Company and the Company is current with respect to any fees  owed to its accountants and lawyers other than payables listed in Schedule 3(s) which could affect  the Company’s ability to perform any of its obligations under any of the Transaction Documents.   In addition, on or prior to the date hereof, the Company had discussions with its accountants about  its financial statements previously filed with the SEC.  Based on those discussions, the Company  has no reason to believe that it will need to restate any such financial statements or any part thereof.         (pp)  No  Disqualification  Events.   With respect  to  Securities  to  be  offered  and  sold  hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation D Securities”), none of  the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other  officer of the Company participating in the offering contemplated hereby, any beneficial owner of  20% or more of the Company’s outstanding voting equity securities, calculated on the basis of  voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected  with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and,  together, “Issuer  Covered  Persons”)  is  subject  to  any  of  the “Bad  Actor” disqualifications  described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except  for a Disqualification Event covered by Rule 506(d)(2) or (d)(3).  The Company has exercised  reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification                                         24   





 






   Event.  The Company has complied, to the extent applicable, with its disclosure obligations under  Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.         (qq)  Other Covered Persons.  The Company is not aware of any Person (other than the  Placement Agent) that has been or will be paid (directly or indirectly) remuneration for solicitation  of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.         (rr)  No  Additional  Agreements.   The  Company  does  not  have  any  agreement  or  understanding with any Buyer with respect to the transactions contemplated by the Transaction  Documents other than as specified in the Transaction Documents.         (ss)  Public Utility Holding Act.  None of the Company nor any of its Subsidiaries is a  “holding company,” or an “affiliate” of a “holding company,” as such terms are defined in the  Public Utility Holding Act of 2005.         (tt)  Federal Power Act.  None of the Company nor any of its Subsidiaries is subject to  regulation as a “public utility” under the Federal Power Act, as amended.         (uu)  Ranking of Notes.  No Indebtedness of the Company, at the Closing, will be senior  to,  or pari  passu with,  the  Notes  in  right  of  payment,  whether  with  respect  to  payment  or  redemptions,  interest, damages,  upon liquidation or dissolution  or otherwise, except  Permitted  Indebtedness (as defined in the Note) and/or Permitted Additional Indebtedness (as defined in the  Note).         (ww)  Disclosure.  The Company confirms that neither it nor any other Person acting on  its behalf has provided any of the Buyers or their agents or counsel with any information that  constitutes  or  could  reasonably  be  expected  to  constitute  material,  non-public  information  concerning the Company or any of its Subsidiaries, other than the existence of the transactions  contemplated by this Agreement and the other Transaction Documents.  The Company understands  and  confirms  that  each  of  the  Buyers  will  rely  on  the  foregoing  representations  in  effecting  transactions in securities of the Company.  As of the date of this Agreement and the Closing Date,  all disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses  and the transactions contemplated hereby, including the schedules to this Agreement, furnished by  or on behalf of the Company or any of its Subsidiaries is true and correct and does not contain any  untrue statement of a material fact or omit to state any material fact necessary in order to make the  statements  made  therein,  in  the  light  of  the  circumstances  under  which  they  were  made,  not  misleading.  Each press release issued by the Company or any of its Subsidiaries during the twelve  (12) months preceding the date of this Agreement did not at the time of release contain any untrue  statement of a material fact or omit to state a material fact required to be stated therein or necessary  in order to make the statements therein, in the light of the circumstances under which they are  made, not misleading.  No event or circumstance has occurred or information exists with respect  to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects,  operations  (including  results  thereof)  or  conditions  (financial  or  otherwise),  which,  under  applicable  law,  rule  or  regulation,  requires  public  disclosure  at  or  before  the  date  hereof  or  announcement by the Company but  which has not  been so  publicly disclosed.  The Company  acknowledges and agrees that no Buyer makes or has made any representations or warranties with                                          25   





 






   respect to the transactions contemplated by the Transaction Documents other than as specified in  the Transaction Documents.   4.    COVENANTS.         (a)   Best Efforts.  Each Buyer shall use its best efforts to timely satisfy each of the  covenants hereunder and conditions to be satisfied by it as provided in Section 6 of this Agreement.   The  Company  shall  use  its  best  efforts  to  timely  satisfy  each  of  the covenants  hereunder  and  conditions to be satisfied by it as provided in Section 7 of this Agreement.         (b)   Form  D  and  Blue  Sky.   The  Company  shall  file  a  Form  D  with  respect  to  the  Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly  after such filing.  The Company shall take such action as the Company shall reasonably determine  is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers  at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the  states of the United States (or to obtain an exemption from such qualification), and shall provide  evidence of any such action so taken to the Buyers within 15 days of the Closing Date.  Without  limiting any other obligation of the Company under this Agreement, the Company shall timely  make  all  filings  and  reports  relating  to  the  offer  and  sale  of  the  Securities  required  under  all  applicable securities laws (including, without limitation, all applicable federal securities laws and  all applicable “Blue Sky” laws), and the Company shall comply with all applicable foreign, federal,  state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the  Securities to the Buyers.         (c)   Reporting Status.  Until the date on which the Buyers shall have sold all of the  Registrable Securities (the “Reporting Period”), the Company shall timely file all reports required  to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status  as an issuer required to  file reports under the 1934 Act  even if the 1934 Act or the rules and  regulations  thereunder  would  no  longer  require  or  otherwise  permit  such  termination.  The  Company  shall  take  all  actions  necessary  to  maintain  its  eligibility  to  register  the  Registrable  Securities for resale by the Buyers on Form S-3.         (d)   Use of Proceeds.  The Company will use the proceeds from the sale of the Securities  for  general  corporate  purposes,  but  not,  directly  or  indirectly,  for  (i)  the  satisfaction  of  any  Indebtedness of the Company or any of its Subsidiaries (other than redemption of the March Notes  or payment obligations under the Transaction Documents (as defined in the March Agreement)  which may be satisfied with the proceeds) (ii) the redemption or repurchase of any securities of  the Company or any of its Subsidiaries, or (iii) the settlement of any outstanding litigation.         (e)   Financial Information.  The Company agrees to send the following to each Investor  (as  defined in  the  Registration  Rights  Agreement)  during  the  Reporting  Period  (i)  unless  the  following are filed with the SEC through EDGAR and are available to the public through the  EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its  Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any  consolidated balance sheets, income statements, stockholders’ equity statements and/or cash flow  statements for any period other than annual, any Current Reports on Form 8-K and any registration  statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the                                         26   





 






   following are either filed with the SEC through EDGAR or are otherwise widely disseminated via  a recognized news release service (such as PR Newswire), on the same day as the release thereof,  facsimile copies of all press releases issued by the Company or any of its Subsidiaries and (iii)  unless the following are filed with the SEC through EDGAR, copies of any notices and other  information  made  available  or  given  to  the  stockholders  of  the  Company  generally,  contemporaneously with the making available or giving thereof to the stockholders.         (f)   Listing.  The Company shall promptly secure the listing or designation for quotation  (as the case may be) of all of the Registrable Securities upon each national securities exchange and  automated quotation system, if any, upon which the Common Stock is then listed or designated  for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such  listing or designation for quotation (as the case may be) of all Registrable Securities from time to  time issuable under the terms of the Transaction Documents on such national securities exchange  or  automated  quotation  system.   The  Company  shall  maintain  the  Common  Stock’s  listing  or  authorization for quotation (as the case may be) on the Principal Market, The New York Stock  Exchange, the NYSE American, the Nasdaq Global Market or the Nasdaq Global Select Market  (each, an “Eligible Market”).  Neither the Company nor any of its Subsidiaries shall take any  action which could be reasonably expected to result in the delisting or suspension of the Common  Stock on an Eligible Market.  The Company shall pay all fees and expenses in connection with  satisfying its obligations under this Section 4(f).         (g)   Fees.  The Company shall reimburse the lead Buyer for all reasonable costs and  expenses  incurred  by  it  or  its affiliates  in  connection  with  the  structuring,  documentation,  negotiation and closing of the transactions contemplated by the Transaction Documents (including,  without limitation, as applicable, all reasonable legal fees of outside counsel and disbursements of  Kelley Drye & Warren LLP, counsel to the lead Buyer, any other reasonable fees and expenses in  connection  with  the  structuring,  documentation,  negotiation  and  closing  of  the  transactions  contemplated by the Transaction Documents and due diligence and regulatory filings in connection  therewith)  (the “Transaction  Expenses”)  and  shall  be  withheld  by  the  lead  Buyer  from  its  Purchase Price at the Closing; provided, that the Company shall promptly reimburse Kelley Drye  &  Warren  LLP on  demand  for  all  Transaction  Expenses  not  so  reimbursed  through  such  withholding  at  the Closing. Notwithstanding the foregoing,  in  no event  shall the Company be  responsible for reimbursement of Transaction Expenses in excess of the sum of (x) $30,000 and  (y) 50% of any reasonable legal fees and expenses of Kelley Drye & Warren LLP in excess of  $30,000. The  Company  shall  be  responsible  for  the  payment  of  any  placement  agent’s  fees,  financial advisory fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions  (other  than  for  Persons  engaged  by  any  Buyer)  relating  to  or  arising  out  of  the  transactions  contemplated  hereby  (including,  without  limitation,  any  fees or  commissions payable  to  the  Placement Agent, who is the Company’s sole placement agent in connection with the transactions  contemplated by this Agreement).  The Company shall pay, and hold each Buyer harmless against,  any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of- pocket expenses) arising in connection with any claim relating to any such payment.  Except as  otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own  expenses in connection with the sale of the Securities to the Buyers.         (h)   Pledge of Securities.  Notwithstanding anything to the contrary contained in this  Agreement,  the  Company  acknowledges  and  agrees  that  the  Securities  may  be  pledged  by  an                                         27   





 






   Investor (as defined in the Registration Rights Agreement) in connection with a bona fide margin  agreement or other loan or financing arrangement that is secured by the Securities.  The pledge of  Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and  no such Investor effecting a pledge of Securities shall be required to provide the Company with  any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or  any other Transaction Document, including, without limitation, Section 2(g) hereof; provided that  an Investor and its pledgee shall be required to comply with the provisions of Section 2(g) hereof  in order to effect a sale, transfer or assignment of Securities to such pledgee.  The Company hereby  agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably  request in connection with a pledge of the Securities to such pledgee by a Buyer.         (i)   Disclosure of Transactions and Other Material Information.                 (i)   Disclosure of Transaction.  The Company shall, on or before 9:30 a.m., New        York time, on the first (1st) Business Day after the date of this Agreement, issue a press        release (the “Press Release”) reasonably acceptable to the lead Buyer disclosing all the        material terms of the transactions contemplated by the Transaction Documents.  On or        before 9:30  a.m., New  York time, on the first  (1st) Business  Day after the date of this        Agreement,  the  Company  shall  file  a  Current  Report  on  Form  8-K  describing  all  the        material terms of the transactions contemplated by the Transaction Documents in the form        required by the 1934 Act and attaching all the material Transaction Documents (including,        without  limitation,  this  Agreement  (and  all  schedules  to  this  Agreement),  the  form  of        Notes, the form of Investor Note, the form of the Warrants, the form of the Registration        Rights Agreement, the form of Master Netting Agreement and the form of Note Purchase        Agreement) (including all attachments, the “8-K Filing”).  From and after the filing of the        8-K Filing, the Company shall have disclosed all material, non-public information (if any)        provided to any of the Buyers 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 filing of the        8-K  Filing,  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, affiliates, employees or        agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand,        shall terminate.                 (ii)  Limitations on Disclosure.  The Company shall not, and the Company shall        cause  each  of  its  Subsidiaries  and  each of  its  and  their  respective  officers,  directors,        employees and agents not to, provide any Buyer with any material, non-public information        regarding the Company or any of its Subsidiaries from and after the date hereof without        the express prior written consent of such Buyer (which may be granted or withheld in such        Buyer’s  sole  discretion).   In  the  event  of  a  breach  of  any  of  the  foregoing  covenants,        including, without limitation, Section 4(o) of this Agreement, or any of the covenants or        agreements  contained in any other Transaction Document, by the Company, any of its        Subsidiaries, or any of its or their respective officers, directors, employees and agents (as        determined in the reasonable good faith judgment of such Buyer), in addition to any other        remedy provided herein or in the Transaction Documents, such Buyer shall have the right        to  make  a  public  disclosure,  in  the  form  of  a  press  release,  public  advertisement  or                                         28   





 






                otherwise, of such breach or such material, non-public information, as applicable, without  the prior approval by the Company, any of its Subsidiaries, or any of its or their respective  officers, directors, employees or agents.  No Buyer shall have any liability to the Company,  any  of  its  Subsidiaries,  or  any  of  its  or  their  respective  officers,  directors,  employees,  affiliates, stockholders or agents, for any such disclosure.  To the extent that the Company  delivers any material, non-public information to a Buyer without such Buyer’s consent, the  Company  hereby  covenants  and  agrees  that  such  Buyer  shall  not  have  any  duty  of  confidentiality with respect to, or a duty not to trade on the basis of, such material, non- public information.  Subject to the foregoing, neither the Company, its Subsidiaries nor  any Buyer shall issue any press releases or any other public statements with respect to the  transactions  contemplated  hereby;  provided,  however,  the  Company  shall  be  entitled,  without the prior approval of any Buyer, to make the Press Release and any press release  or other public disclosure with respect to such transactions (i) in substantial conformity  with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable  law and regulations (provided that in the case of clause (i) each Buyer shall be consulted  by the Company in connection with any such press release or other public disclosure prior  to its release).  Without the prior written consent of the applicable Buyer (which may be  granted or withheld in such Buyer’s sole discretion), the Company shall not (and shall  cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any  filing, announcement, release or otherwise.  Notwithstanding anything contained in this  Agreement to the contrary and without implication that the contrary would otherwise be  true, the Company expressly acknowledges and agrees that no Buyer shall have (unless  expressly agreed to by a particular Buyer after the date hereof in a written definitive and  binding  agreement  executed  by  the  Company  and  such  particular  Buyer  (it  being  understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any  duty of confidentiality with respect to, or a duty not to trade on the basis of, any material,  non-public information regarding the Company or any of its Subsidiaries.         (iii) Other  Confidential  Information.   Disclosure  Failures;  Disclosure  Delay  Payments.  In addition to other remedies set forth in this Section 4(i), and without limiting  anything set forth in any other Transaction Document, at any time after the Closing Date  if  the  Company,  any  of  its  Subsidiaries, or  any  of  their respective  officers,  directors,  employees or agents, provides any Buyer with material non-public information relating to  the  Company  or  any  of  its  Subsidiaries (each,  the “Confidential  Information”), the  Company shall, on or prior to the applicable Required Disclosure Date (as defined below),  publicly disclose  such Confidential  Information on  a  Current  Report  on  Form  8-K  or  otherwise (each, a “Disclosure”).  From and after such Disclosure, the Company shall have  disclosed all Confidential Information provided to such Buyer 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 such Disclosure, 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,  affiliates, employees or agents, on the one hand, and any of the Buyers or any of their  affiliates, on the other hand, shall terminate.  In the event that the Company fails to effect  such Disclosure on or prior to the Required Disclosure Date and such Buyer shall have  possessed Confidential Information for at least ten (10) consecutive Trading Days (each, a                                   29                





 






                “Disclosure Failure”), then, as partial relief for the damages to such Buyer by reason of  any such delay in, or reduction of, its ability to buy or sell shares of Common Stock after  such Required Disclosure Date (which remedy shall not be exclusive of any other remedies  available at law or in equity), the Company shall pay to such Buyer an amount in cash  equal to the greater of (I) one percent (1%) of the aggregate Purchase Price and (II) the  applicable  Disclosure  Restitution  Amount,  on  each  of  the  following  dates  (each,  a  “Disclosure Delay Payment Date”): (i) on the date of such Disclosure Failure and (ii) on  every thirty (30) day anniversary such Disclosure Failure until the earlier of (x) the date  such  Disclosure  Failure  is  cured  and  (y)  such  time  as  all  such  non-public  information  provided  to  such  Buyer  shall  cease  to  be  Confidential  Information  (as  evidenced  by  a  certificate, duly executed by an authorized officer of the Company to the foregoing effect)  (such  earlier  date,  as  applicable,  a “Disclosure  Cure  Date”).   Following  the  initial  Disclosure  Delay  Payment  for  any  particular Disclosure  Failure,  without  limiting  the  foregoing, if a Disclosure Cure Date occurs prior to any thirty (30) day anniversary of such  Disclosure Failure, then such Disclosure Delay Payment (prorated for such partial month)  shall be made on the second (2nd) Business Day after such Disclosure Cure Date.  The  payments to which an Investor shall be entitled pursuant to this Section 4(i)(iii) are referred  to  herein  as “Disclosure  Delay  Payments.” In  the  event  the  Company  fails  to  make  Disclosure Delay Payments in a timely manner in accordance with the foregoing, such  Disclosure Delay Payments shall bear interest at the rate of two percent (2%) per month  (prorated for partial months) until paid in full.          (iv)  For the purpose of this Agreement the following definitions shall apply:                (1)   “Disclosure Failure Market Price” means, as of any Disclosure        Delay Payment Date, the price computed as the quotient of (I) the sum of the five        (5) highest VWAPs (as  defined in  the Notes) of the Common Stock during  the        applicable Disclosure Restitution Period (as defined below), divided by (II) five (5)        (such  period,  the “Disclosure  Failure  Measuring  Period”).   All  such        determinations  to  be  appropriately  adjusted  for  any  share  dividend,  share  split,        share  combination,  reclassification  or  similar  transaction  that  proportionately        decreases  or  increases  the  Common  Stock  during  such Disclosure  Failure        Measuring Period.               (2)   “Disclosure  Restitution  Amount” means,  as  of  any  Disclosure        Delay Payment Date, the product of (x) difference of (I) the Disclosure Failure        Market Price less (II) the lowest purchase price, per share of Common Stock, of        any Common Stock issued or issuable to such Buyer pursuant to this Agreement or        any other Transaction Documents, multiplied by (y) 10% of the aggregate daily        dollar trading volume (as reported on Bloomberg (as defined in the Notes)) of the        Common Stock on the Principal Market for each Trading Day (as defined in the        Notes) either (1) with respect to the initial Disclosure Delay Payment Date, during        the period commencing on the applicable Required Disclosure Date through and        including  the  Trading  Day  immediately  prior  to  the  initial  Disclosure  Delay        Payment Date or (2) with respect to each other Disclosure Delay Payment Date,        during  the  period  commencing  the  immediately  preceding  Disclosure  Delay        Payment Date through and including the Trading Day immediately prior to such                                   30                





 






               applicable  Disclosure  Delay  Payment  Date  (such  applicable  period,  the              “Disclosure Restitution Period”).                     (3)   “Required Disclosure Date” means (x) if such Buyer authorized              the delivery of such Confidential Information, either (I) if the Company and such              Buyer  have  mutually  agreed  upon  a  date  (as  evidenced  by  an  e-mail  or  other              writing) of Disclosure of such Confidential Information, such agreed upon date or              (II) otherwise, the seventh (7th) calendar day after the date such Buyer first received              any Confidential Information or (y) if such Buyer did not authorize the delivery of              such  Confidential  Information,  the  first  (1st)  Business  Day  after such  Buyer’s              receipt of such Confidential Information.         (j)   [Reserved]         (k)   [Reserved]         (l)   Reservation of Shares.  So long as any of the Notes or Warrants remain outstanding,  the Company shall take all action necessary to at all times have authorized, and reserved for the  purpose  of  issuance,  no  less  than the  sum of  (i) 200%  of the  maximum  number  of  shares  of  Common Stock issuable upon conversion of all the Notes then outstanding (assuming for purposes  hereof that (x) the Notes are convertible at the Alternate Conversion Price assuming an Alternate  Conversion Date as of the applicable date of determination, (y) interest on the Notes shall accrue  through the applicable Maturity Date of such Notes (or portions thereof, as applicable) (except,  with respect to any Restricted Principal, accrue through December 31, 2023) and will be converted  in shares of Common Stock at a conversion price equal to the Alternate Conversion Price assuming  an Alternate  Conversion Date  as  of  the  applicable  date  of  determination  and  (z)  any  such  conversion shall not take into account any limitations on the conversion of the Notes set forth in  the Notes), and (ii) 100% of the maximum number of Warrant Shares issuable upon exercise of all  the Warrants then outstanding (without regard to any limitations on the exercise of the Warrants  set forth therein) (collectively, the “Required Reserve Amount”); provided that at no time shall  the number of shares of Common Stock reserved pursuant to this Section 4(k) be reduced other  than proportionally in connection with any conversion, exercise and/or redemption, as applicable  of Notes and Warrants.  If at any time the number of shares of Common Stock authorized and  reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will  promptly take all corporate action necessary to authorize and reserve a sufficient number of shares,  including, without limitation,  calling  a special meeting of stockholders to  authorize additional  shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of  an insufficient number of authorized shares, obtain stockholder approval of an increase in such  authorized number of shares, and voting the management shares of the Company in favor of an  increase in the authorized shares of the Company to ensure that the number of authorized shares  is sufficient to meet the Required Reserve Amount.         (m)   Conduct of Business.  The business of the Company and its Subsidiaries shall not  be conducted in violation of any law, ordinance or regulation of any Governmental Entity, except  where such violations would not reasonably be expected to result, either individually or in the  aggregate, in a Material Adverse Effect.                                          31   





 






         (n)   Variable Securities.  So long as any Notes remain outstanding, the Company and  each Subsidiary shall be prohibited from effecting or entering into an agreement to effect any  Subsequent Placement involving a Variable Rate Transaction (other than Permitted Variable Rate  Transactions).  “Variable Rate Transaction” means any transaction in which the Company or  any Subsidiary (i) issues or sells any Convertible Securities either (A) at a conversion, exercise or  exchange rate or other price that is based upon and/or varies with the trading prices of or quotations  for  the  shares of  Common Stock  at  any  time  after  the  initial  issuance  of  such Convertible  Securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at  some future date after the initial issuance of such Convertible Securities or upon the occurrence of  specified or contingent events directly or indirectly related to the business of the Company or the  market for the Common Stock or (ii) enters into any agreement whereby the Company or any  Subsidiary may sell securities at a future determined price (other than standard and customary  “preemptive” or “participation” rights).  As used in the Transaction Documents (x) “ATM/EOL  Transaction” means any, direct or indirect, equity line of credit or “at-the-market” offering of any  securities  by  the  Company  or  any  of  its  Subsidiaries and  (y) “Permitted  Variable  Rate  Transaction” means any bona fide ATM/EOL Transaction, pursuant to which the Company sells  Common Stock to a bona fide broker-dealer (with respect to either an “at-the market” offering or  an equity line of credit) or any other applicable investor (solely with respect to an equity line of  credit)  (as  applicable,  each  a  “VRT  Transaction  Counterparty”);  provided,  that  such VRT  Transaction Counterparty is named as an “underwriter” in any registration statement with respect  thereto.   Each Buyer shall be entitled to obtain injunctive relief against the Company and its  Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect  damages.         (o)   Participation Right  At any time on or prior to the second anniversary of the later  of (x) the Closing Date and (y) the date no Investor Notes remain outstanding, neither the Company  nor any of its Subsidiaries shall, directly or indirectly, issue, offer, sell, grant any option or right  to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or  right to purchase or other disposition of) any debt, any equity security or any equity-linked or  related security (including, without limitation, any “equity security” (as that term is defined under  Rule 405 promulgated under the 1933 Act), any Convertible Securities (as defined below), any  preferred  stock  or  any  purchase  rights)  (any  such  issuance,  offer,  sale,  grant,  disposition  or  announcement (whether occurring during the Restricted Period or at any time thereafter) is referred  to  as  a  “Subsequent  Placement”)  unless  the  Company  shall  have  first  complied  with  this  Section 4(o). Notwithstanding the foregoing, this Section 4(o) shall not apply in respect of the  issuance  of  (i)  shares  of  Common  Stock  or  standard  options  to  purchase  Common  Stock  to  directors, officers or employees of the Company in their capacity as such pursuant to an Approved  Stock Plan (as defined below), provided that the exercise price of any such options is not lowered,  none of such options are amended to increase the number of shares issuable thereunder and none  of the terms or conditions of any such options are otherwise materially changed in any manner that  adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or  exercise of Convertible Securities (other than standard options to purchase Common Stock issued  pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date  hereof, provided that the conversion, exercise or other method of issuance (as the case may be) of  any such Convertible Security is made solely pursuant to the conversion, exercise or other method  of issuance (as the case may be) provisions of such Convertible Security that were in effect on the  date immediately prior to the date of this Agreement, the conversion, exercise or issuance price of                                         32   





 






   any such Convertible Securities (other than standard options to purchase Common Stock issued  pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered, none of  such  Convertible  Securities  (other  than  standard  options  to  purchase  Common  Stock  issued  pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase  the  number  of  shares  issuable  thereunder  and  none  of  the  terms  or  conditions  of  any  such  Convertible Securities (other than standard options to purchase Common Stock issued pursuant to  an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in  any manner that adversely affects any of the Buyers; (iii) the Conversion Shares (iv) any shares of  Common Stock issued or issuable in connection with bona fide vendor services and/or settlement  of bona fide litigation or other bona fide claims up to $5 million in the aggregate (“Permitted  Settlement Transactions”); provided that (x) the primary purpose of such issuance is not to raise  capital as reasonably determined, (y) the recipient of the securities in such issuance solely consists  of  the actual vendor, claimant or plaintiff (as applicable, but not including any subsequent acquirer  of such claim with a primary business of buying or selling securities), and (z) the number or amount  of securities issued to such Persons by the Company shall not be disproportionate to the reasonable  value of the services rendered to such vendor or the reasonable value of claim to such claimant or  plaintiff,  as  applicable, as  reasonably  determined,  (v)  the  Warrant  Shares, (vi)  any  shares  of  Common  Stock  issued  or  issuable  in  connection  with  any  bona  fide  strategic  or  commercial  alliances, acquisitions, mergers, licensing arrangements, and strategic partnerships, provided, that  (x) the purchaser or acquirer or recipient of the securities in such issuance has a class of securities  that are traded on or quoted through an Eligible Market with a market capitalization of $1 billion,  and (y) the purchaser or acquirer or recipient of the securities in such issuance solely consists of  either (A) the actual participants in such strategic or commercial alliance, strategic or commercial  licensing arrangement or strategic or commercial partnership with a commercial agreement with  the Company for consideration equal to (or in excess of) $100,000, (B) the actual owners of such  assets  or  securities  acquired  in  such  acquisition  or  merger  or  (C)  the  stockholders,  partners,  employees,  consultants,  officers, directors or members  of the foregoing  Persons, in  each case,  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, as applicable and (vii) shares of Common Stock  issued in  any Permitted Variable Rate Transaction (each of the foregoing in clauses (i) through  (vii),  collectively  the  “Excluded  Securities”). “Approved  Stock  Plan”  means  any  employee  benefit  plan which  has  been  approved  by  the  board  of  directors  of  the  Company  prior  to  or  subsequent to the date hereof pursuant to which shares of Common Stock and standard options to  purchase Common Stock may be issued to any employee, officer or director for services provided  to the Company in their capacity as such.  “Convertible Securities” means any capital stock or  other  security  of  the  Company  or  any  of  its  Subsidiaries  that  is  at  any  time  and  under  any  circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which  otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company  (including,  without  limitation,  Common  Stock)  or  any  of  its  Subsidiaries. The  Company  acknowledges  and  agrees  that  the  right  set  forth  in  this  Section 4(o) is  a  right  granted  by  the  Company, separately, to each Buyer. The Company acknowledges and agrees that the right set  forth in this Section 4(o) is a right granted by the Company, separately, to each Buyer.               (i)   At least five (5) Trading Days prior to any proposed or intended Subsequent        Placement, the Company shall deliver to each Buyer a written notice (each such notice, a        “Pre-Notice”),  which  Pre-Notice  shall  not  contain  any  information  (including,  without                                         33   





 






                limitation, material, non-public information) other than:  (A) if the proposed Offer Notice  (as defined below) constitutes or contains material, non-public information, a statement  asking whether the Investor is willing to accept material non-public information or (B) if  the proposed Offer Notice does not constitute or contain material, non-public information,  (x) a statement that the Company proposes or intends to effect a Subsequent Placement,  (y) a statement that the statement in clause (x) above does not constitute material, non- public information and (z) a statement informing such Buyer that it is entitled to receive an  Offer Notice (as defined below) with respect to such Subsequent Placement upon its written  request.   Upon  the  written  request  of  a  Buyer  within  three  (3)  Trading  Days  after  the  Company’s delivery to such Buyer of such Pre-Notice, and only upon a written request by  such Buyer, the Company shall promptly, but no later than one (1) Trading Day after such  request, deliver to such Buyer an irrevocable written notice (the “Offer Notice”) of any  proposed or intended issuance or sale or exchange (the “Offer”) of the securities being  offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall  (A) identify and describe the Offered Securities, (B) describe the price and other terms  upon which they are to be issued, sold or exchanged, and the number or amount of the  Offered Securities to be issued, sold or exchanged, (C) identify the Persons (if known) to  which or with which the Offered Securities are to be offered, issued, sold or exchanged and  (D) offer to issue and sell to or exchange with such Buyer in accordance with the terms of  the Offer such Buyer’s pro rata portion of 30% of the Offered Securities, provided that the  number of Offered Securities which such Buyer shall have the right to subscribe for under  this  Section 4(o) shall  be  (x)  based  on  such  Buyer’s  pro  rata  portion  of  the  aggregate  original  principal  amount  of  the  Notes  purchased  hereunder  by  all  Buyers  (the “Basic  Amount”), and (y) with respect to each Buyer that elects to purchase its Basic Amount,  any additional portion of the Offered Securities attributable to the Basic Amounts of other  Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers  subscribe for less than their Basic Amounts (the “Undersubscription Amount”), which  process shall be repeated until each Buyer shall have an opportunity to subscribe for any  remaining  Undersubscription  Amount, but  such  process  shall  not  extend  past  the  tenth  (10th) Business Day following the Offer Notice (unless the Company delivers an additional  Offering  Notice  or  amends  or  modifies  the  terms  or  conditions  of  such  Subsequent  Placement).         (ii)  To accept an Offer, in whole or in part, such Buyer must deliver a written  notice to the Company prior to the end of the fifth (5th) Business Day after such Buyer’s  receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Buyer’s  Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase  all of its Basic Amount, the Undersubscription Amount, if any, that such Buyer elects to  purchase (in either case, the “Notice of Acceptance”).  If the Basic Amounts subscribed  for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who  has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to  purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount  it has subscribed for; provided, however, if the Undersubscription Amounts subscribed for  exceed the difference between the total of all the Basic Amounts and the Basic Amounts  subscribed  for  (the “Available  Undersubscription  Amount”), each Buyer  who  has  subscribed  for  any  Undersubscription  Amount  shall  be  entitled  to  purchase  only  that  portion of the Available Undersubscription Amount as the Basic Amount of such Buyer                                   34                





 






                bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription  Amounts, subject to rounding by the Company to the extent it deems reasonably necessary.   Notwithstanding the foregoing, if the Company desires to modify or amend the terms and  conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver  to  each  Buyer  a  new  Offer  Notice  and  the  Offer  Period  shall  expire  on  the fifth  (5th)  Business Day after such Buyer’s receipt of such new Offer Notice.         (iii) The Company shall have five (5) Business Days from the expiration of the  Offer Period above (A) to offer, issue, sell or exchange all or any part of such Offered  Securities as to which a Notice of Acceptance has not been given by a Buyer (the “Refused  Securities”)  pursuant  to  a  definitive  agreement(s)  (the “Subsequent  Placement  Agreement”),  but  only  to  the  offerees  described  in  the  Offer  Notice  (if  so  described  therein) and only upon terms and conditions (including, without limitation, unit prices and  interest  rates)  that  are  not  more  favorable  to  the  acquiring  Person  or  Persons  or  less  favorable  to  the  Company  than  those  set  forth  in  the  Offer  Notice  and  (B)  to  publicly  announce (x) the execution of such Subsequent Placement Agreement, and (y) either (I)  the  consummation  of  the  transactions  contemplated  by  such  Subsequent  Placement  Agreement or (II) the termination of such Subsequent Placement Agreement, which shall  be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement  Agreement and any documents contemplated therein filed as exhibits thereto.         (iv)  In the event the Company shall propose to sell less than all the Refused  Securities (any such sale to be in the manner and on the terms specified in Section 4(o)(iii)  above), then each Buyer may, at its sole option and in its sole discretion, withdraw its  Notice of Acceptance or reduce the number or amount of the Offered Securities specified  in its Notice of Acceptance to an amount that shall be not less than the number or amount  of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(o)(ii)  above multiplied by a fraction, (i) the numerator of which shall be the number or amount  of Offered Securities the Company actually proposes to issue, sell or exchange (including  Offered Securities to be issued or sold to Buyers pursuant to this Section 4(o) prior to such  reduction) and (ii) the denominator of which shall be the original amount of the Offered  Securities.  In the event that any Buyer so elects to reduce the number or amount of Offered  Securities  specified  in  its  Notice  of  Acceptance,  the  Company  may  not  issue,  sell  or  exchange more than the reduced number or amount of the Offered Securities unless and  until  such  securities  have  again  been  offered  to  the  Buyers  in  accordance  with  Section 4(o)(i) above.         (v)   Upon the closing of the issuance, sale or exchange of all or less than all of  the Refused Securities, such Buyer shall acquire from the Company, and the Company  shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice  of Acceptance, as reduced pursuant to Section 4(o)(iv) above if such Buyer has so elected,  upon the terms and conditions specified in the Offer.  The purchase by such Buyer of any  Offered Securities is subject in all cases to the preparation, execution and delivery by the  Company  and  such  Buyer  of  a  separate  purchase  agreement  relating  to  such  Offered  Securities reasonably satisfactory in form and substance to such Buyer and its counsel.                                    35                





 






               (vi)  Any  Offered  Securities  not  acquired  by  a  Buyer  or  other  Persons  in        accordance with this Section 4(o) may not be issued, sold or exchanged until they are again        offered to such Buyer under the procedures specified in this Agreement.               (vii) The Company and each Buyer agree that if any Buyer elects to participate        in the Offer, (x) neither the Subsequent Placement Agreement with respect to such Offer        nor  any  other  transaction  documents  related  thereto  (collectively,  the “Subsequent        Placement Documents”) shall include any term or provision whereby such Buyer shall be        required to agree to any restrictions on trading as to any securities of the Company or be        required to consent to any amendment to or termination of, or grant any waiver, release or        the  like  under  or  in  connection  with,  any  agreement  previously  entered  into  with  the        Company or any instrument received from the Company, and (y) any registration rights set        forth in such Subsequent Placement Documents shall be similar in all material respects to        the registration rights contained in the Registration Rights Agreement.               (viii) Notwithstanding anything to the contrary in this Section 4(o) and unless        otherwise agreed to by such Buyer, the Company shall either confirm in writing to such        Buyer that the transaction with respect to the Subsequent Placement has been abandoned        or shall publicly disclose its intention to issue the Offered Securities, in either case, in such        a  manner  such  that  such  Buyer  will  not  be  in  possession  of  any  material,  non-public        information, by the fifth (5th) Business Day following delivery of the Offer Notice.  If by        such fifth (5th) Business Day, no public disclosure regarding a transaction with respect to        the Offered Securities has been made, and no notice regarding the abandonment of such        transaction has been received by such Buyer, such transaction shall be deemed to have been        abandoned  and  such  Buyer  shall  not  be  in  possession  of  any  material,  non-public        information with respect to the Company or any of its Subsidiaries.  Should the Company        decide to pursue such transaction with respect to the Offered Securities, the Company shall        provide such Buyer with another Offer Notice and such Buyer will again have the right of        participation set forth in this Section 4(o).  The Company shall not be permitted to deliver        more than one such Offer Notice to such Buyer in any sixty (60) day period, except as        expressly contemplated by the last sentence of Section 4(o)(ii).               (ix)  The restrictions contained in this Section 4(o) shall not apply in connection        with  the  issuance  of  any  Excluded  Securities.  The  Company  shall  not  circumvent  the        provisions of this Section 4(o) by providing terms or conditions to one Buyer that are not        provided to all.         (p)   Subsequent Placements.  For so long as any Notes or Warrants remain outstanding,  the Company shall not, in any manner, enter into or affect any Subsequent Placement if the effect  of such Subsequent Placement is to cause the Company to be required to issue upon conversion of  any Notes or exercise of any Warrant any shares of Common Stock in excess of that number of  shares of Common Stock which the Company may issue upon conversion of the Notes and exercise  of the Warrants without breaching the Company’s obligations under the rules or regulations of the  Principal Market.          (q)   Passive Foreign Investment Company.  The Company shall conduct its business,  and shall cause its Subsidiaries to conduct their respective businesses, in such a manner as will                                         36   





 






   ensure that the Company will not be deemed to constitute a passive foreign investment company  within the meaning of Section 1297 of the Code.         (r)   Corporate  Existence.   So  long  as  any  Buyer  beneficially  owns  any  Notes  or  Warrants, the Company shall not be party to any Fundamental Transaction (as defined in the Notes)  unless  the  Company  is  in  compliance  with  the  applicable provisions  governing  Fundamental  Transactions set forth in the Notes and the Warrants.         (s)   Conversion  and  Exercise  Procedures.   Each  of  the  form  of Exercise Notice (as  defined in the Warrants) included in the Warrants and the form of Conversion Notice (as defined  in the Notes) included in the Notes set forth the totality of the procedures required of the Buyers  in order to exercise the Warrants or convert the Notes.  Except as provided in Section 5(d), no  additional  legal  opinion,  other  information  or  instructions  shall  be  required  of  the  Buyers  to  exercise their Warrants or convert their Notes.  The Company shall honor exercises of the Warrants  and  conversions  of  the  Notes  and  shall  deliver  the  Conversion  Shares  and  Warrant  Shares  in  accordance with the terms, conditions and time periods set forth in the Notes and Warrants.         (t)   Regulation M.  The Company will not take any action prohibited by Regulation M  under the 1934 Act, in connection with the distribution of the Securities contemplated hereby.         (u)   General Solicitation.  None of the Company, any of its affiliates (as defined in Rule  501(b) under the 1933 Act) or any person acting on behalf of the Company or such affiliate will  solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation  or  general  advertising  within  the  meaning  of  Regulation D,  including:   (i)  any  advertisement,  article, notice or other communication published in any newspaper, magazine or similar medium  or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been  invited by any general solicitation or general advertising.         (v)   Integration.  None of the Company, any of its affiliates (as defined in Rule 501(b)  under the 1933 Act), or any person acting on behalf of the Company or such affiliate will sell,  offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined  in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would  require the registration of the Securities under the 1933 Act or require stockholder approval under  the rules  and regulations of the Principal Market  and the Company will take all action that is  appropriate or necessary to assure that its offerings of other securities will not be integrated for  purposes of the 1933 Act or the rules and regulations of the Principal Market, with the issuance of  Securities contemplated hereby.         (w)   Notice of Disqualification Events.  The Company will notify the Buyers in writing,  prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person  and (ii) any event that would, with the passage of time, become a Disqualification Event relating  to any Issuer Covered Person.         (x)   Stockholder Approval.  The Company shall provide each stockholder entitled to  vote  at an  annual  or special  meeting  of  stockholders  of  the  Company  (the “Stockholder  Meeting”),  which  shall  be  promptly  called  and  held  not  later  than December  31,  2020 (the  “Stockholder Meeting Deadline”), a proxy statement, in a form reasonably acceptable to the lead                                         37   





 






   Buyer and  Kelley  Drye  &  Warren  LLP,  at  the  expense  of  the  Company,  with  the  Company  obligated  to  reimburse  the  expenses  of  Kelley  Drye  &  Warren  LLP  incurred  in  connection  therewith in an amount not exceed $5,000, soliciting each such stockholder’s affirmative vote at  the Stockholder Meeting for approval of resolutions (“Stockholder Resolutions”) providing for  the issuance of the Securities (as defined herein) in compliance with the rules and regulations of  the  Principal  Market (“Stockholder  Approval”,  and  the  date  the  Stockholder  Approval  is  obtained,  the “Stockholder  Approval  Date”),  and  the  Company  shall  use  its  reasonable  best  efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors  of  the  Company  to  recommend  to  the  stockholders  that  they  approve  such  resolutions.   The  Company  shall  be  obligated  to  seek  to  obtain  the  Stockholder  Approval  by  the  Stockholder  Meeting Deadline.  If, despite the Company’s reasonable best efforts the Stockholder Approval is  not  obtained  on  or  prior  to  the  Stockholder  Meeting  Deadline,  the  Company  shall  cause  an  additional Stockholder Meeting to be held on or prior to June 30, 2021.  If, despite the Company’s  reasonable best efforts the Stockholder Approval is not obtained after such subsequent stockholder  meetings,  the  Company  shall  cause  an  additional  Stockholder  Meeting  to  be  held quarterly  thereafter until such Stockholder Approval is obtained.         (y)   Closing Documents.  On or prior to fourteen (14) calendar days after the Closing  Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Kelley Drye &  Warren LLP a complete closing set of the executed Transaction Documents, Securities and any  other document required to be delivered to any party pursuant to Section 7 hereof or otherwise.   5.    REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.         (a)   Register.  The Company shall maintain at its principal executive offices (or such  other office or agency of the Company as it may designate by notice to each holder of Securities),  a register for the Notes and the Warrants in which the Company shall record the name and address  of the Person in whose name the Notes and the Warrants have been issued (including the name  and address of each transferee), the principal amount of the Notes held by such Person, the number  of Conversion Shares issuable pursuant to the terms of the Notes and the number of Warrant Shares  issuable upon exercise of the Warrants held by such Person.  The Company shall keep the register  open  and  available  at  all  times  during  business  hours  for  inspection  of  any  Buyer  or  its  legal  representatives.         (b)   Transfer Agent Instructions.  The Company shall issue irrevocable instructions to  its transfer agent and any subsequent transfer agent (as applicable, the “Transfer Agent”) in a  form acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”) to issue  certificates or credit shares to the applicable balance accounts at The Depository Trust Company  (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Conversion  Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to  the Company upon conversion of the Notes or the exercise of the Warrants (as the case may be).   The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent  Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to Section  2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and  that the Securities shall otherwise be freely transferable on the books and records of the Company,  as applicable, to the extent provided in this Agreement and the other Transaction Documents.  If a  Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the                                         38   





 






   Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or  more certificates or credit shares to the applicable balance accounts at DTC in such name and in  such denominations as specified by such Buyer to effect such sale, transfer or assignment.  In the  event that such sale, assignment or transfer involves Conversion Shares or Warrant Shares sold,  assigned or transferred pursuant to an effective registration statement or in compliance with Rule  144, the transfer agent shall issue such shares to such Buyer, assignee or transferee (as the case  may be) without any restrictive legend in accordance with Section 5(d) below.  The Company  acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a  Buyer.   Accordingly,  the  Company  acknowledges  that  the  remedy  at  law  for  a  breach  of  its  obligations  under  this  Section 5(b) will  be  inadequate  and  agrees,  in  the  event  of  a  breach  or  threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be  entitled, in addition to all other available remedies, to an order and/or injunction restraining any  breach and requiring immediate issuance and transfer, without the necessity of showing economic  loss and without any bond or other security being required.  The Company shall cause its counsel  to  issue  the  legal  opinion  referred  to  in  the  Irrevocable  Transfer  Agent  Instructions  to  the  Company’s  transfer  agent  on  each  Effective  Date  (as  defined  in  the  Registration  Rights  Agreement).  Any fees (with respect to the transfer agent, counsel to the Company or otherwise)  associated with the issuance of such opinion or the removal of any legends on any of the Securities  shall be borne by the Company.         (c)   Legends.  Each Buyer understands that the Securities have been issued (or will be  issued in the case of the Conversion Shares and the Warrant Shares) pursuant to an exemption  from  registration or qualification under the 1933 Act  and applicable state securities laws,  and  except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws  of any state and a restrictive legend in substantially the following form (and a stop-transfer order  may be placed against transfer of such stock certificates):         [NEITHER  THE  ISSUANCE  AND  SALE  OF  THE  SECURITIES        REPRESENTED  BY  THIS   [NOTE][WARRANT]     NOR  THE  SECURITIES        INTO   WHICH    THIS   [NOTE][WARRANT]      ARE   [CONVERTIBLE]        [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS        CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES        ACT  OF  1933,  AS  AMENDED,  OR  APPLICABLE  STATE  SECURITIES        LAWS.   THE  SECURITIES  MAY  NOT  BE  OFFERED  FOR  SALE,  SOLD,        TRANSFERRED  OR  ASSIGNED  (I)  IN  THE  ABSENCE  OF  (A)  AN        EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER        THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF        COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A        FORM  REASONABLY  ACCEPTABLE  TO  THE  COMPANY,  THAT        REGISTRATION  IS  NOT REQUIRED  UNDER SAID ACT OR  (II)  UNLESS        SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A        UNDER  SAID  ACT.   NOTWITHSTANDING  THE  FOREGOING,  THE        SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE        MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT        SECURED BY THE SECURITIES.                                          39   





 






         (d)   Removal of Legends.  Certificates evidencing Securities shall not be required to  contain  the  legend  set  forth  in  Section 5(c) above  or  any  other  legend  (i)  while  a  registration  statement (including a Registration Statement) covering the resale of such Securities is effective  under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the  transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned  or  transferred  under  Rule  144  (provided  that  a  Buyer  provides  the  Company  with  reasonable  assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which  shall not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other  transfer (other than under Rule 144), provided that such Buyer provides the Company with an  opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale,  assignment or transfer of the Securities may be made without registration under the applicable  requirements of the 1933 Act or (v) if such legend is not required under applicable requirements  of  the  1933  Act  (including,  without  limitation,  controlling  judicial  interpretations  and  pronouncements issued by the SEC).  If a legend is not required pursuant to the foregoing, the  Company shall no later than two (2) Trading Days (or such earlier date as required pursuant to the  1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the  date such Buyer delivers such legended certificate representing such Securities to the Company)  following  the  delivery  by  a  Buyer  to  the  Company  or  the  transfer  agent  (with  notice  to  the  Company) of a legended certificate representing such Securities (endorsed or with stock powers  attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or  transfer, if applicable), together with any other deliveries from such Buyer as may be required  above in this Section 5(d), as directed by such Buyer, either:  (A) provided that the Company’s  transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such  Securities are Conversion Shares  or Warrant  Shares,  credit the aggregate number of shares  of  Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance  account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s  transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue  and  deliver  (via  reputable  overnight  courier)  to  such  Buyer,  a  certificate  representing  such  Securities that is free from all restrictive and other legends, registered in the name of such Buyer  or its designee (the date by which such credit is so required to be made to the balance account of  such Buyer’s or such Buyer’s designee with DTC or such certificate is required to be delivered to  such Buyer pursuant to the foregoing is referred to herein as the “Required Delivery Date”, and  the date such shares of Common Stock are actually delivered without restrictive legend to such  Buyer  or  such  Buyer’s  designee  with  DTC,  as  applicable,  the “Share  Delivery  Date”).  The  Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance  of Securities or the removal of any legends with respect to any Securities in accordance herewith.         (e)   Failure to Timely Deliver; Buy-In.  If the Company fails to fail, for any reason or  for no reason, to issue and deliver (or cause to be delivered) to a Buyer (or its designee) by the  Required  Delivery  Date, either  (I)  if  the  Transfer  Agent  is  not  participating  in  the  DTC  Fast  Automated  Securities  Transfer  Program,  a  certificate  for  the  number  of  Conversion  Shares  or  Warrant Shares (as the case may be) to which such Buyer is entitled and register such Conversion  Shares or Warrant Shares (as the case may be) on the Company’s share register or, if the Transfer  Agent  is  participating  in  the  DTC  Fast  Automated Securities  Transfer  Program,  to  credit  the  balance account of such Buyer or such Buyer’s designee with DTC for such number of Conversion  Shares  or  Warrant  Shares (as  the  case  may  be) submitted  for  legend  removal  by  such  Buyer  pursuant  to  Section 5(d) above or (II) if the Registration Statement covering the resale of the                                         40   





 






   Conversion Shares or Warrant Shares (as the case may be) submitted for legend removal by such  Buyer pursuant to Section 5(d) above (the “Unavailable Shares”) is not available for the resale of  such Unavailable Shares and the Company fails to promptly, but in no event later than as required  pursuant  to  the  Registration  Rights  Agreement  (x)  so  notify  such  Buyer  and  (y)  deliver  the  Conversion Shares or Warrant Shares, as applicable, electronically without any restrictive legend  by crediting such aggregate number of Conversion Shares or Warrant Shares (as the case may be)  submitted for legend removal by such Buyer pursuant to Section 5(d) above to such Buyer’s or its  designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the  event  described  in  the  immediately  foregoing  clause  (II)  is  hereinafter  referred  as  a “Notice  Failure” and together with the event described in clause (I) above, a “Delivery Failure”), then, in  addition to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer  on each day after the Share Delivery Date and during such Delivery Failure an amount equal to  2% of the product of (A) the sum of the number of shares of Common Stock not issued to such  Buyer on or prior to the Required Delivery Date and to which such Buyer is entitled, and (B) any  trading price of the Common Stock selected by such Buyer in writing as in effect at any time during  the period beginning on the date of the delivery by such Buyer to the Company of the applicable  Conversion Shares or Warrant Shares (as the case may be) and ending on the applicable Share  Delivery Date.  In addition to the foregoing, if on or prior to the Required Delivery Date either (I)  if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,  the Company shall fail to issue and deliver a certificate to a Buyer and register such shares of  Common Stock on the Company’s share register or, if the Transfer Agent is participating in the  DTC Fast Automated Securities Transfer Program, credit the balance account of such Buyer or  such Buyer’s designee with DTC for the number of shares of Common Stock to which such Buyer  submitted for legend removal by such Buyer pursuant to Section 5(d) above (ii) below or (II) a  Notice Failure occurs, and if on or after such Trading Day such Buyer purchases (in an open market  transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Buyer  of shares of Common Stock submitted for legend removal by such Buyer pursuant to Section 5(d)  above that such Buyer is entitled to receive from the Company (a “Buy-In”), then the Company  shall, within two (2) Trading Days after such Buyer’s request and in such Buyer’s discretion, either  (i) pay cash to such Buyer in an amount equal to such Buyer’s total purchase price (including  brokerage commissions and other out-of-pocket expenses, if any, for the shares of Common Stock  so purchased) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such  certificate  or  credit  such  Buyer’s  balance  account  shall  terminate  and  such  shares  shall  be  cancelled,  or  (ii)  promptly  honor  its  obligation  to so deliver  to  such  Buyer  a  certificate  or  certificates  or  credit  the  balance  account  of  such  Buyer  or  such  Buyer’s  designee  with  DTC  representing such number of shares of Common Stock that would have been so delivered if the  Company timely complied with its obligations hereunder and pay cash to such Buyer in an amount  equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of  Conversion Shares or Warrant Shares (as the case may be) that the Company was required to  deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale  Price (as defined in the Warrants) of the Common Stock on any Trading Day during the period  commencing  on  the  date  of  the  delivery  by  such  Buyer  to  the  Company  of  the  applicable  Conversion Shares or Warrant Shares (as the case may be) and ending on the date of such delivery  and payment under this clause (ii).  Nothing shall limit such Buyer’s right to pursue any other  remedies available to it hereunder, at law or in equity, including, without limitation, a decree of  specific  performance  and/or  injunctive  relief  with  respect  to  the  Company’s  failure  to  timely                                         41   





 






   deliver certificates representing shares of Common Stock (or to electronically deliver such shares  of Common Stock) as required pursuant to the terms hereof.  Notwithstanding anything herein to  the contrary, with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e)  shall not apply to the applicable Buyer the extent the Company has already paid such amounts in  full  to  such  Buyer  with  respect  to  such  Notice  Failure  and/or Delivery  Failure,  as  applicable,  pursuant to the analogous sections of the Note or Warrant, as applicable, held by such Buyer.         (f)   FAST Compliance.  While any Warrants remain outstanding, the Company shall  maintain a transfer agent that participates in the DTC Fast Automated Securities Transfer Program.   6.    CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.         (a)   The obligation of the Company hereunder to issue and sell the Notes and the related  Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date,  of each of the following conditions, provided that these conditions are for the Company’s sole  benefit and may be waived by the Company at any time in its sole discretion by providing each  Buyer with prior written notice thereof:               (i)   Such  Buyer  shall  have  duly  executed  and  delivered  to  the  Company  an        Investor  Collateral  Certificate  and,  at  the  Company’s  direction, executed  and  held  as        Collateral (as defined in the Series B Note) an Investor Note in such original principal        amount as is set forth across from such Buyer’s name in column (7) of the Schedule of        Buyers.               (ii)  Such Buyer shall have executed each of the other Transaction Documents        to which it is a party and delivered the same to the Company.               (iii) Such Buyer and each other Buyer shall have delivered to the Company the        Purchase  Price  (less,  in  the  case  of  any  Buyer,  the  amounts  withheld  pursuant  to        Section 4(g)) for the Note and the related Warrants being purchased by such Buyer at the        Closing by wire transfer of immediately available funds in accordance with the Flow of        Funds Letter.               (iv)  The representations and warranties of such Buyer shall be true and correct        in all material respects as of the date when made and as of the Closing Date as though        originally made at that time (except for representations and warranties that speak as of a        specific date, which shall be true and correct as of such specific date), and such Buyer shall        have  performed,  satisfied  and complied  in  all  material  respects  with  the  covenants,        agreements  and  conditions  required  by  this  Agreement  to  be  performed,  satisfied  or        complied with by such Buyer at or prior to the Closing Date.   7.    CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.         (a)   The obligation  of  each  Buyer  hereunder  to  purchase  its  Note and  its  related  Warrants at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the  following conditions, provided that these conditions are for each Buyer’s sole benefit and may be  waived by such Buyer at any time in its sole discretion by providing the Company with prior  written notice thereof:                                         42   





 






                      (i)   The Company shall have duly executed and delivered to such Buyer each  of the Transaction Documents to which it is a party and the Company shall have duly  executed and delivered to such Buyer (A) a Series A Note in such original principal amount  as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers, (B)  a Series B Note in the aggregate original principal amount as is set forth opposite such  Buyer’s  name  in  column (4)  on  the  Schedule  of  Buyers and  (C) a Warrants initially  exercisable for such aggregate number of Warrant Shares as is set forth across from such  Buyer’s name in column (5) of the Schedule of Buyers, in each case, as being purchased  by such Buyer at the Closing pursuant to this Agreement.         (ii)  Such Buyer shall have received the opinion of Winstead PC, the Company’s  counsel, dated as of the Closing Date, addressed to such Buyer and the Placement Agent  in the form acceptable to such Buyer.         (iii) The Company shall have delivered to such Buyer a copy of the Irrevocable  Transfer Agent Instructions, in the form acceptable to such Buyer, which instructions shall  have been delivered to and acknowledged in writing by the Company’s transfer agent.         (iv)  The Company shall have delivered to such Buyer a certificate evidencing  the  formation  and  good  standing  of  the  Company  in the  Company’s jurisdiction  of  formation issued by the Secretary of State of such jurisdiction of formation as of a date  within ten (10) days of the Closing Date.         (v)   The Company shall have delivered to such Buyer a certificate evidencing  the  Company’s  qualification  as  a  foreign  corporation and  good  standing issued  by  the  Secretary  of  State  (or comparable  office)  of  each  jurisdiction  in  which  the  Company  conducts business and is required to so qualify, as of a date within ten (10) days of the  Closing Date.         (vi)  The Company shall have delivered to such Buyer a certified copy of the  Certificate of Incorporation as certified by the Delaware Secretary of State within ten (10)  days of the Closing Date.         (vii) The Company shall have delivered to such Buyer a certificate, in the form  acceptable to such Buyer, executed by the Secretary of the Company and dated as of the  Closing  Date,  as  to  (i)  the  resolutions  consistent  with  Section 3(b) as  adopted  by  the  Company’s  board  of  directors  in  a  form  reasonably  acceptable  to  such  Buyer,  (ii)  the  Certificate of Incorporation of the Company and (iii) the Bylaws of the Company, each as  in effect at the Closing.         (viii) Each and every representation and warranty of the Company shall be true  and correct as of the date when made and as of the Closing Date as though originally made  at that time (except for representations and warranties that speak as of a specific date, which  shall be true and correct as of such specific date) and the Company shall have performed,  satisfied  and  complied  in  all  respects  with  the  covenants,  agreements  and  conditions  required to be performed, satisfied or complied with by the Company at or prior to the  Closing Date.  Such Buyer shall have received a certificate, duly executed by the Chief                                   43                





 






                Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect  and as to such other matters as may be reasonably requested by such Buyer in the form  acceptable to such Buyer.         (ix)  The  Company  shall  have  delivered  to  such  Buyer  a  letter  from  the  Company’s transfer agent certifying the number of shares of Common Stock outstanding  on the Closing Date immediately prior to the Closing.         (x)   The  Common  Stock  (A)  shall  be  designated  for  quotation  or  listed  (as  applicable)  on  the  Principal  Market  and  (B)  shall  not  have  been  suspended,  as  of  the  Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor  shall suspension by the SEC or the Principal Market have been threatened, as of the Closing  Date, either (I) in writing by the SEC or the Principal Market or (II) by falling below the  minimum maintenance requirements of the Principal Market.           (xi)  The  Company  shall  have  obtained  all  governmental,  regulatory  or  third  party consents and approvals, if any, necessary for the sale of the Securities, including  without limitation, those required by the Principal Market, if any, except as provided in  subparagraph (xiv) below.         (xii) No  statute,  rule,  regulation,  executive  order,  decree,  ruling  or  injunction  shall have been enacted, entered, promulgated or endorsed by any court or Governmental  Entity of competent jurisdiction that prohibits the consummation of any of the transactions  contemplated by the Transaction Documents.         (xiii) Since the date of execution of this Agreement, no event or series of events  shall have occurred that reasonably would have or result in a Material Adverse Effect.         (xiv) The Company shall have obtained any necessary approval of the Principal  Market to list or designate for quotation (as the case may be) the Conversion Shares and  the Warrant Shares.         (xv)  As of time of consummation of the Closing (without giving effect to the  transactions contemplated hereby), the market capitalization of the Company shall at least  be $40 million.         (xvi) Within two (2) Business Days prior to the Closing, the Company shall have  delivered or caused to be delivered to each Buyer certified copies of requests for copies of  information on Form UCC-11, listing all effective financing statements which name as  debtor the Company or any of its Subsidiaries and which are filed in such office or offices  as may be reasonably necessary, in the opinion of the Buyers, together with copies of such  financing statements and the results of searches for any tax Lien and judgment Lien filed  against such Person or its property, which results, except as otherwise agreed to in writing  by the Buyers, shall not show any such Liens (other than Permitted Liens);         (xvii) No Price Failure (as defined in the Notes) or Volume Failure (as defined in  the  Notes) or  Equity  Conditions  Failure  (as  defined  in  the  Notes) shall  exist  as  of the  Closing Date.                                   44                





 






               (xviii) Such Buyer shall have received a letter on the letterhead of the Company        (the “Flow of Funds Letter”) (x) duly executed by the Chief Executive Officer of the        Company, setting forth the wire amounts of each Buyer and the wire transfer instructions        of  the  Company  and  (y) directing  each  Buyer  (or  its  designee)  to  maintain  physical        possession of a duly executed Investor Note of such Buyer as Collateral (as defined in the        Series B Note) securing the Series B Note issued to such Buyer, in such original principal        amount as is set forth across from such Buyer’s name in column (7) of the Schedule of        Buyers, issued pursuant to the Note Purchase Agreement of such Buyer, both as payment        for, and as Collateral (as defined in such Buyer’s Series B Note) securing, such Buyer’s        Series B Note to be issued and sold to such Buyer at the Closing.                 (xix) The Company and each Subsidiary shall have delivered to such Buyer a        copy of its lien search results from the Company’s or such Subsidiary’s jurisdiction of        incorporation.               (xx)  The Company and its Subsidiaries shall have delivered to such Buyer such        other documents, instruments or certificates relating to the transactions contemplated by        this Agreement as such Buyer or its counsel may reasonably request.   8.    TERMINATION.         In the event that the Closing shall not have occurred with respect to a Buyer within five (5)  days of the date hereof, then such Buyer shall have the right to terminate its obligations under this  Agreement with respect to itself at any time on or after the close of business on such date without  liability  of  such  Buyer  to  any  other  party; provided,  however,  (i)  the  right  to  terminate  this  Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions  contemplated by this Agreement to have been consummated by such date is the result of such  Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Notes  and the Warrants shall be applicable only to such Buyer providing such written notice, provided  further that no such termination shall affect any obligation of the Company under this Agreement  to reimburse such Buyer for the expenses described in Section 4(g) above.  Nothing contained in  this Section 8 shall be deemed to release any party from any liability for any breach by such party  of the terms and provisions of this Agreement or the other Transaction Documents or to impair the  right of any party to compel specific performance by any other party of its obligations under this  Agreement or the other Transaction Documents.     9.    MISCELLANEOUS.         (a)   Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction,  validity, enforcement and interpretation of this Agreement shall be governed by the internal laws  of the State of New York, without giving effect to any choice of law or conflict of law provision  or  rule  (whether  of  the  State  of  New  York  or  any  other  jurisdictions)  that  would  cause  the  application of the laws of any jurisdictions other than the State of New York.  The Company 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 under any of the other Transaction Documents or with any transaction  contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any                                         45   





 






   suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such  court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of  such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service  of process and consents to process being served in any such suit, action or proceeding by mailing  a copy thereof to such party at the address for such 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 manner  permitted by law.  Nothing contained herein shall be deemed or operate to preclude any Buyer  from bringing suit or taking other legal action against the Company in any other jurisdiction to  collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling  in favor of such Buyer.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT  IT  MAY  HAVE  TO,  AND  AGREES  NOT  TO  REQUEST,  A  JURY  TRIAL  FOR  THE  ADJUDICATION  OF  ANY  DISPUTE  HEREUNDER  OR           UNDER  ANY  OTHER  TRANSACTION  DOCUMENT  OR       IN  CONNECTION  WITH  OR  ARISING  OUT  OF  THIS  AGREEMENT,  ANY  OTHER  TRANSACTION  DOCUMENT                 OR  ANY  TRANSACTION CONTEMPLATED HEREBY OR THEREBY.         (b)   Counterparts.   This  Agreement  may  be  executed  in  two  or  more  identical  counterparts,  all  of  which  shall  be  considered  one  and  the  same  agreement  and  shall  become  effective when counterparts have been signed by each party and delivered to the other party.  In  the event that any signature is delivered by facsimile transmission or by an e-mail which contains  a portable document format (.pdf) file of an executed signature page, such signature page 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 signature page were an original thereof.         (c)   Headings;  Gender.   The  headings  of  this  Agreement  are  for  convenience  of  reference and shall not form part of, or affect the interpretation of, this Agreement.  Unless the  context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,  feminine, neuter, singular and plural forms thereof.  The terms “including,” “includes,” “include”  and  words  of  like  import  shall  be  construed  broadly  as  if  followed  by  the  words “without  limitation.”  The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire  Agreement instead of just the provision in which they are found.         (d)   Severability; Maximum Payment Amounts.  If any provision of this Agreement is  prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent  jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be  deemed amended to apply to the broadest extent that it would be valid and enforceable, and the  invalidity  or  unenforceability  of  such  provision  shall  not  affect  the  validity  of  the  remaining  provisions  of  this  Agreement  so  long  as  this  Agreement  as  so  modified  continues  to  express,  without material change, the original intentions of the parties as to the subject matter hereof and  the  prohibited  nature,  invalidity  or  unenforceability  of  the  provision(s)  in  question  does  not  substantially  impair  the  respective  expectations  or  reciprocal  obligations  of  the  parties  or  the  practical realization of the benefits that would otherwise be conferred upon the parties.  The parties  will  endeavor  in  good  faith  negotiations to  replace  the  prohibited,  invalid  or  unenforceable  provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the  prohibited,  invalid  or  unenforceable  provision(s).   Notwithstanding  anything  to  the  contrary  contained in this Agreement or any other Transaction Document (and without implication that the                                         46   





 






   following is required or applicable), it is the intention of the parties that in no event shall amounts  and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to  or received by any of the Buyers, under the Transaction Documents (including without limitation,  any  amounts  that  would  be  characterized  as “interest” under  applicable  law)  exceed  amounts  permitted under any applicable law.  Accordingly, if any obligation to pay, payment made to any  Buyer,  or  collection  by  any  Buyer  pursuant  the  Transaction  Documents  is  finally  judicially  determined to be contrary to any such applicable law, such obligation to pay, payment or collection  shall be  deemed  to  have  been  made  by  mutual  mistake  of  such  Buyer,  the  Company  and  its  Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the  maximum amount or rate of interest, as the case may be, as would not be so prohibited by the  applicable  law.   Such  adjustment  shall  be  effected,  to  the  extent  necessary,  by  reducing  or  refunding, at the option of such Buyer, the amount of interest or any other amounts which would  constitute  unlawful  amounts  required  to  be  paid  or actually  paid  to  such  Buyer  under  the  Transaction  Documents.   For  greater  certainty,  to  the  extent  that  any  interest,  charges,  fees,  expenses or other amounts required to be paid to or received by such Buyer under any of the  Transaction Documents or related thereto are held to be within the meaning of “interest” or another  applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over  the period of time to which they relate.           (e)   Entire  Agreement;  Amendments.   This Agreement,  the  other  Transaction  Documents  and  the  schedules  and  exhibits  attached  hereto  and  thereto  and  the  instruments  referenced herein and therein supersede all other prior oral or written agreements between the  Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including,  without limitation, any transactions by any Buyer with respect to Common Stock or the Securities,  and the other matters  contained herein  and therein,  and this  Agreement, the other Transaction  Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced  herein and therein contain the entire understanding of the parties solely with respect to the matters  covered herein and therein; provided, however, nothing contained in this Agreement or any other  Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any  Buyer has entered into with, or any instruments any Buyer has received from, the Company or any  of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer  in  the  Company  or  (ii)  waive,  alter,  modify  or  amend  in  any  respect  any  obligations  of  the  Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person,  in any agreement entered into prior to the date hereof between or among the Company and/or any  of its Subsidiaries and any Buyer, or any instruments any Buyer received from the Company and/or  any of its  Subsidiaries prior to  the date hereof,  and all such agreements and instruments  shall  continue in full force and effect.  Except as specifically set forth herein or therein, neither the  Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect  to such matters.  For clarification purposes, the Recitals are part of this Agreement.  No provision  of this Agreement may be amended other than by an instrument in writing signed by the Company  and  the  Required  Holders  (as  defined  below),  and  any  amendment  to  any  provision  of this  Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all  Buyers and holders of Securities, as applicable; provided that no such amendment shall be effective  to the extent that it (A) applies to less than all of the holders of the Securities then outstanding or  (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent  (which may be granted or withheld in such Buyer’s sole discretion).  No waiver shall be effective  unless it is in writing and signed by an authorized representative of the waiving party, provided                                         47   





 






   that the Required Holders may waive any provision of this Agreement, and any waiver of any  provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be  binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall  be effective to the extent that it (1) applies to less than all of the holders of the Securities then  outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability  on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in  such Buyer’s sole discretion).  No consideration (other than reimbursement of legal fees) shall be  offered or paid to any Person to amend or consent to a waiver or modification of any provision of  any of the Transaction Documents unless the same consideration also is offered to all of the parties  to the Transaction Documents, all holders of the Notes or all holders of the Warrants (as the case  may be).  From the date hereof and while any Notes or Warrants are outstanding, the Company  shall not be permitted to receive any consideration from a Buyer or a holder of Notes or Warrants  that is not otherwise contemplated by the Transaction Documents in order to, directly or indirectly,  induce the Company or any Subsidiary (i) to treat such Buyer or holder of Notes or Warrants in a  manner  that  is  more  favorable  than  to  other  similarly  situated  Buyers  or  holders  of  Notes  or  Warrants, as applicable, or (ii) to treat any Buyer(s) or holder(s) of Notes or Warrants in a manner  that  is  less  favorable  than  the  Buyer  or  holder  of  Notes  or  Warrants  that  is  paying  such  consideration; provided, however, that the determination of whether a Buyer has been treated more  or less favorably than another Buyer shall disregard any securities of the Company purchased or  sold by any Buyer.  The Company has not, directly or indirectly, made any agreements with any  Buyers relating to the terms or conditions of the transactions contemplated by the Transaction  Documents except as set forth in the Transaction Documents.  Without limiting the foregoing, the  Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment  or promise or has any other obligation to provide any financing to the Company, any Subsidiary  or otherwise.  As a material inducement for each Buyer to enter into this Agreement, the Company  expressly  acknowledges  and  agrees  that  (x)  no  due  diligence  or  other  investigation  or  inquiry  conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s  right  to  rely  on,  or  shall  modify  or  qualify  in  any  manner  or  be  an  exception  to  any  of,  the  Company’s representations and warranties contained in this Agreement or any other Transaction  Document and (y) unless a provision of this Agreement or any other Transaction Document is  expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained  in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify  in  any  manner  or  be  an  exception  to  any  of,  the  Company’s  representations  and  warranties  contained in this Agreement or any other Transaction Document.  “Required Holders” means (I)  prior to the Closing Date, each Buyer entitled to purchase Notes at the Closing and (II) on or after  the  Closing  Date, (x)  Alto  Opportunity  Master  Fund,  SPC - Segregated  Master  Portfolio  B  (“Alto”),  so  long  as  Alto  holds  any of  the Notes,  Warrants or Registrable  Securities (or  any  Convertible Securities issued in exchange for any of the foregoing), or (y) otherwise, (A) holders  of a majority in aggregate principal amount of the Notes as of such time (excluding any Notes held  by the Company or any of its Subsidiaries as of such time) issued or issuable hereunder or pursuant  to the Notes or the Warrants or (B) the Buyers, with respect to any waiver or amendment of Section  4(o) after such time as Alto doesn’t hold any of the Notes or Warrants.         (f)   Notices.   Any  notices,  consents,  waivers  or  other  communications  required  or  permitted to be given under the terms of this Agreement must be in writing and will be deemed to  have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by  facsimile (provided confirmation of transmission is mechanically or electronically generated and                                         48   





 






   kept on file by the sending party) or electronic mail (provided that such sent email is kept on file  (whether electronically or otherwise) by the sending party and the sending party does not receive  an automatically generated message from the recipient’s email server that such e-mail could not  be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier  service with next day delivery specified, in each case, properly addressed to the party to receive  the same.  The addresses, facsimile numbers and e-mail addresses for such communications shall  be:                     If to the Company:                           Phunware, Inc.                          7800 Shoal Creek Blvd, Suite 230-S                          Austin, Texas 78757                           Telephone:  (512) 693-4199                          Facsimile:  (___) ___-____                          Attention:  Chief Executive Officer                          E-Mail:  aknitowski@phunware.com                     with a copy (for informational purposes only) to:                           Winstead PC                          401 Congress Avenue Suite 2100                          Austin, Texas 78701                          Telephone:  (512) 370-2804                          Facsimile:  (512) 370-2850                          Attention:  Alex R. Allemann, Esq.                          E-mail:  aallemann@winstead.com                     If to the Transfer Agent:                           Continental Stock Transfer & Trust Company                          1 State Street, Floor 30                          New York, New York 110004                          Telephone:  (212) 845-329                          Facsimile:  (___) ___-____                          Attention:  Michael Mullings and George Dalton                          E-Mail:  mmullings@continentalstock.com and                          gdalton@continentalstock.com    If to a Buyer, to its address, e-mail address and facsimile number set forth on the Schedule of  Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,                                          49   





 






                     with a copy (for informational purposes only) to:                           Kelley Drye & Warren LLP                          101 Park Avenue                          New York, NY 10178                          Telephone:  (212) 808-7540                          Facsimile:  (212) 808-7897                          Attention:  Michael A. Adelstein, Esq.                          E-mail:  madelstein@kelleydrye.com   or to such other address, e-mail address and/or facsimile number and/or to the attention of such  other Person as the recipient party has specified by written notice given to each other party five  (5) days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP shall  only be provided copies of notices sent to the lead Buyer.  Written confirmation of receipt (A)  given by the recipient of such notice, consent, waiver or other communication, (B) mechanically  or electronically generated by the sender’s facsimile machine or e-mail containing the time, date,  recipient facsimile number and, with respect to each facsimile transmission, an image of the first  page  of  such  transmission  or  (C)  provided  by  an  overnight  courier service  shall  be  rebuttable  evidence of personal service, receipt by facsimile or receipt from an overnight courier service in  accordance with clause (i), (ii) or (iii) above, respectively.         (g)   Successors and Assigns.  This Agreement shall be binding upon and inure to the  benefit of the parties and their respective successors and assigns, including any purchasers of any  of  the  Notes  and  Warrants.   The  Company  shall  not  assign  this  Agreement  or  any  rights  or  obligations  hereunder  without  the  prior  written  consent  of  the  Required  Holders,  including,  without limitation, by way of a Fundamental Transaction (as defined in the Warrants) (unless the  Company is in compliance with the applicable provisions governing Fundamental Transactions set  forth in the Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company  is in compliance with the applicable provisions governing Fundamental Transactions set forth in  the Notes).  A Buyer may assign some or all of its rights hereunder in connection with any transfer  of any of its Securities without the consent of the Company, in which event such assignee shall be  deemed to be a Buyer hereunder with respect to such assigned rights.         (h)   No Third Party Beneficiaries.  This Agreement is intended for the benefit of the  parties hereto and their respective permitted successors and assigns, and is not for the benefit of,  nor may any provision hereof be enforced by, any other Person, other than the Indemnitees referred  to in Section 9(k).  Notwithstanding the foregoing, the Placement Agent shall be an intended third  party beneficiary of (i) the Company’s representations and warranties set forth in Section 3 hereof  and (ii) each Buyer’s representations, warranties and agreements set forth in Section 2 hereof.         (i)   Survival.  The representations, warranties, agreements and covenants shall survive  the  Closing.   Each  Buyer  shall  be  responsible  only  for  its  own  representations,  warranties,  agreements and covenants hereunder.         (j)   Further Assurances.  Each party shall do and perform, or cause to be done and  performed, all such further acts and things, and shall execute and deliver all such other agreements,  certificates, instruments and documents, as any other party may reasonably request in order to                                         50   





 






   carry out the intent and accomplish the purposes of this Agreement and the consummation of the  transactions contemplated hereby.         (k)   Indemnification.  In consideration of each Buyer’s execution and delivery of the  Transaction  Documents  and  acquiring  the  Securities  thereunder  and  in  addition  to  all  of  the  Company’s  other  obligations  under  the  Transaction  Documents,  the  Company  shall  defend,  protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their  stockholders, partners, members, officers, directors, employees and direct or indirect investors and  any of the foregoing Persons’ agents or other representatives (including, without limitation, those  retained in connection with the transactions contemplated by this Agreement) (collectively, the  “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs,  penalties,  fees,  liabilities  and  damages,  and  expenses  in  connection  therewith  (irrespective  of  whether  any  such  Indemnitee  is  a  party  to  the  action  for  which  indemnification  hereunder  is  sought),  and  including  reasonable  attorneys’ fees  and  disbursements  (the “Indemnified  Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any  misrepresentation  or  breach of  any  representation  or  warranty  made  by  the  Company  or  any  Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement or  obligation of the Company or any Subsidiary contained in any of the Transaction Documents or  (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a  third party (including for these purposes a derivative action brought on behalf of the Company or  any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from (A)  the execution, delivery, performance or enforcement of any of the Transaction Documents, (B)  any transaction financed or to  be financed in  whole or in  part, directly  or indirectly, with  the  proceeds  of  the  issuance  of  the  Securities,  (C)  any  disclosure  properly  made  by  such  Buyer  pursuant to Section 4(i), or (D) the status of such Buyer or holder of the Securities either as an  investor in the Company pursuant to the transactions contemplated by the Transaction Documents  or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in  any action or proceeding for injunctive or other equitable relief).  To the extent that the foregoing  undertaking by the Company may be unenforceable for any reason, the Company shall make the  maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which  is  permissible  under  applicable law.   Except  as  otherwise  set  forth  herein,  the  mechanics  and  procedures with respect to the rights and obligations under this Section 9(k) shall be the same as  those set forth in Section 6 of the Registration Rights Agreement.         (l)   Construction.   The  language  used  in  this  Agreement  will  be  deemed  to  be  the  language chosen by the parties to express their mutual intent, and no rules of strict construction  will be applied against any party.  No specific representation or warranty shall limit the generality  or applicability of a more general representation or warranty.  Each and every reference to share  prices,  shares  of  Common  Stock  and  any  other  numbers  in  this  Agreement  that  relate  to  the  Common  Stock  shall  be  automatically  adjusted  for  any  stock  splits,  stock  dividends,  stock  combinations, recapitalizations or other similar transactions that occur with respect to the Common  Stock  after  the  date  of  this  Agreement.  Notwithstanding anything  in  this  Agreement  to  the  contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or  warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to  borrow, identification of the availability of, and/or securing of, securities of the Company in order  for  such  Buyer  (or  its  broker  or  other  financial  representative)  to  effect short  sales or  similar  transactions in the future.                                         51   





 






         (m)   Remedies.  Each Buyer and in the event of assignment by Buyer of its rights and  obligations hereunder, each holder of Securities, shall have all rights and remedies set forth in the  Transaction Documents and all rights and remedies which such holders have been granted at any  time under any other agreement or contract and all of the rights which such holders have under  any law.  Any Person having any rights under any provision of this Agreement shall be entitled to  enforce such rights specifically (without posting a bond or other security), to recover damages by  reason of any breach of any provision of this Agreement and to exercise all other rights granted by  law.  Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to  perform, observe, or discharge any or all of its or such Subsidiary’s (as the case may be) obligations  under the Transaction Documents, any remedy at law would inadequate relief to the Buyers.  The  Company  therefore  agrees  that  the  Buyers  shall  be  entitled to  specific performance  and/or  temporary,  preliminary  and  permanent  injunctive  or  other  equitable  relief  from  any  court  of  competent  jurisdiction  in  any  such  case  without  the  necessity  of  proving  actual  damages  and  without posting a bond or other security.  The remedies provided in this Agreement and the other  Transaction Documents shall be cumulative and in addition to all other remedies available under  this Agreement and the other Transaction Documents, at law or in equity (including a decree of  specific performance and/or other injunctive relief).         (n)   Withdrawal  Right.   Notwithstanding  anything  to  the  contrary  contained  in  (and  without  limiting  any  similar  provisions  of)  the  Transaction  Documents,  whenever  any  Buyer  exercises a right, election, demand or option under a Transaction Document and the Company or  any Subsidiary does not timely perform its related obligations within the periods therein provided,  then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written  notice to the Company or such Subsidiary (as the case may be), any relevant notice, demand or  election in whole or in part without prejudice to its future actions and rights.         (o)   Payment Set Aside; Currency.  To the extent that the Company makes a payment  or payments to any Buyer hereunder or pursuant to any of the other Transaction Documents or any  of  the  Buyers  enforce  or  exercise  their  rights  hereunder  or  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, foreign, 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.  Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement  and  the  other  Transaction  Documents  are  in  United  States  Dollars  (“U.S. Dollars”),  and  all  amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S.  Dollars.  All amounts denominated in other currencies (if any) shall be converted into the U.S.  Dollar  equivalent  amount  in  accordance  with  the  Exchange  Rate  on  the  date  of  calculation.   “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars  pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal  on the relevant date of calculation.         (p)   Judgment Currency.                                          52   





 






               (i)   If for the purpose of obtaining or enforcing judgment against the Company        in connection with this Agreement or any other Transaction Document in any court in any        jurisdiction it becomes necessary to convert into any other currency (such other currency        being hereinafter in this Section 9(p) referred to as the “Judgment Currency”) an amount        due in US Dollars under this Agreement, the conversion shall be made at the Exchange        Rate prevailing on the Trading Day immediately preceding:                           (1)   the date actual payment of the amount due, in the case of any              proceeding in the courts of New York or in the courts of any other jurisdiction that              will give effect to such conversion being made on such date:  or                           (2)   the date on which the foreign court determines, in the case              of any proceeding in the courts of any other jurisdiction (the date as of which such              conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to              as the “Judgment Conversion Date”).               (ii)  If in the case of any proceeding in the court of any jurisdiction referred to        in Section 9(p)(i)(2)  above, there is a change in the Exchange Rate prevailing between the        Judgment  Conversion  Date  and  the  date  of  actual  payment  of  the  amount  due,  the        applicable party shall pay such adjusted amount as may be necessary to ensure that the        amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing        on the date of payment, will produce the amount of US Dollars which could have been        purchased with the amount of Judgment Currency stipulated in the judgment or judicial        order at the Exchange Rate prevailing on the Judgment Conversion Date.               (iii) Any amount due from the Company under this provision shall be due as a        separate debt and shall not be affected by judgment being obtained for any other amounts        due under or in respect of this Agreement or any other Transaction Document.         (q)   Independent Nature of Buyers’ Obligations and Rights.  The obligations of each  Buyer under the Transaction Documents are several and not joint with the obligations of any other  Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any  other  Buyer under  any  Transaction  Document.   Nothing  contained  herein  or  in  any  other  Transaction Document,  and no action taken by any Buyer pursuant  hereto  or thereto,  shall be  deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so  constitute, a partnership, an association, a joint venture or any other kind of group or entity, or  create a presumption that the Buyers are in any way acting in concert or as a group or entity, and  the Company shall not assert any such claim with respect to such obligations or the transactions  contemplated by the Transaction Documents or any matters, and the Company acknowledges that  the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim,  with respect to such obligations or the transactions contemplated by the Transaction Documents.   The decision of each Buyer to purchase Securities pursuant to the Transaction Documents has been  made by such Buyer independently of any other Buyer.  Each Buyer acknowledges that no other  Buyer has acted as agent for such Buyer in connection with such Buyer making its investment  hereunder  and  that  no  other  Buyer  will  be  acting  as  agent  of  such  Buyer  in  connection  with  monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction  Documents.   The  Company  and  each  Buyer  confirms  that  each  Buyer  has  independently                                         53   





 






   participated  with  the  Company  and  its  Subsidiaries  in  the  negotiation  of  the  transaction  contemplated hereby with the advice of its own counsel and advisors.  Each Buyer shall be entitled  to independently protect and enforce its rights, including, without limitation, the rights arising out  of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any  other Buyer to be joined as an additional party in any proceeding for such purpose.  The use of a  single agreement to effectuate the purchase and sale of the Securities contemplated hereby was  solely in the control of the Company, not the action or decision of any Buyer, and was done solely  for  the  convenience  of  the  Company  and  its  Subsidiaries  and  not  because  it  was  required  or  requested  to  do  so  by  any  Buyer.  It  is  expressly  understood  and  agreed  that  each  provision  contained in this Agreement and in each other Transaction Document is between the Company,  each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers  collectively and not between and among the Buyers.                                [signature pages follow]                                          54   





 






         IN WITNESS WHEREOF, each Buyer and the Company have caused their respective  signature page to this Agreement to be duly executed as of the date first written above.                                         COMPANY:                                                                            PHUNWARE, INC.                                                                                                                                                        By:                                                                         Name:                                           Title:        





 






         IN WITNESS WHEREOF, each Buyer and the Company have caused their respective  signature page to this Agreement to be duly executed as of the date first written above.                                          BUYER:                                                                              ALTO OPPORTUNITY MASTER FUND, SPC -                                       SEGREGATED MASTER PORTFOLIO B                                                                                                                                                             By:                                                                         Name:                                           Title:     





 






                                                          SCHEDULE OF BUYERS                    (1)               (2)               (3)        (4)       (5)        (6)       (7)        (8)                (9)                                                                                                                                                                Original   Original                                  Original                                          Principal Principal Aggregate            Aggregate   Principal                                         Amount of  Amount of  Number of              Cash    Amount of     Legal Representative’s                   Address and Facsimile  Series A   Series B   Warrant  Purchase     Wire     Investor     Address and Facsimile      Buyer              Number            Notes      Notes     Shares     Price    Amount      Notes             Number                                                                                                             Alto           c/o Ayrton Capital LLC  $4,320,000 $17,280,000 2,160,000 $20,000,000 $4,000,000 $16,000,000 Kelley Drye & Warren LLP  Opportunity    222 Broadway, 19th Floor                                                                 101 Park Avenue   Master Fund,   New York, NY 10038                                                                       New York, NY 10178  SPC -          Attention Waqas Khatri                                                                   Telephone:  (212) 808-7540  Segregated              Marian Freidin                                                                  Facsimile:  (212) 808-7897  Master Portfolio E-mail: wk@ayrtonllc.com                                                               Attention:  Michael A.  B                                                                                                       Adelstein, Esq.                 mfreidin@ayrtonllc.com                                                                                                                          





 






                                                                               Schedule 3(a)                                                                            Subsidiaries                                           PhunCoin, Inc.  Phunware OpCo, Inc.  Rain Acquisition Sub, Inc.  Rain Acquisition, LLC  Phun Token International  30 Second Software, Inc.  Taurus Merger Company, LLC  GoTV Networks, Inc.  Simplikate Systems LLC  GoTV Studios, LLC  SendDroid, LLC  Chengdu Digby Technology Co., Ltd.   Phunware Holdings CV  Rain – US LLC  Odyssey Mobile Marketing Limited  Odyssey Mobile Asia Pte. Ltdl  Phunware NL Cooperatief U.A.  Phunware Europe BV                                               





 






                                    Schedule 3(g)    Phunware shall pay to Canaccord Genuity in cash by wire transfer of immediately available funds,  upon, and subject to, the closing of a Private Placement, a closing fee equal to 3.0 % of the Gross  Proceeds.  For purposes hereof, the term “Gross Proceeds” shall mean the aggregate investment  proceeds received by Client from any Investor or Investors other than Excluded Persons at such  closing of the Private Placement.     





 






                                                        Schedule 3(r)(iii)                                                                     A)  Phunware, Inc. Summary Cap Table As of June 30, 2020                                                                               Shares Common Stock (Issued and Outstanding)                                      43,565,051   Employee Incentive Plans:            Outstanding      Available for Issuance 2009 Plan                                          1,252,681                               -    1,252,681  2018 Plan                                          2,646,242                      221,388    2,867,630  2018 ESPP                                                       -                      272,941        272,941   Warrants:                            Exercise Price Per Warrant Public - PHUNW                       $                    11.50              1,761,291  Sponsor                              $                    11.50              1,658,381  Phunware - Series D-1                $                      5.53                   14,866 Phunware - Series F                  $                      9.22                 377,022 Unit Purchase Option Warrants        $                    11.50                    24,172                                         Principal Balance Conversion price  Convertible Notes                      @ 6/30/2020       @ 6/30/2020 2020 March Senior convertible note   $            1,714,285 $                          3.00        571,429 --> These notes will be paid off at closing 2019 Convertible note                $               250,000 $                        11.50          21,740 --> Company holds option to prepay at any time       B)           Name                        Title             Common Stock      Stock Options     Restricted       Total                                                                          (right to buy)   Stock Units Alan Knitowski            CEO/President/Director              919,297             233,886    387,166      1,540,349 Luan Dang                 CTO                                 980,988                90,158  180,916      1,252,062 Matt Aune                 CFO                                 101,903             165,240    218,416         485,559  Randall Crowder           COO/Director                        114,532             229,500    424,666         768,698  Keith Cowan               Director                             94,630                          28,049        122,679  Eric Manlunas             Director                          1,288,826                          56,099     1,344,925 Lori Tauber Marcus        Director                             93,338                          28,049        121,387  Blythe Masters            Chairperson                          77,493                          62,761        140,254  Kathy Tan Mayor           Director                             89,472                          28,049        117,521  George Syllantavos        Director                          1,452,226                          28,049     1,480,275                                                               5,212,705           718,784   1,442,220     7,373,709           





 






                                    Schedule 3(s)                                           The Company’s Indebtedness as of June 30, 2020 consisted of the following:      •  March 2020 Senior Convertible Note attributable to Alto Opportunity Master Fund B with        a principal balance of $1,714,286;     •  2019 convertible notes with a principal amount of $250,000 to one individual holder;     •  Five-year  unsecured  promissory  notes  that  do  not  begin  maturing  until  2024  with  a        principal amount of $905,000;     •  Paycheck Protection Loan with Chase Bank, N.A. with a principal amount of $2,850,336;     •  Related party bridge loans with a principal balance of $360,036;      •  A subordinated note of $75,000 with a vendor; and     •  Factoring line balance of $359,185.  Leases     •  The Company has operating office space leases in Austin, Texas; Irvine, California; San        Diego, California; and Miami, Florida.     •  On  May  18,  2018,  the  Company  entered  into  a  lease  amendment  with  3050  Biscayne        Properties, LLC to extend its current lease in Miami, Florida (the “Amendment”).  The        Amendment commences on July 1, 2018 and terminates on June 30, 2023.  Under the        Amendment, the Company will pay monthly rent of approximately $109 per year for the        first year, with such rent increasing by a specified amount every year thereafter.      •  On  July  16,  2019,  the  Company  entered  into  a  lease  agreement  with  BRE  CA  Office        Owner, LLC for new office space in Irvine, California, for the lease of approximately 8,687        rentable  square  feet  located  at  16845  Von  Karman  Avenue  (the  “Lease”).  The  Lease        commences on November 1, 2019, and terminates on March 31, 2025, subject to one five-       year  renewal  option.  Under  the  Lease,  the  Company  will  pay  monthly  rent  of        approximately $354 per year for the first year, with such rent increasing by a specified        amount  every  year  thereafter.  The  Lease  also  obligates  the  Company  to  pay  its        proportionate share of certain cost increases incurred by the landlord. The Company may        receive certain abatements subject to the terms and conditions of the Lease. The Company        was also obligated to pay a security deposit of approximately $118.     •  On August 20, 2019, the Company entered into a lease amendment with Seamless Shoal        Creek,  LLC  to  extend  its  current  lease  in  Austin,  Texas  (the  "Amendment").  The        Amendment commences on April 1, 2020, and terminates on March 31, 2022, with no        renewal  options.  Under  the  Amendment,  the  Company  will  pay  monthly  rent  of        approximately $223 and $231 per year for the first year and second year, respectively. The        Amendment  also  obligates  the  Company  to  pay  its  proportionate  share  of  certain  cost        increases incurred by the landlord.     •  On November 12, 2019, the Company entered into a lease amendment with Promontory        Associates,  a  California  General  Partnership  to  extend  its  current  lease  in  San  Diego,        California (the “Amendment”).  The Amendment commences on February 1, 2020 and        terminates  on  June  30,  2025,  subject  to  one  five-year  renewal  option.   Under  the     





 






                Amendment, the Company will pay monthly rent of approximately $151 per year for the  first  year,  with  such  rent  increasing  by  a  specified  amount  every  year  thereafter.  The  Company may receive certain abatements subject to the terms and conditions of the Lease.   The Amendment also obligates the Company to pay its proportionate share of certain cost  increases incurred by the landlord.                   





 






                                   Schedule 3(x)(i)                                           ISSUED PATENTS       1. Method and System for Accessing Wireless Account Information (Patent # 7,979,350)     2. Server-Side Wireless Communications Link Support for Mobile Handheld Devices        (Patent # 8,009,619)     3. Client-Side Wireless Communications Link Support for Mobile Handheld Devices        (Patent # 8,060,594)     4. Server Method and System for Rendering Content on a Wireless Device (Patent #        8,103,865)     5. Method and System for Rendering Content on a Wireless Device (Patent # 8,478,245 &        Patent # 8,989,715)      6. Server Method and System for Executing Applications on a Wireless Device (Patent #        8,560,601)     7. Methods and Systems for Interactive User Interface Objects (Patent # 8,732,619)     8. Enterprise Branded Application Frameworks for Mobile and Other Environments  (Patent        # 8,788,358 & Patent # 9,965,775)     9. Geo-Fence Entry and Exit Notification System (Patent # 8,812,024 & Patent # 8,812,027)     10. Method and System for Customizing Content on a Server for Rendering on a Wireless        Device (Patent # 9,015,692)     11. Systems and Methods for Indoor and Outdoor Mobile Device Navigation (Patent #        9,766,080)     12. Monitoring Outdoor and Indoor Regions with Mobile Devices (Patent # 10,038,972)     13. Mobile Device Localization Based on Relative Received Signal Strength Indicators        (Patent # 10,254,378)    PENDING PATENTS     1. Systems and Methods for Indoor and Outdoor Mobile Device Navigation  (Application #        15/678,987)     2. Monitoring Outdoor and Indoor Regions with Mobile Devices (Application #        16/028,268)     3. Methods and Systems for Interactive User Interface Objects (Application # 15/942,221)     4. Systems and Methods for Utilizing Dynamic Device Location (Application # 16/035,342)     5. Systems and Methods for Enterprise Branded Application Frameworks for Mobile and        Other Environments (Application # 15/942,071)