Document:

dgtw_ex102.htm

EXHIBIT 10.2

 

EQUITY PURCHASE AGREEMENT

 

This equity purchase agreement is entered into as of April 23, 2018 (this “Agreement”), by and between DIGITALTOWN, INC., a Minnesota corporation (the “Company”), and TRITON FUNDS LP, a Delaware limited partnership (the “Investor”).

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase up to One Million Dollars ($1,000,000) of the Company’s Common Stock (as defined below);

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I

CERTAIN DEFINITIONS

 

Section 1.1 DEFINED TERMS. As used in this Agreement, the following terms shall have the following meanings specified or indicated (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“Agreement” shall have the meaning specified in the preamble hereof.

 

“Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

 

“Capital Call” shall mean the right of the Company to require the Investor to purchase shares of Common Stock, subject to the terms and conditions of this Agreement.

 

“Capital Call Notice” shall mean a written notice, substantially in the form of Exhibit A hereto, to Investor setting forth the Capital Call Shares which the Company intends to require Investor to purchase pursuant to the terms of this Agreement.

 

“Capital Call Shares” shall mean all shares of Common Stock issued, or that the Company shall be entitled to issue, per applicable Capital Call Notice in accordance with the terms and conditions of this Agreement.

 

“Claim Notice” shall have the meaning specified in Section 9.3(a).

 

“Clearing Costs” shall mean all of the Investor’s broker and Transfer Agent fees, excluding commissions.

 

“Clearing Date” shall be the date on which the Investor receives the Capital Call Shares as DWAC Shares in its brokerage account.

 

“Closing” shall mean one of the closings of a purchase and sale of shares of Common Stock pursuant to Section 2.3.

 

	  
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“Closing Certificate” shall mean the closing certificate of the Company in the form of Exhibit B hereto.

 

“Closing Date” shall mean the date that is six (6) Trading Days after the Clearing Date.

 

“Commitment Amount” shall mean One Million Dollars ($1,000,000).

 

“Commitment Period” shall mean the period commencing on the Execution Date and ending on the earlier of (i) the date on which the Investor shall have purchased Capital Call Shares pursuant to this Agreement equal to the Commitment Amount, (ii) December 31, 2018, or (iii) written notice of termination by the Company to the Investor upon a material breach of this Agreement by Investor.

 

“Common Stock” shall mean the Company’s common stock, $0.01 value per share, and any shares of any other class of common stock whether now or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon liquidation of the Company).

 

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

 

“Company” shall have the meaning specified in the preamble to this Agreement.

 

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

“Damages” shall mean any loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys’ fees and disbursements and costs and expenses of expert witnesses and investigation).

 

“Dispute Period” shall have the meaning specified in Section 9.3(a).

 

“DTC” shall mean The Depository Trust Company, or any successor performing substantially the same function for the Company.

 

“DTC/FAST Program” shall mean the DTC’s Fast Automated Securities Transfer Program.

 

“DWAC” shall mean Deposit Withdrawal at Custodian as defined by the DTC.

 

“DWAC Eligible” shall mean that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements, including, without limitation, transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Capital Call Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Capital Call Shares, as applicable, via DWAC.

 

	  
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“DWAC Shares” means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and (iii) timely credited by the Company to the Investor’s or its designee’s specified DWAC account with DTC under the DTC/FAST Program, or any similar program hereafter adopted by DTC performing substantially the same function.

 

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

 

“Exchange Cap” shall have the meaning set forth in Section 7.1(c).

 

“Execution Date” shall mean the date of this Agreement.

 

“FINRA” shall mean the Financial Industry Regulatory Authority, Inc.

 

“Indemnified Party” shall have the meaning specified in Section 9.2.

 

“Indemnifying Party” shall have the meaning specified in Section 9.2.

 

“Indemnity Notice” shall have the meaning specified in Section 9.3(e).

 

“Investment Amount” shall mean the Capital Call Shares referenced in the Capital Call Notice multiplied by the Purchase Price.

 

“Investor” shall have the meaning specified in the preamble to this Agreement.

 

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

 

“Material Adverse Effect” shall mean any effect on the business, operations, properties, or financial condition of the Company and the Subsidiaries that is material and adverse to the Company and the Subsidiaries and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to enter into and perform its obligations under any Transaction Document.

 

"Minimum Purchase Price" shall mean $0.01.

 

“Person” shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

“Principal Market” shall mean any of the national exchanges (i.e. NYSE, NYSE AMEX, Nasdaq), or principal quotation systems (i.e. OTCQX, OTCQB, OTC Pink, the OTC Bulletin Board), or other principal exchange or recognized quotation system which is at the time the principal trading platform or market for the Common Stock.

 

	  
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“Purchase Price” shall be 75% of the volume weighted average price of the Common Stock the five Trading Days prior to the Closing Date.

 

“Registration Statement” shall have the meaning specified in Section 6.3.

 

“Regulation D” shall mean Regulation D promulgated under the Securities Act.

 

“Rule 144” shall mean Rule 144 under the Securities Act or any similar provision then in force under the Securities Act.

 

“SEC” shall mean the United States Securities and Exchange Commission.

 

“SEC Documents” shall have the meaning specified in Section 4.5.

 

“Securities” mean the Capital Call Shares.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Short Sales” shall mean all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act.

 

“Subsidiary” means any Person the Company wholly-owns or controls, or in which the Company, directly or indirectly, owns a majority of the voting stock or similar voting interest, in each case that would be disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under the Securities Act.

 

“Third Party Claim” shall have the meaning specified in Section 9.3(a).

 

“Trading Day” shall mean a day on which the Principal Market shall be open for business.

 

“Transaction Documents” shall mean this Agreement and all schedules and exhibits hereto and thereto.

 

“Transfer Agent” shall mean the current transfer agent of the Company, and any successor transfer agent of the Company.

 

ARTICLE II

PURCHASE AND SALE OF COMMON STOCK

 

Section 2.1 CAPITAL CALLS. Upon the terms and conditions set forth herein (including, without limitation, the provisions of Article VII), the Company shall have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a Capital Call Notice from time to time, to purchase Capital Call Shares provided that the amount of Capital Call Shares shall not exceed the Beneficial Ownership Limitation set forth in Section 7.1(g).

 

	 
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Section 2.2 MECHANICS.

 

(a) CAPITAL CALL NOTICE. At any time and from time to time during the Commitment Period, except as provided in this Agreement, the Company may deliver a Capital Call Notice to Investor, subject to satisfaction of the conditions set forth in Section 7.2 and otherwise provided herein. The Company shall deliver the Capital Call Shares as DWAC Shares to the Investor alongside the Capital Call Notice.

 

(b) DATE OF DELIVERY OF CAPITAL CALL NOTICE. A Capital Call Notice shall be deemed delivered on (i) the Trading Day it is received by email by the Investor if such notice is received on or prior to 8:30 a.m. New York time or (ii) the immediately succeeding Trading Day if it is received by email after 8:30 a.m. New York time on a Trading Day or at any time on a day which is not a Trading Day.

 

Section 2.3 CLOSINGS. The Closing of a Capital Call shall occur five (5) Trading Days following the Clearing Date, whereby the Investor, at its discretion, shall deliver the Investment Amount, by wire transfer of immediately available funds to an account designated by the Company. In addition, on or prior to such Closing, each of the Company and the Investor shall deliver to each other all documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein.

 

(a) MINIMUM PURCHASE PRICE. If the Purchase Price on the Closing Date is less than the Minimum Purchase Price, then the Investor may, in its sole discretion, elect to purchase all, any, or none of the respective Capital Call Shares at the Minimum Purchase Price.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF INVESTOR

 

The Investor represents and warrants to the Company that:

 

Section 3.1 INTENT. The Investor is entering into this Agreement for its own account and the Investor has no present arrangement (whether or not legally binding) at any time to sell the Securities to or through any Person in violation of the Securities Act or any applicable state securities laws; provided, however, that the Investor reserves the right to dispose of the Securities at any time in accordance with federal and state securities laws applicable to such disposition.

 

Section 3.2 NO LEGAL ADVICE FROM THE COMPANY. The Investor acknowledges that it has had the opportunity to review this Agreement and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.

 

Section 3.3 ACCREDITED INVESTOR. The Investor is an accredited investor as defined in Rule 501(a)(3) of Regulation D, and the Investor has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Securities. The Investor acknowledges that an investment in the Securities is speculative and involves a high degree of risk.

 

	 
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Section 3.4 AUTHORITY. The Investor has the requisite power and authority to enter into and perform its obligations under the Transaction Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of the Transaction Documents and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action and no further consent or authorization of the Investor is required. The Transaction Documents to which it is a party has been duly executed by the Investor, and when delivered by the Investor in accordance with the terms hereof, will constitute the valid and binding obligation of the Investor enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

Section 3.5 NOT AN AFFILIATE. The Investor is not an officer, director or “affiliate” (as that term is defined in Rule 405 of the Securities Act) of the Company.

 

Section 3.6 ORGANIZATION AND STANDING. The Investor is an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents.

 

Section 3.7 ABSENCE OF CONFLICTS. The execution and delivery of the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby and compliance with the requirements hereof and thereof, will not (a) violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Investor, (b) violate any provision of any indenture, instrument or agreement to which the Investor is a party or is subject, or by which the Investor or any of its assets is bound, or conflict with or constitute a material default thereunder, (c) result in the creation or imposition of any lien pursuant to the terms of any such indenture, instrument or agreement, or constitute a breach of any fiduciary duty owed by the Investor to any third party, or (d) require the approval of any third-party (that has not been obtained) pursuant to any material contract, instrument, agreement, relationship or legal obligation to which the Investor is subject or to which any of its assets, operations or management may be subject.

 

Section 3.8 DISCLOSURE; ACCESS TO INFORMATION. The Investor had an opportunity to review copies of the SEC Documents filed on behalf of the Company and has had access to all publicly available information with respect to the Company.

 

Section 3.9 MANNER OF SALE. At no time was the Investor presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising.

 

	 
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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to the Investor that, except as disclosed in the SEC Documents or except as set forth in the disclosure schedules hereto:

 

Section 4.1 ORGANIZATION OF THE COMPANY. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

Section 4.2 AUTHORITY. The Company has the requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents. The execution and delivery of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required. The Transaction Documents have been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

Section 4.3 CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of (a) 2,000,000,000 shares of Common Stock, par value of $0.01 per share, of which approximately 84,494,824 shares of Common Stock are issued and outstanding and (b) no shares of preferred stock. Except as set forth on Schedule 4.3, the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule 4.3 and except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investor) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

  

	 
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Section 4.4 LISTING AND MAINTENANCE REQUIREMENTS. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the twelve (12) months preceding the date hereof, received notice from the Principal Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Principal Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

 

Section 4.5 SEC DOCUMENTS; DISCLOSURE. Except as set forth on Schedule 4.5, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the one (1) year preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Documents”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Documents prior to the expiration of any such extension. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and other federal laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents when filed contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply as to form and substance in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto or (b) in the case of unaudited interim statements, to the extent they may not include 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 operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments). Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided the Investor or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Investor will rely on the foregoing representation in effecting transactions in securities of the Company.

 

Section 4.6 VALID ISSUANCES. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid, and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.

  

	 
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Section 4.7 NO CONFLICTS. The execution, delivery and performance of the 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 Capital Call Shares, do not and will not: (a) result in a violation of the Company’s or any Subsidiary’s certificate or articles of incorporation, by-laws or other organizational or charter documents, (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, instrument or any “lock-up” or similar provision of any underwriting or similar agreement to which the Company or any Subsidiary is a party, or (c) result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect) nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The business of the Company is not being conducted in violation of any law, ordinance or regulation of any governmental entity, except for possible violations that either singly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Transaction Documents (other than any SEC, FINRA or state securities filings that may be required to be made by the Company subsequent to any Closing or any registration statement that may be filed pursuant hereto); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of Investor herein.

 

Section 4.8 NO MATERIAL ADVERSE CHANGE. No event has occurred that would have a Material Adverse Effect on the Company that has not been disclosed in subsequent SEC filings.

 

Section 4.9 LITIGATION AND OTHER PROCEEDINGS. Except as disclosed in the SEC Documents or as set forth on Schedule 4.9, there are no actions, suits, investigations, inquiries or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties, nor has the Company received any written or oral notice of any such action, suit, proceeding, inquiry or investigation, which would have a Material Adverse Effect. No judgment, order, writ, injunction or decree or award has been issued by or, to the knowledge of the Company, requested of any court, arbitrator or governmental agency which would have a Material Adverse Effect. 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 Subsidiary or any current or former director or officer of the Company or any Subsidiary.

  

	 
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Section 4.10 REGISTRATION RIGHTS. Except as set forth on Schedule 4.10, no Person (other than the Investor) has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

ARTICLE V

COVENANTS OF INVESTOR

 

Section 5.1 COMPLIANCE WITH LAW; TRADING IN SECURITIES. The Investor’s trading activities with respect to shares of Common Stock will be in compliance with all applicable state and federal securities laws and regulations and the rules and regulations of FINRA and the Principal Market.

 

Section 5.2 SHORT SALES AND CONFIDENTIALITY. Neither the Investor, nor any affiliate of the Investor acting on its behalf or pursuant to any understanding with it, will execute any Short Sales during the period from the date hereof to the end of the Commitment Period. For the purposes hereof, and in accordance with Regulation SHO, the sale after delivery of a Put Notice of such number of shares of Common Stock reasonably expected to be purchased under a Put Notice shall not be deemed a Short Sale. The Investor shall, until such time as the transactions contemplated by the Transaction Documents are publicly disclosed by the Company in accordance with the terms of the Transaction Documents, maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents.

 

ARTICLE VI

COVENANTS OF THE COMPANY

 

Section 6.1 LISTING OF COMMON STOCK. The Company shall promptly secure the listing of all of the Capital Call Shares to be issued to the Investor hereunder on the Principal Market (subject to official notice of issuance) and shall use commercially reasonable best efforts to maintain, so long as any shares of Common Stock shall be so listed, the listing of all such Capital Call Shares from time to time issuable hereunder. The Company shall use its commercially reasonable efforts to continue the listing and trading of the Common Stock on the Principal Market (including, without limitation, maintaining sufficient net tangible assets) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of FINRA and the Principal Market.

 

Section 6.2 EQUITY LINES. So long as this Agreement remains in effect, the Company covenants and agrees that it will not, without the prior written consent of the Investor, enter into an equity line of credit agreement. For the avoidance of doubt, nothing contained in the Transaction Documents shall restrict, or require the Investor’s consent for, any agreement providing for the issuance or distribution of any equity securities of the Company pursuant to any agreement or arrangement that is not covered in this Section 6.2.

 

Section 6.3 FILING OF CURRENT REPORT AND REGISTRATION STATEMENT. The Company agrees that it shall file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the SEC within the time required by the Exchange Act, relating to the transactions contemplated by, and describing the material terms and conditions of, the Transaction Documents (the “Current Report”). The Company shall permit the Investor to review and comment upon the final pre-filing draft version of the Current Report at least two (2) Trading Days prior to its filing with the SEC, and the Company shall give reasonable consideration to all such comments. The Investor shall use its reasonable best efforts to comment upon the final pre-filing draft version of the Current Report within one (1) Trading Day from the date the Investor receives it from the Company. The Company shall also file with the SEC, within thirty (30) calendar days from the date hereof, a new registration statement (the “Registration Statement”) covering only the resale of the Capital Call Shares.

  

	 
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ARTICLE VII

CONDITIONS TO DELIVERY OF

PUT NOTICES AND CONDITIONS TO CLOSING

 

Section 7.1 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO ISSUE AND SELL CAPITAL CALL SHARES. The right of the Company to issue and sell the Capital Call Shares to the Investor is subject to the satisfaction of each of the conditions set forth below:

 

(a) ACCURACY OF INVESTOR’S REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Investor shall be true and correct in all material respects as of the date of this Agreement and as of the date of each Closing as though made at each such time.

 

(b) PERFORMANCE BY INVESTOR. Investor shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to such Closing.

 

(c) PRINCIPAL MARKET REGULATION. The Company shall not issue any Capital Call Shares, and the Investor shall not have the right to receive any Capital Call Shares, if the issuance of such Capital Call Shares would exceed the aggregate number of shares of Common Stock which the Company may issue without breaching the Company’s obligations under the rules or regulations of the Principal Market (the “Exchange Cap”).

 

Section 7.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF INVESTOR TO PURCHASE CAPITAL CALL SHARES. The obligation of the Investor hereunder to purchase Capital Call Shares is subject to the satisfaction of each of the following conditions:

 

(a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement, and any amendment or supplement thereto, shall remain effective for the resale by the Investor of the Capital Call Shares and (i) neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or intends or has threatened to do so and (ii) no other suspension of the use of, or withdrawal of the effectiveness of, such Registration Statement or related prospectus shall exist.

  

	 
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(b) ACCURACY OF THE COMPANY’S REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company shall be true and correct in all material respects as of the date of this Agreement and as of the date of each Closing (except for representations and warranties specifically made as of a particular date).

 

(c) PERFORMANCE BY THE COMPANY. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company.

 

(d) NO INJUNCTION. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or adopted by any court or governmental authority of competent jurisdiction that prohibits or directly and materially adversely affects any of the transactions contemplated by the Transaction Documents, and no proceeding shall have been commenced that may have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by the Transaction Documents.

 

(e) ADVERSE CHANGES. Since the date of filing of the Company’s most recent SEC Document, no event that had or is reasonably likely to have a Material Adverse Effect has occurred.

 

(f) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The trading of the Common Stock shall not have been suspended by the SEC, the Principal Market or FINRA, or otherwise halted for any reason, and the Common Stock shall have been approved for listing or quotation on and shall not have been delisted from the Principal Market. In the event of a suspension, delisting, or halting for any reason, of the trading of the Common Stock, as contemplated by this Section 7.2(f), the Investor shall have the right to return to the Company any amount of Capital Call Shares associated with such Capital Call, and the Investment Amount with respect to such Capital Call shall be reduced accordingly.

 

(g) BENEFICIAL OWNERSHIP LIMITATION. The number of Capital Call Shares then to be purchased by the Investor shall not exceed the number of such shares that, when aggregated with all other shares of Common Stock then owned by the Investor beneficially or deemed beneficially owned by the Investor, would result in the Investor owning more than the Beneficial Ownership Limitation (as defined below), as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. For purposes of this Section 7.2(g), in the event that the amount of Common Stock outstanding, as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder, is greater on a Closing Date than on the date upon which the Capital Call Notice associated with such Closing Date is given, the amount of Common Stock outstanding on such Closing Date shall govern for purposes of determining whether the Investor, when aggregating all purchases of Common Stock made pursuant to this Agreement, would own more than the Beneficial Ownership Limitation following such Closing Date. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable pursuant to a Put Notice.

  

	 
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(h) PRINCIPAL MARKET REGULATION. The issuance of the Capital Call Shares shall not exceed the Exchange Cap.

 

(i) NO KNOWLEDGE. The Company shall have no knowledge of any event more likely than not to have the effect of causing the Registration Statement to be suspended or otherwise ineffective (which event is more likely than not to occur within the fifteen (15) Trading Days following the Trading Day on which such Put Notice is deemed delivered).

 

(j) NO VIOLATION OF SHAREHOLDER APPROVAL REQUIREMENT. The issuance of the Capital Call Shares shall not violate the shareholder approval requirements of the Principal Market.

 

(k) OFFICER’S CERTIFICATE. On the date of delivery of each Put Notice, the Investor shall have received the Closing Certificate executed by an executive officer of the Company and to the effect that all the conditions to such Closing shall have been satisfied as of the date of each such certificate.

 

(l) DWAC ELIGIBLE. The Common Stock must be DWAC Eligible and not subject to a “DTC chill.”

 

(m) SEC DOCUMENTS. All reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with the SEC pursuant to the reporting requirements of the Exchange Act shall have been filed with the SEC within the applicable time periods prescribed for such filings under the Exchange Act.

 

ARTICLE VIII

LEGENDS

 

Section 8.1 NO RESTRICTIVE STOCK LEGEND. No restrictive stock legend shall be placed on the share certificates representing the Capital Call Shares.

 

Section 8.2 INVESTOR’S COMPLIANCE. Nothing in this Article VIII shall affect in any way the Investor’s obligations hereunder to comply with all applicable securities laws upon the sale of the Common Stock.

  

	 
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ARTICLE IX

NOTICES; INDEMNIFICATION

 

Section 9.1 NOTICES. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram, or email as a PDF, addressed as set forth below or to such other address as such party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by email at the address designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of mailing by express courier service or on the fifth business day after deposited in the mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.

 

The addresses for such communications shall be:

 

If to the Company: 

 

If to the Investor:

 

TRITON FUNDS LLC

1262 Prospect Street

La Jolla, CA 92037

Email: tritonfunds@tritonfunds.com

 

Either party hereto may from time to time change its address or email for notices under this Section 9.1 by giving at least ten (10) days’ prior written notice of such changed address to the other party hereto.

 

Section 9.2 INDEMNIFICATION. Each party (an “Indemnifying Party”) agrees to indemnify and hold harmless the other party along with its officers, directors, employees, and authorized agents, and each Person or entity, if any, who controls such party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (an “Indemnified Party”) from and against any Damages, joint or several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or relating to (i) any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of the Indemnifying Party contained in this Agreement, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or supplement thereto, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading, or (iv) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law, as such Damages are incurred, except to the extent such Damages result primarily from the Indemnified Party’s failure to perform any covenant or agreement contained in this Agreement or the Indemnified Party’s negligence, recklessness or bad faith in performing its obligations under this Agreement; provided, however, that the foregoing indemnity agreement shall not apply to any Damages of an Indemnified Party to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made by an Indemnifying Party in reliance upon and in conformity with written information furnished to the Indemnifying Party by the Indemnified Party expressly for use in the Registration Statement, any post-effective amendment thereof or supplement thereto, or any preliminary prospectus or final prospectus (as amended or supplemented).

  

	 
	14
	

 
	 

  

Section 9.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for indemnification by any Indemnified Party under Section 9.2 shall be asserted and resolved as follows:

 

(a) In the event any claim or demand in respect of which an Indemnified Party might seek indemnity under Section 9.2 is asserted against or sought to be collected from such Indemnified Party by a Person other than a party hereto or an affiliate thereof (a “Third Party Claim”), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party’s claim for indemnification that is being asserted under any provision of Section 9.2 against an Indemnifying Party, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim (a “Claim Notice”) with reasonable promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party’s ability to defend has been prejudiced by such failure of the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the “Dispute Period”) whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party under Section 9.2 and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim.

 

(i) If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 9.3(a), then the Indemnifying Party shall have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not be indemnified in full pursuant to Section 9.2). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party’s delivery of the notice referred to in the first sentence of this clause (i), file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate to protect its interests; and provided, further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this clause (i), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under Section 9.2 with respect to such Third Party Claim.

  

	 
	15
	

 
	 

  

(ii) If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party(with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this clause (ii), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in clause (iii) below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party’s defense pursuant to this clause (ii) or of the Indemnifying Party’s participation therein at the Indemnified Party’s request, and the Indemnified Party shall reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this clause (ii), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.

 

(iii) If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to the Indemnified Party with respect to the Third Party Claim under Section 9.2 or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.

  

	 
	16
	

 
	 

  

(b) In the event any Indemnified Party should have a claim under Section 9.2 against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under Section 9.2 specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim (an “Indemnity Notice”) with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party’s rights hereunder except to the extent that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.

 

(c) The Indemnifying Party agrees to pay the Indemnified Party, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.

 

(d) The indemnity provisions contained herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party may be subject to.

 

ARTICLE X

MISCELLANEOUS

 

Section 10.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to the principles of conflicts of law. Each of the Company and the Investor hereby submits to the exclusive jurisdiction of the United States federal and state courts located in California, County of Orange, with respect to any dispute arising under the Transaction Documents or the transactions contemplated thereby.

 

Section 10.2 JURY TRIAL WAIVER. The Company and the Investor hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other in respect of any matter arising out of or in connection with the Transaction Documents.

 

Section 10.3 ASSIGNMENT. The Transaction Documents shall be binding upon and inure to the benefit of the Company and the Investor and their respective successors. Neither this Agreement nor any rights of the Investor or the Company hereunder may be assigned by either party to any other Person.

  

	 
	17
	

 
	 

  

Section 10.4 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the benefit of the Company and the Investor and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as set forth in Section 9.3.

 

Section 10.5 TERMINATION. The Company may terminate this Agreement at any time by written notice to the Investor in the event of a material breach of this Agreement by the Investor. In addition, this Agreement shall automatically terminate on the earlier of (i) the end of the Commitment Period; (ii) the date that the Company sells and the Investor purchases the Commitment Amount; (iii) the date in which the Registration Statement is no longer effective, or (iv) the date that, pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed for the Company or for all or substantially all of its property or the Company makes a general assignment for the benefit of its creditors; provided, however, that the provisions of Articles III, IV, V, VI, IX and the agreements and covenants of the Company and the Investor set forth in Article X shall survive the termination of this Agreement.

 

Section 10.6 ENTIRE AGREEMENT. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the Company and the Investor with respect to the matters covered herein and therein and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

Section 10.7 FEES AND EXPENSES. Except as expressly set forth in the Transaction Documents or any other writing to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including any fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Investor.

 

Section 10.8 COUNTERPARTS. The Transaction Documents may be executed in multiple counterparts, each of which may be executed by less than all of the parties and shall be deemed to be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which together shall constitute one and the same instrument. The Transaction Documents may be delivered to the other parties hereto by email of a copy of the Transaction Documents bearing the signature of the parties so delivering this Agreement.

 

Section 10.9 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective if it materially changes the economic benefit of this Agreement to any party.

 

Section 10.10 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 the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

  

	 
	18
	

  
	  

  

Section 10.11 NO STRICT 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.

 

Section 10.12 EQUITABLE RELIEF. The Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Investor. The Company therefore agrees that the Investor shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

 

Section 10.13 TITLE AND SUBTITLES. The titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement.

 

Section 10.14 AMENDMENTS; WAIVERS. No provision of this Agreement may be amended or waived by the parties from and after the date that is one (1) Trading Day immediately preceding the initial filing of the Registration Statement with the SEC. Subject to the immediately preceding sentence, (i) no provision of this Agreement may be amended other than by a written instrument signed by both parties hereto and (ii) no provision of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

Section 10.15 PUBLICITY. The Company and the Investor shall consult with each other in issuing any press releases or otherwise making public statements with respect to the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such public statement, other than as required by law, without the prior written consent of the other parties, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which such case the disclosing party shall provide the other party with prior notice of such public statement. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Investor without the prior written consent of the Investor, except to the extent required by law. The Investor acknowledges that the Transaction Documents may be deemed to be “material contracts,” as that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore be required to file such documents as exhibits to reports or registration statements filed under the Securities Act or the Exchange Act. The Investor further agrees that the status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.

 

[Signature Page Follows]

  

	 
	19
	

 
	 

  

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

  

		
DIGITALTOWN, INC.
	
		 		
		By:	/s/ Rob Monster	
		
Name:
	Rob Monster	
		Title:	CEO	

  

		
TRITON FUNDS LP
	
		 		
		By:	/s/ Tyler Hoffman	
		
Name:
	Tyler Hoffman	
		Title:	Authorized Signatory	

 

[Signature Page to equity purchase agreement]

  

	 
	20
	

 
	 

  

DISCLOSURE SCHEDULES TO

EQUITY PURCHASE AGREEMENT

 

Schedule 4.3 – Capitalization

 

Schedule 4.5 – SEC Documents

 

Schedule 4.9 – Litigation

 

Schedule 4.10 – Registration Rights

  

	 
	21
	

 
	 

  

EXHIBIT A

 

FORM OF CAPITAL CALL NOTICE

 

TO: TRITON FUNDS LP

 

We refer to the equity purchase agreement, dated as of April 23, 2018, (the “Agreement”), entered into by and between DIGITALTOWN, INC., and you. Capitalized terms defined in the Agreement shall, unless otherwise defined herein, have the same meaning when used herein.

 

We hereby:

 

1) Give you notice that we require you to purchase __________ Capital Call Shares; and

 

2) Certify that, as of the date hereof, the conditions set forth in Section 7.2 of the Agreement are satisfied.

 

		
DIGITALTOWN, INC.
	
		 		
		By:		
		
Name:
		
		Title:		

  

	 
	22
	

 
	 

  

EXHIBIT B

 

FORM OF OFFICER’S CERTIFICATE

OF DIGITALTOWN, INC.

 

Pursuant to Section 7.2(k) of that certain equity purchase agreement, dated as of April 23, 2018 (the “Agreement”), by and between DIGITALTOWN, INC. (the “Company”) and TRITON FUNDS LP (the “Investor”), the undersigned, in his capacity as Chief Executive Officer of the Company, and not in his individual capacity, hereby certifies, as of the date hereof (such date, the “Condition Satisfaction Date”), the following:

 

1. The representations and warranties of the Company are true and correct in all material respects as of the Condition Satisfaction Date as though made on the Condition Satisfaction Date (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Condition Satisfaction Date, except for any conditions which have temporarily caused any representations or warranties of the Company set forth in the Agreement to be incorrect and which have been corrected with no continuing impairment to the Company or the Investor; and

 

2. All of the conditions precedent to the obligation of the Investor to purchase Capital Call Shares set forth in the Agreement, including but not limited to Section 7.2 of the Agreement, have been satisfied as of the Condition Satisfaction Date.

 

Capitalized terms used herein shall have the meanings set forth in the Agreement unless otherwise defined herein.

 

IN WITNESS WHEREOF, the undersigned has hereunto affixed his hand as of the April 23, 2018.

 

 

		By:	/s/ Rob Monster	
		
Name:
	Rob Monster	
		Title:	CEO	

  

  

	
23Exhibit 10.1

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

This Separation Agreement
and General Release (this “Agreement”) is entered into by and between Fred’s Inc. (the “Company”)
and Michael Bloom (“Executive,” and, together with the Company, the “Parties”).

 

1.            The
Parties acknowledge and agree that Executive’s last day of employment with the Company will be May 24, 2018 (the “Separation
Date”). Effective as of the Separation Date, Executive shall not be, or hold himself out as, an Executive, agent,
or representative of the Company or any of its affiliates.

 

2.            The
period between April 24, 2018 and May 24, 2018 shall be the “Transition Period.” During the Transition
Period, Executive will not be authorized to take (and will not take) any actions on behalf of the Company or any Company Affiliate.
Effective immediately upon the commencement of the Transition Period, Executive hereby resigns from the Board (and any committees
thereof) and the Board of Directors (and any committees thereof) of any of Company’s affiliates and from the board of directors
or similar governing body of any corporation, limited liability company or other entity in which Company or any affiliate holds
an equity interest and with respect to which board or similar governing body Executive serves as Company’s or such affiliate’s
designee or other representative. Executive will continue to receive his base salary, at the annual rate of $700,000 per annum
(less applicable deductions and withholdings), through the Transition Period.

 

3.            In
consideration of Executive executing and complying with this Agreement and the Surviving Provisions in full settlement of any compensation
or benefits to which Executive otherwise could claim to be entitled, and in exchange for the mutual promises, covenants, releases,
and waivers set forth in this Agreement, the Company will provide Executive with the following severance benefits:

 

(a)          Company
shall pay Executive any vested or accrued and unpaid payments, rights or benefits Executive may otherwise be entitled to receive
pursuant to the terms of any accrued but unused vacation or other employee benefit or compensation plan maintained by Company at
the time or times provided therein.

 

(b)          On
the Separation Date, Executive’s rights under any compensation or benefits program shall become vested and any restrictions
on stock options or contractual rights granted to Executive shall be removed, including but not limited to the removal and/or lapse
of any and all restrictions on the 272,759 shares of Executive’s restricted stock.

 

(c)          All
stock options provided as an Employment Incentive under Section 3(d) of the Amended Compensation Agreement shall vest and all restrictions
on restricted stock provided as an Employment Incentive under Section 3(d) of the Amended Compensation Agreement shall immediately
lapse.

 

    	1

     

    

 

(d)          Until
the earlier of the third anniversary of Executive’s Separation Date or the date Executive is employed by a new employer,
Company shall continue to provide Executive a car allowance in the amount of $1,000 per month.

 

(e)          When
the Executive’s coverage (if any) under the Company’s medical plan(s) ceases, pursuant to governing law and independent
of this Agreement, Executive will be entitled to elect benefit continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), for Executive and any eligible dependents if Executive timely applies for such coverage.
If Executive elects COBRA, Company shall reimburse Executive for the Employee portion of Executive’s COBRA premiums for a
maximum of eighteen (18) months; provided, however, that the Company’s reimbursement of continuation coverage
may cease at any time Executive becomes eligible for group medical coverage from another employer. Information regarding Executive’s
rights under COBRA will be provided to Executive in a separate mailing. Executive acknowledges and agrees that Executive is solely
responsible for all federal, state, and/or tax liability, if any, arising from any such COBRA reimbursement described in this Paragraph
3 and that neither the Company nor any of its representatives have provided advice regarding the tax consequences of any consideration
set forth in this Paragraph 3.

 

(f)          Following
the expiration of the eighteen (18) month COBRA reimbursement period, Executive shall receive monthly payments in the amount of
$1,287.39 for an additional eighteen (18) months; provided, however, that these payments will cease at any time Executive
becomes eligible for group medical coverage from another employer.

 

In addition
to the benefits set forth above, the Company, through its officers, agrees not to make any untruthful or disparaging statements,
written or oral, about Executive.

 

4.            In
exchange for Executive timely executing and complying with both this Agreement and the release attached hereto as Exhibit A
(the “Post-Employment Release”), and for not timely revoking the Post-Employment Release in accordance
with its terms: severance in the amount equal to $1,166,666.67 less applicable deductions and withholdings, to be paid in substantially
equal installments at Executive’s regular pay intervals in effect prior to the Separation Date, over a period of twenty (20)
months beginning no later than the first regular Company payroll payment date which occurs within thirty 30 days following the
lapse of any right of Executive to revoke the release attached hereto as Exhibit A.

 

    	2

     

    

 

5.            Executive
acknowledges and agrees that the consideration provided in Paragraphs 2 through 4, above: (a) is in full discharge of any
and all obligations owed to Executive, monetarily or otherwise, with respect to Executive’s employment, including but not
limited to any obligations set forth in the Amended Compensation Agreement; and (b) exceeds any payment, benefit, or other thing
of value to which Executive might otherwise be entitled in the absence of this Agreement. Executive specifically acknowledges and
agrees that Executive is not entitled to any other salary, wages, commissions, overtime, premiums, paid time off, vacation, sick
pay, holiday pay, personal day pay, royalties, equity, phantom equity, carried interest, bonuses, deferred compensation, or other
forms of compensation, benefits, fringe benefits, perquisites, interests, or payments of any kind or nature whatsoever (collectively,
“Compensation”), except as explicitly provided in this Agreement. Further, Executive acknowledges and
agrees that the terms of this Agreement and the Surviving Provisions remain in full force and effect and will continue to bind
Executive following the Separation Date. Executive further acknowledges that by Executive executing this Agreement, Executive and
the other Releasors are waiving and releasing any and all legal rights and claims they may have under the ADEA and all other federal,
state and local laws regarding age discrimination, whether those claims are currently known to Executive or hereafter discovered.
However, nothing in the foregoing is intended to limit or restrict Executive’s right to challenge the validity of this Agreement
as to claims and rights asserted under the ADEA or Executive’s right to enforce the Agreement. Executive further agrees that
in the event he or any of the other Releasors brings any ADEA Claims against any of the Releasees, or in the event they seek to
recover monetary or other compensation against any of the Releasees through any ADEA Claim brought by a governmental agency on
their behalves, this Agreement shall serve as a complete defense to such Claims.

 

6.            In
exchange for the consideration provided to Executive pursuant to Paragraph 3 of this Agreement, Executive, on behalf of Executive
and all of Executive’s heirs, executors, administrators, successors, and assigns (collectively, “Releasors”),
hereby releases and forever waives and discharges any and all claims, liabilities, causes of action, demands, charges, complaints,
suits, rights, costs, debts, expenses, promises, agreements, or damages of any kind or nature (collectively, “Claims”)
that Executive or any of the other Releasors ever had, now have, or might have against the Company and Alden Global Capital LLC,
and each of their current, former, or future affiliates, or any of their respective current, former, or future subsidiaries, parents,
related companies, controlling shareholders, or divisions, as well as (collectively with the Company, the “Company
Entities”), or any of the Company Entities’ respective directors, members, managers, employees, trustees, officers,
general partners, limited partners, Executives, consultants, contractors, advisors, agents, benefit plans, attorneys, successors,
assigns, or investment funds (or the other investment vehicles any of the foregoing manage and/or for which they perform services)
(collectively with the Company Entities, the “Releasees,” and each a “Releasee”),
arising at any time prior to the date Executive executes this Agreement, whether such Claims are known to Executive or unknown
to Executive, whether such Claims are accrued or contingent, including, but not limited to, any and all (a) Claims arising out
of, or that might be considered to arise out of or to be connected in any way with, Executive’s employment or other relationship
with any of the Releasees, or the termination of such employment or other relationship; (b) Claims under any contract, agreement,
or understanding that Executive may have with any of the Releasees, whether written or oral, express or implied, at any time prior
to the Effective Date (as defined below) (including, but not limited to, under the Amended Compensation Agreement; (c) Claims arising
under any federal, state, foreign, or local law, rule, constitution, ordinance, or public policy, including, without limitation,
(i) Claims arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Civil
Rights Act of 1991, the Americans With Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave
Act, the Executive Retirement Income Security Act of 1974, the Vietnam Era Veterans Readjustment Act of 1974, the Immigration Reform
and Control Act of 1986, the Equal Pay Act, the Labor Management Relations Act, the National Labor Relations Act, the Occupational
Safety and Health Act, the Genetic Information Nondiscrimination Act of 2008, the Rehabilitation Act of 1973, the Uniformed Services
Employment and Reemployment Rights Act, the Worker Adjustment and Retraining Notification Act, the Sarbanes-Oxley Act of 2002,
the Dodd-Frank Act, the Internal Revenue Code of 1986, and/or the Tennessee Human Rights Act, as all such laws have been amended
from time to time, or any other federal, state, foreign, or local labor law, wage and hour law, worker safety law, Executive relations
or fair employment practices law, or public policy, (ii) Claims arising in tort, including, but not limited to, Claims for misrepresentation,
defamation, libel, slander, invasion of privacy, conversion, replevin, false light, tortious interference with contract or economic
advantage, negligence, fraud, fraudulent inducement, quantum meruit, promissory estoppel, prima facie tort, restitution, or the
like, and (iii) Claims for Compensation, other monetary or equitable relief, attorneys’ or experts’ fees or costs,
forum fees or costs, or any tangible or intangible property of Executive’s that remains with any of the Releasees; and (d) Claims
arising under any other applicable law, regulation, rule, policy, practice, promise, understanding, or legal or equitable theory
whatsoever; provided, however, that Executive does not release (A) any claims that arise after the Effective Date;
(B) any claims for breach of this Agreement or to enforce the terms of this Agreement; or (C) any claims that cannot be waived
or released as a matter of law. Executive specifically intends the release of Claims in this Paragraph 6 to be the broadest possible
release permitted by law.

 

    	3

     

    

 

7.            Executive
represents and warrants that Executive has never commenced or filed, or caused to be commenced or filed, any lawsuit or arbitration
against any of the Releasees. Except as otherwise provided in Paragraph 6 of this Agreement, Executive further agrees not to directly
or indirectly commence, file, or in any way pursue, or cause or assist any person or entity to commence, file, or pursue, any Claim,
lawsuit, or arbitration against any of the Releasees in the future. For avoidance of doubt, nothing in this Agreement, any other
agreement between Executive and the Company, or any Company policy shall prevent Executive from filing a charge with the Equal
Employment Opportunity Commission (the “EEOC”) or any other government agency or participating in any
EEOC or other agency investigation; provided, that Executive may not receive any monetary relief from any of the Releasees
as a consequence of any charge filed with the EEOC and/or any litigation arising out of an EEOC charge; and provided, further,
that nothing herein shall restrict Executive’s right to receive an award for information provided to the U.S. Securities
and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934.

 

8.            This
Agreement shall be interpreted strictly in accordance with its terms, to the maximum extent permissible under governing law, and
shall not be construed against or in favor of any Party, regardless of which Party drafted this Agreement or any provision hereof.
If any provision of this Agreement (or any of the Surviving Provisions) is determined to be unenforceable as a matter of governing
law, an arbitrator or reviewing court of appropriate jurisdiction shall have the authority to “blue pencil” or otherwise
modify such provision so as to render it enforceable while maintaining the Parties’ original intent to the maximum extent
possible. Each provision of this Agreement is severable from the other provisions hereof, and if one or more provisions hereof
are declared invalid, the remaining provisions shall nevertheless remain in full force and effect. For purposes of this Agreement,
the connectives “and,” “or,” and “and/or” shall be construed either disjunctively or conjunctively
as necessary to bring within the scope of a sentence or clause all subject matter that might otherwise be construed to be outside
of its scope.

 

    	4

     

    

 

9.            Executive
agrees to cooperate with the Company, without any compensation other than that set forth in this Agreement, in connection with
(a) promptly, fulsomely, and in good faith responding to the Company’s requests for knowledge or information within Executive’s
possession following the Separation Date, and (b) any investigation or review by any federal, state, foreign, or local regulatory
or other authority, and in the defense or prosecution of any demand, claim, or action, that is now in existence or may be brought
in the future against or on behalf of any of the Releasees relating to events, occurrences, or omissions that may have occurred
(or failed to have occurred) while Executive was employed by the Company. Executive’s cooperation in connection with any
such investigation, demand, claim, or action shall include, but not be limited to, being available to (i) meet with the Releasees
and their counsel in connection with discovery or pre-trial issues, and (ii) provide truthful testimony (including via affidavit,
deposition, at trial, or otherwise) on behalf of the Releasees, all without the requirement of being subpoenaed. The Company shall
try to schedule Executive’s cooperation pursuant to this Paragraph so as not to unduly interfere with Executive’s other
personal or professional pursuits.

 

10.          Executive
represents, warrants and agrees that he has not breached, and will not breach, (i) any of his covenants under this Agreement, or
(ii) any of his other obligations as an employee of the Company including, without limitation, those under Paragraphs 8(a), 8(b),
8(c) or 8(d) of the Amended Compensation Agreement (the “Surviving Provisions”) Executive’s obligations
thereunder are summarized as follows:

 

(a)          Confidentiality.
As more fully set forth in Paragraph 8(a) of the Amended Compensation Agreement, while employed by Company and thereafter, Executive
shall not disclose any Confidential Information either directly or indirectly, to anyone (other than appropriate Company employees
and advisors), or use such information for his own account, or for the account of any other person or entity, without the prior
written consent of Company or except as required by law. This confidentiality covenant has no temporal or geographical restriction.
For purposes of this Agreement, “Confidential Information” shall mean all non-public information respecting Company's
business, including, but not limited to, its services, pricing, scheduling, products, research and development, processes, customer
lists, marketing plans and strategies, and financing plans, but excluding information that is, or becomes, available to the public
(unless such availability occurs through an unauthorized act on the part of Executive). Executive shall promptly supply to Company
all property and any other tangible product or document that has been produced by, received by or otherwise submitted to Executive
during or prior to his term of employment, and shall not retain any copies thereof.

 

    	5

     

    

 

(b)          Non-Competition.
As more fully set forth in Paragraph 8(b) of the Amended Compensation Agreement, Executive acknowledges that his services are of
special, unique and extraordinary value to Company. Accordingly, the Executive shall not at any time prior to May 24, 2019. become
an employee, consultant, officer, partner or director or provide services in any fashion to any Competitor with Company (or any
of its affiliates).

 

(c)          Non-Solicitation.
As more fully set forth in Paragraph 8(c) of the Amended Compensation Agreement, Executive shall not, at any time prior to May
24, 2019, whether on Executive’s own behalf or on behalf of or in conjunction with any person, company, business entity or
other organization whatsoever, directly or indirectly, (x) solicit or encourage any employee of Company or its affiliates to leave
the employment of Company or its affiliates or (y), without permission of Company, knowingly hire a former employee of Company
or its affiliates.

 

(d)          Non-Disparagement.
As more fully set forth in Paragraph 8(d) of the Amended Compensation Agreement, while employed by Company and at any time after
the Separation Date, Executive agrees not to make any untruthful or disparaging statements, written or oral, about Company, its
affiliates, and Alden Global Capital LLC, their predecessors or successors or any of their past and present officers, directors,
stockholders, partners, members, agents and employees or Company’s business practices, operations or personnel policies and
practices to any of Company’s customers, clients, competitors, suppliers, investors, directors, consultants, employees, former
employees, or the press or other media in any country.

 

Notwithstanding the
foregoing, in accordance with the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), and other applicable law, nothing
in this Agreement, or any other agreement or policy of the Company shall prevent Executive from, or expose Executive to criminal
or civil liability under federal or state trade secrets law for, (i) directly or indirectly sharing any Company trade secrets
or other Confidential Information (except information protected by any of the Releasees’ attorney-client or work product
privilege) with an attorney or with any federal, state, or local government agencies, regulators, or officials, for the purpose
of investigating or reporting a suspected violation of law, whether in response to a subpoena or otherwise, without notice to the
Company; or (ii) disclosing the Company’s trade secrets in a filing in connection with a legal claim, provided that the filing
is made under seal. Furthermore, Executive shall be permitted to (A) share information about this Agreement with Executive’s
spouse, attorney, accountant, or financial advisor, so long as Executive ensures that such parties maintain the strict confidentiality
of this Agreement; (B) share information regarding Executive compensation with other persons or entities; and (C) apprise any future
employer or other person or entity to which Executive provides services of Executive’s continuing obligations to the Company
under this Agreement and/or the Amended Compensation Agreement.

 

11.         This
Agreement and the Surviving Provisions set forth the entire agreement between the Parties hereto, fully supersedes any and all
prior agreements or understandings between the Parties, and can be modified only in a written agreement signed by Executive, on
the one hand, and an officer of the Company, on the other hand. Executive specifically acknowledges and agrees that notwithstanding
any discussions or negotiations Executive may have had with any of the Releasees prior to the execution of this Agreement, Executive
is not relying on any promises or assurances other than those explicitly contained in this Agreement. This Agreement shall be deemed
to have been made in Memphis, Tennessee, and shall be interpreted, construed, and enforced pursuant to the laws of the State of
Tennessee, without giving effect to Tennessee’s conflict or choice of law principles.

 

    	6

     

    

 

12.         Executive
represents and warrants that he is not aware of any facts or circumstances that Executive has not disclosed to the General Counsel
and/or the Chairman of the Nominating and Governance Committee that he knows or believes to be either (a) a past or current violation
of the Company’s or any of its affiliates’ rules and/or policies, or (b) a past or current violation of any laws, rules,
and/or regulations applicable to the Company or any of its affiliates. This Agreement shall not in any way be construed as an admission
by any of the Releasees of any liability or of any wrongful acts whatsoever against Executive or any other person.

 

13.         Should
Executive materially breach this Agreement or any of the Surviving Provisions, then: (a) the Company shall have no further obligations
to Executive under this Agreement or otherwise (including, but not limited to, any obligation to provide the payments or other
consideration set forth in Paragraphs 3 and 4 of this Agreement); (b) the Company will be entitled to recoup all payments previously
provided to Executive under Paragraphs 3 and 4 of this Agreement; (c) the Company shall have all rights and remedies available
to it under this Agreement and any applicable law or equitable theory; and (d) all of Executive’s promises, covenants, representations,
and warranties under this Agreement and the Surviving Provisions will remain in full force and effect.

 

14.         Executive
agrees that his breach or threatened breach of Paragraphs 6, 7, 9, 10, or 15 of this Agreement or the Surviving Provisions would
result in irreparable and continuing harm to the Releasees for which there is no adequate remedy at law. Thus, in addition to the
Releasees’ right to arbitrate disputes hereunder, the Releasees shall be entitled to obtain emergency equitable relief, including
a temporary restraining order and/or preliminary injunction, in aid of arbitration, from any state or federal court of competent
jurisdiction, without first posting a bond, to restrain any such breach or threatened breach. Upon the issuance (or denial) of
an injunction, the underlying merits of any dispute will be resolved in accordance with the arbitration provisions of Paragraph
16 of this Agreement.

 

    	7

     

    

 

15.         (a)          Except
as provided in Paragraph 14 of this Agreement, the Parties irrevocably and unconditionally agree that any past, present, or future
dispute, controversy, or claim arising under or relating to this Agreement; arising in connection with Executive’s employment
or affiliation or the termination thereof; or otherwise arising between Executive and any of the Releasees, involving Executive,
on the one hand, and any of the Releasees, on the other hand, including both claims brought by Executive and claims brought against
Executive, shall be submitted for resolution to binding arbitration as provided herein; provided, that nothing herein shall
require arbitration of a claim or charge which, by law, cannot be the subject of a compulsory arbitration agreement. Any such arbitration
shall be administered by the American Arbitration Association (“AAA”); shall be conducted in accordance with
AAA’s Employment Arbitration Rules and Procedures, as modified herein; and shall be conducted by a single arbitrator. The
Company shall be responsible for the arbitrator’s costs. Both the Company and the Executive will be responsible for their
own attorneys’ fees. Such arbitration will be conducted in Tennessee, and the arbitrator will apply Tennessee law, including
federal statutory law as applied in Tennessee courts. Except as set forth in Paragraph 14, above, the arbitrator, and not
any federal or state court, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability,
enforceability, and/or formation of this Agreement, including any dispute as to whether (i) a particular claim is subject to arbitration
hereunder, and/or (ii) any part of this Paragraph 15 is void or voidable. The arbitral award shall be in writing, shall state the
reasons for the award, and shall be final and binding on the parties. Executive shall treat the arbitration as strictly confidential,
and Executive shall not disclose the existence or nature of any claim, defense, or argument; any documents, correspondence, pleadings,
briefing, exhibits, arguments, testimony, evidence, or information exchanged or presented in connection with any claim, defense,
or argument; or any rulings, decisions, or results of any claim, defense, or argument (collectively, “Arbitration Materials”)
to any third party, with the sole exception of Executive’s legal counsel, who Executive shall ensure complies with these
confidentiality terms. In the event any of the Releasees substantially prevail in an action involving Executive’s breach
of any provision of Paragraphs 6, 7, 9, 10, or 15 hereunder, such party shall be entitled to an award including its reasonable
attorneys’ fees and costs, to the extent such an award is permitted by law. The arbitrator otherwise shall not have authority
to award attorneys’ fees or costs, punitive damages, compensatory damages, damages for emotional distress, penalties, lost
opportunities, or any other damages or relief not measured by the prevailing party’s actual out-of-pocket losses, except
to the extent such relief is explicitly available under a statute, ordinance, or regulation pursuant to which a successful claim
is brought. In agreeing to arbitrate his claims hereunder, Executive hereby recognizes and agrees that he is waiving his right
to a trial in court and/or by a jury.

 

16.         In
the event of any court proceeding to challenge or enforce an arbitrator’s award, the Parties hereby consent to the exclusive
jurisdiction of the state and federal courts sitting in Tennessee; agree to exclusive venue in that jurisdiction; and waive any
claim that such jurisdiction is an inconvenient or inappropriate forum. The Parties agree to take all steps necessary to protect
the confidentiality of the Arbitration Materials in connection with any court proceeding, agree to use their reasonable best efforts
to file any court proceeding permitted herein and all Confidential Information (and all documents containing Confidential Information)
under seal, and agree to the entry of an appropriate protective order encompassing the confidentiality terms of this Agreement.

 

17.         (a)          In
accordance with the Age Discrimination in Employment Act (“ADEA”) and the Older Workers Benefit Protection
Act, 29 U.S.C. § 621 et seq., Executive understands that he shall have twenty-one (21) days to consider this Agreement, execute
it, and return it via email or overnight courier (via FedEX or UPS) to Esther Lander, Akin Gump Strauss Hauer & Feld, LLC,
1333 New Hampshire Ave, NW, Washington DC, 20036, elander@akingump.com.  To the extent that Executive executes this Agreement
prior to the end of the twenty-one (21) day period, Executive hereby knowingly and voluntarily waives the remainder of this twenty-one
(21) day period.  If Executive fails to execute and return this Agreement within the twenty-one (21) day period in the manner
provided above, then this Agreement will be null and void and of no force or effect.

 

    	8

     

    

 

(b)          Executive
acknowledges that if he timely executes this Agreement, he shall have seven (7) days from the date he executes this Agreement to
revoke this Agreement by providing written notice of such revocation by email or overnight courier (via FedEx or UPS) to Esther
Lander, Akin Gump Strauss Hauer & Feld, LLC, 1333 New Hampshire Ave, NW, Washington DC, 20036, elander@akingump.com.. If Executive
revokes this Agreement within seven (7) days from the date he executes it as provided herein, then this Agreement will be null
and void and of no force or effect. If Executive does not revoke this Agreement within seven (7) days from the date he timely executes
this Agreement in the manner provided above, this Agreement will become fully binding, effective, irrevocable, and enforceable
on the eighth (8th) calendar day after Executive executes it (the “Effective Date”).

 

18.         By
signing below, Executive expressly acknowledges, represents, and warrants that Executive has carefully read this Agreement; that
Executive fully understands the terms, conditions, and significance of this Agreement and its final and binding effect; that no
other promises or representations were made to Executive other than those set forth in this Agreement; that Executive is fully
competent to manage Executive’s business affairs; that Executive understands that this Agreement contains a waiver and release
of all known or unknown claims; that the Company has advised Executive to consult with an attorney concerning this Agreement; that
Executive has executed this Agreement voluntarily, knowingly, and with an intent to be bound by this Agreement; and that Executive
has full power and authority to release Executive’s Claims as set forth herein and has not assigned any such Claims to any
other individual or entity.

 

19.         This
Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together
will constitute one and the same instrument.

 

    	9

     

    

 

IN WITNESS WHEREOF,
the Parties hereto have executed this Agreement as of the date indicated below.

 

FRED’S, INC.

 

	By:	/s/Joseph Anto	 	4/27/2018
	 	Joseph Anto, Chief Financial Officer	 	Date
	 	Authorized Signatory	 	 

 

ExecutivE

 

	/s/ Michael Bloom	 	4/27/2018 
	Michael Bloom	 	Date

 

    	10

     

    

 

[TO BE EXECUTED NO EARLIER
THAN MAY 25, 2018 

AND NO LATER THAN JUNE 15,
2018]

 

EXHIBIT A

 

POST-EMPLOYMENT RELEASE

 

In exchange for the
payments and other consideration provided to Michael Bloom (“Executive”) under the Separation Agreement
and Release of All Claims between Executive and Fred, Inc. (the “Company”) and its affiliates (the “Separation
Agreement”), to which this Post-Employment Release is an Exhibit, and as a precondition to Executive’s receipt
of the payments and other consideration set forth in Paragraph 4 thereof, Executive hereby agrees as follows. All capitalized terms
utilized but not defined herein shall have the same meanings ascribed to them in the Separation Agreement:

 

1.            Upon
the Post-Employment Release Effective Date, as defined below, to the maximum extent permitted by law, and except as otherwise provided
for within the Separation Agreement or this Post-Employment Release, Executive, on behalf of Executive and all of Executive’s
heirs, executors, administrators, successors, and assigns (collectively, “Releasors”), hereby releases
and forever waives and discharges any and all claims, liabilities, causes of action, demands, charges, complaints, suits, rights,
costs, debts, expenses, promises, agreements, or damages of any kind or nature (collectively, “Claims”)
that Executive or any of the other Releasors ever had, now have, or might have against the Company and Alden Global Capital LLC,
or any of their current, former, or future affiliates, or any of their respective current, former, or future subsidiaries, parents,
related companies, controlling shareholders, or divisions (collectively with the Company, the “Company Entities”),
or any of the Company Entities’ respective directors, members, managers, employees, trustees, officers, general partners,
limited partners, Executives, consultants, contractors, advisors, agents, benefit plans, attorneys, successors, assigns, or investment
funds (or the other investment vehicles any of the foregoing manage and/or for which they perform services) (collectively with
the Company Entities, the “Releasees,” and each a “Releasee”), arising at any
time prior to the date Executive executes this Agreement, whether such Claims are known to Executive or unknown to Executive, whether
such Claims are accrued or contingent, including, but not limited to, any and all (a) Claims arising out of, or that might be considered
to arise out of or to be connected in any way with, Executive’s employment or other relationship with any of the Releasees,
or the termination of such employment or other relationship; (b) Claims under any contract, agreement, or understanding that
Executive may have with any of the Releasees, whether written or oral, express or implied, at any time prior to the Post-Employment
Release Effective Date (as defined below) (including, but not limited to, under the Amended Compensation Agreement, as defined
in the Separation Agreement); (c) Claims arising under any federal, state, foreign, or local law, rule, constitution, ordinance,
or public policy, including, without limitation, (i) Claims arising under Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1866, 42 U.S.C. § 1981, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Age Discrimination
in Employment Act, the Family and Medical Leave Act, the Executive Retirement Income Security Act of 1974, the Vietnam Era Veterans
Readjustment Act of 1974, the Immigration Reform and Control Act of 1986, the Equal Pay Act, the Labor Management Relations Act,
the National Labor Relations Act, the Occupational Safety and Health Act, the Genetic Information Nondiscrimination Act of 2008,
the Rehabilitation Act of 1973, the Uniformed Services Employment and Reemployment Rights Act, the Worker Adjustment and Retraining
Notification Act, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act, the Internal Revenue Code of 1986, and/or the Tennessee Human
Rights Act, as all such laws have been amended from time to time, or any other federal, state, foreign, or local labor law, wage
and hour law, worker safety law, Executive relations or fair employment practices law, or public policy, (ii) Claims arising in
tort, including, but not limited to, Claims for misrepresentation, defamation, libel, slander, invasion of privacy, conversion,
replevin, false light, tortious interference with contract or economic advantage, negligence, fraud, fraudulent inducement, quantum
meruit, promissory estoppel, prima facie tort, restitution, or the like, and (iii) Claims for Compensation, other monetary or equitable
relief, attorneys’ or experts’ fees or costs, forum fees or costs, or any tangible or intangible property of Executive’s
that remains with any of the Releasees; and (d) Claims arising under any other applicable law, regulation, rule, policy, practice,
promise, understanding, or legal or equitable theory whatsoever.

 

    	Exhibit A -1 

     

    

 

2.            Executive
represents and warrants that Executive has never commenced or filed, or caused to be commenced or filed, any lawsuit or arbitration
against any of the Releasees. Executive further agrees not to directly or indirectly commence, file, or in any way pursue, or cause
or assist any person or entity to commence, file, or pursue, any Claim, lawsuit or arbitration against any of the Releasees in
the future pursuing, in whole or in part, any Claim released herein. For avoidance of doubt, nothing in this Post-Employment Release,
any other agreement between Executive and the Company, or any Company policy shall prevent Executive from filing a charge with
the Equal Employment Opportunity Commission (the “EEOC”) or any other government agency or participating
in any EEOC or other agency investigation; provided that Executive may not receive any relief (including, but not limited to, reinstatement,
back pay, front pay, damages, attorneys’ or experts’ fees, costs, and/or disbursements) as a consequence of any charge
filed with the EEOC and/or any litigation arising out of such a charge.         

 

3.           For
avoidance of doubt, the foregoing Release does not include any claims that cannot be released or waived by law, nor does it prohibit
Executive or any of the other Releasors from filing a charge or complaint with or participating in an investigation or proceeding
conducted by any Government Agencies (including but not limited to the Equal Employment Opportunity Commission); provided,
however, that Executive and the other Releasors are releasing and waiving the right to seek or accept any compensatory damages,
back pay, front pay, or reinstatement remedies for Executive or the other Releasors personally with respect to any and all Claims
released in this Post-Employment Release; and provided, further, that nothing herein shall restrict Executive’s
right to receive an award for information provided to the U.S. Securities and Exchange Commission pursuant to Section 21F of the
Securities Exchange Act of 1934.

 

4.           Executive
acknowledges that by Executive executing this Post-Employment Release, Executive and the other Releasors are waiving and releasing
any and all legal rights and claims they may have under the ADEA and all other federal, state and local laws regarding age discrimination,
whether those claims are currently known to Executive or hereafter discovered. However, nothing in the foregoing is intended to
limit or restrict Executive’s right to challenge the validity of this Post-Employment Release as to claims and rights asserted
under the ADEA or Executive’s right to enforce the Separation Agreement. Executive further agrees that in the event he or
any of the other Releasors brings any ADEA Claims against any of the Releasees, or in the event they seek to recover monetary or
other compensation against any of the Releasees through any ADEA Claim brought by a governmental agency on their behalves, this
Post-Employment Release shall serve as a complete defense to such Claims.

 

    	Exhibit A -2 

     

    

 

5.           In
accordance with the Age Discrimination in Employment Act (“ADEA”) and the Older Workers Benefit Protection
Act, 29 U.S.C. § 621 et seq., Executive understands that he shall have twenty-one (21) days to consider this Agreement, execute
it, and return it via email, facsimile, or overnight courier (via FedEX or UPS) to Esther Lander, Akin Gump Strauss Hauer &
Feld, LLC, 1333 New Hampshire Ave, NW, Washington DC, 20036, elander@akingump.com. To the extent that Executive executes this Release
prior to the end of the twenty-one (21) day period, Executive hereby knowingly and voluntarily waives the remainder of this twenty-one
(21) day period. If Executive fails to execute and return this Agreement within the twenty-one (21) day period in the manner provided
above, then this Agreement will be null and void and of no force or effect.

 

6.           If
Executive does not revoke this Post-Employment Release within seven (7) days from the date he executes it, this Post-Employment
Release will become fully binding, effective, and enforceable on the eighth (8th) calendar day after the day he executes it (the
“Post Employment Release Effective Date”). For avoidance of doubt, should Executive fail to timely execute
this Post-Employment Release, or should he timely revoke this Post-Employment Release after signing it, (A) he shall receive the
payments and benefits set forth in Paragraph 3 of the Separation Agreement, (B) the Company’s and Company Affiliates’
obligations under Paragraph 4 of the Separation Agreement shall be null and void and of no force or effect, and (C) the remainder
of the Separation Agreement shall remain binding, enforceable, and irrevocable.

 

7.           By
signing below, Executive acknowledges and agrees that he (i) has carefully read and fully understands all of the provisions of
the Separation Agreement (including this Post-Employment Release); (ii) knowingly and voluntarily agrees to all of the terms set
forth in the Separation Agreement (including this Post-Employment Release); (iii) knowingly and voluntarily agrees to be legally
bound by the Separation Agreement (including this Post-Employment Release); (iv) has been advised to consult with an attorney prior
to signing this Separation Agreement (including this Post-Employment Release); (v) has full power to release his and the other
Releasors’ Claims as set forth herein; and (vi) has not assigned any such Claims to any individual or to any corporation,
partnership or any other entity or organization.

 

8.           This
Exhibit A shall be part of the Separation Agreement and, once executed, may be enforced in accordance with the terms of the Separation
Agreement. Executive understands that once the Separation Agreement becomes effective, it will remain effective and irrevocable
regardless of whether this Post-Employment Release is timely executed (or, if it is executed, regardless of whether it is timely
revoked); provided, that if Executive does not timely execute the Post-Employment Release (or if Executive timely revokes
the Post-Employment Release after signing it) he will not receive the consideration set forth in Paragraph 4 of the Separation
Agreement. For avoidance of doubt, Executive further understands that if he and/or the Company fail to timely execute the Separation
Agreement, then the Separation Agreement (including this Post-Employment Release) will be null and void.

 

    	Exhibit A -3 

     

    

 

9.           PDF,
facsimile, and other true and correct copies of this Post-Employment Release shall have the same force and effect as an original
hereof.

 

[THE REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK.]

 

    	Exhibit A -4 

     

    

 

To confirm Executive’s
understanding of, and agreement to, the terms of this Post-Employment Release, and to execute it, he has signed and dated it below.

 

	 	 	 
	MICHAEL BLOOM	 	Date:

 

    	Exhibit A -5

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