Document:

goig_ex105

 

Exhibit 10.5

SECURITIES PURCHASE AGREEMENT

 

THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of
May __, 2020, by and among GoIP Global, Inc., a Colorado
corporation (and together with all of its current and future,
direct and/or indirect, wholly owned and/or partially owned
Subsidiaries, collectively, the “Company”), and the Purchaser identified on the signature
pages hereto (each, including its successors and assigns, a
“Purchaser”
and, collectively, the “Purchasers”).

 

RECITALS

 

A.           The
Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act (as
defined below), and/or Rule 506(b) of Regulation D
(“Regulation
D”) as promulgated by the United States Securities and
Exchange Commission under the Securities Act.

 

B.           The
Purchasers, wishes to purchase, and the Company wishes to sell at
closing, upon the terms and conditions stated in this Agreement,
the Securities (as defined herein), all in the amounts and for the
price set forth on Schedule 1
hereto.

 

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

 

ARTICLE
1

DEFINITIONS

 

1.1 Defined Terms. In addition to
terms defined elsewhere in this Agreement or in any supplement,
amendment or exhibit hereto, when used herein, the following terms
shall have the following meanings:

 

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

 

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

 

(c) “Closing”
shall have the meaning ascribed to such term in Section
2.1(a).

 

(d) “Closing
Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to
pay the Purchase Price and (ii) the Company’s obligations to
deliver the Securities has been satisfied or waived with respect to
the Closing.

 

 

 

(e) “Common Stock” means (i)
the Company’s common stock, par value $0.001 per share, and
(ii) any capital stock into which such common stock shall have been
changed or any share capital resulting from a reclassification of
such common stock.

 

(f) “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, rights,
options, warrants 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.

 

 

 

 

(g) “Contingent Obligation”
means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid
or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect
thereto.

 

(h) “Conversion Date” has the
meaning set forth in the Notes.

 

(i) “Conversion Shares” means
all shares of Common Stock issuable upon conversion of any portion
of the Notes, and/or as any other payment due under the Notes
including, but not limited to interest and/or otherwise, but solely
to the extent and subject to any conditions set forth in the
Notes.

 

(j) “Dollar(s)” and
“$”
means lawful money of the United States.

 

(k) “Event of Default” shall
have the meaning set forth in the Notes.

 

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

 

(m) “Exempt Issuance” means
the issuance of (a) shares of Common Stock or options to employees,
officers, consultants, advisors or directors of the Company
pursuant to any stock or option plan duly adopted for such purpose
by a majority of the members of the Board of Directors or a
majority of the members of a committee of directors established for
such purpose, (b) securities upon the exercise or exchange of or
conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such
securities or to decrease the exercise, exchange or conversion
price of such securities or (c) Permitted Indebtedness incurred in
satisfaction with clause 1.1(v)(c) hereunder.

 

(n) “GAAP” means generally
accepted accounting principles in the United States of America as
in effect from time to time.

 

(o) “Indebtedness” means, with
respect to any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase
price of property or services (but excluding trade payables
incurred in the ordinary course of business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or the Purchaser under
such agreement in the event of default are limited to repossession
or sale of such property), (e) all capital lease obligations
of such Person, (f) all obligations of such Person, contingent
or otherwise, as an account party or applicant under acceptance,
letter of credit, surety bond or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase,
redeem, retire or otherwise acquire for value any capital stock of
such Person, (h) all obligations for any earn-out consideration,
(i) the liquidation value of preferred capital stock of such
Person, (j) all guarantee obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (i)
above, (k) all obligations of the kind referred to in
clauses (a) through (i) above secured by (or for which the
holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for
the payment of such obligation and all obligations of such Person
in respect of hedge agreements; and (l) all Contingent Obligations
in respect to indebtedness or obligations of any Person of the kind
referred to in clauses (a)-(k) above. The Indebtedness of any
Person shall include, without duplication, the Indebtedness of any
other entity (including any partnership in which such Person is a
general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of
such Indebtedness expressly provide that such Person is not liable
therefor.

 

(p) “Liens” or
“liens”
means a lien, mortgage, charge pledge, security interest,
encumbrance, right of first refusal, preemptive right or other
restriction, or other clouds on title.

 

(q) “Liabilities” means all
direct or indirect liabilities, Indebtedness and obligations of any
kind of Company to the Purchaser, howsoever created, arising or
evidenced, whether now existing or hereafter arising (including
those acquired by assignment), absolute or contingent, due or to
become due, primary or secondary, joint or several, whether
existing or arising through discount, overdraft, purchase, direct
loan, participation, operation of law, or otherwise, including, but
not limited to, pursuant to the Notes, this Agreement and/or any of
the other Transaction Documents, all accrued but unpaid interest on
the Notes the principal, any letter of credit, any standby letter
of credit, and/or outside attorneys’ and paralegals’
fees or charges relating to the preparation of the Transaction
Documents and the enforcement of the Purchaser’s rights,
remedies and powers under this Agreement, the Notes and/or the
other Transaction Documents.

 

(r)  “Material
Adverse Effect” means a material adverse effect on
(a) the business, assets, property, operations, or condition
(financial or otherwise) of the Company, (b) the validity or
enforceability of this Agreement or any of the other Transaction
Documents or (c) the rights or remedies of the Purchaser
hereunder or thereunder.

 

 

 

 

(s) “Notes” means all of the
Original Issue Discount Senior Secured Convertible Promissory Notes
due May 9, 2021 that are owned by the Purchasers, which, subject to
the terms and conditions set forth in this Agreement, shall be
purchased from the Company pursuant to this Agreement; the form of
Note is annexed hereto as Exhibit A
and any and all Note(s) issued in exchange, transfer or replacement
of the Notes.

 

(t) “Permitted Indebtedness”
means (a) the indebtedness evidenced by the Notes, and (b) lease
obligations and purchase money indebtedness incurred in connection
with the acquisition of capital assets and lease obligations with
respect to newly acquired or leased assets in the ordinary course
of business, (c) any indebtedness issued to funds affiliated with
Arena Investors LP and (d) any indebtedness issued by the Company
to any SBA-approved lender.

 

(u) “Permitted Lien” means the
individual and collective reference to the following: (a) Liens for
taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges
or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment
of the management of the Company) have been established in
accordance with GAAP; (b) Liens imposed by law which were incurred
in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising
in the ordinary course of the Company’s business, and which
(x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (y) are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien; and (c) Liens incurred in
connection with Permitted Indebtedness thereunder; (d) Pledges and
deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other
social security laws or regulations; (e) Deposits to secure the
performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course
of business; and (f) any Liens in favor of the
Purchaser.

 

(v) “Person” means any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, institution,
entity, party or government (whether national, federal, state,
county, city, municipal or otherwise including, without limitation,
any instrumentality, division, agency, body or department
thereof).

 

(w)  “Principal
Market” means the principal Trading Market on which
the Common Stock is listed or quoted for trading on the date in
question.

 

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

 

(y) “Purchase
Price” shall have the
meaning as set forth on Schedule 1 next to the heading
“Purchase Price,” in United States
Dollars.

 

(z) “Reverse Stock Split”
means the 500 for 1 reverse stock split of the Company’s
common stock which will take effect after the Closing
Date;

 

(aa) “SEC”
or “Commission” means the
United States Securities and Exchange Commission.

 

(bb) “Securities”
means the Notes and the Warrants purchased pursuant to this
Agreement and all Underlying Shares and any securities of the
Company issued in replacement, substitution and/or in connection
with any exchange, conversion and/or any other transaction pursuant
to which all or any of such securities of the Company to the
Purchasers.

 

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

 

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

 

(ee) Subordination
Agreement” means the
Subordination Agreement, dated as of the date hereof, by and among
funds affiliated with Arena Investors LP, and the Purchasers, as
the Creditors therein, which Subordination Agreement is
annexed hereto as Exhibit B.

 

 

 

 

(ff)  “Subsidiary”
means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person all of
the Company’s Subsidiaries are set forth on Schedule 3.1(a)
hereto.

 

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

 

(hh) “Trading
Market” means any of the following markets or
exchanges on which the Common Stock is listed or quoted for trading
on the date in question: the NYSE MKT, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, any market or quotation service of the OTC
Markets Group or the OTC Bulletin Board (or any successors to any
of the foregoing).

 

(ii) “Transaction
Documents” means, collectively, this Agreement, the
Notes, the Warrant, the Subordination Agreement and such other
documents, instruments, certificates, supplements, amendments,
exhibits and schedules required and/or attached pursuant to this
Agreement and/or any of the above documents, and/or any other
document and/or instrument related to the above agreements,
documents and/or instruments, and the transactions hereunder and/or
thereunder and/or any other agreement, documents or instruments
required or contemplated hereunder or thereunder, whether now
existing or at any time hereafter arising.

 

(jj) “Transfer
Agent” means Manhattan Transfer Registrar Co. the
current transfer agent of the Company, with a mailing address of
38B Sheep Pasture Road, Port Jefferson, NY 11777 and a phone number
of 631-928-7655,
and any successor transfer agent of the Company.

 

(kk) “UCC”
means the Uniform Commercial Code of as in effect from time to time
in the State of New York; provided, however, that, in the event
that, by reason of mandatory provisions of law, any or all of the
attachment, perfection, priority, or remedies with respect to the
Purchaser’ Liens on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York, the term “UCC” shall mean the
Uniform Commercial code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating
to such attachment, perfection, priority, or remedies.

 

(ll) “Underlying
Shares” means all Conversion Shares and Warrant
Shares.

 

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

 

(nn) “Warrant(s)”
means the two (2)-year Common Stock Purchase Warrants of the
Company, to be issued at the Closing, the form of which is annexed
hereto as Exhibit C.

 

(oo)  “Warrant
Shares” means all shares of Common Stock issuable upon
exercise of the Warrants and/or any other securities issuable upon
exercise of the Warrants.

 

1.2 Other Definitional
Provisions.

 

(a) Use of Defined Terms. Unless
otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the other Transaction
Documents or any certificate or
other document made or delivered pursuant hereto or
thereto.

 

(b) Accounting Terms. As used
herein and in the other Transaction Documents, and any certificate
or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company not defined in
Section 1.1
and accounting terms partly
defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under
GAAP (provided that
all terms of an accounting or financial nature used herein shall be
construed, and all computations of amounts referred to herein shall
be made without giving effect to (i) any election under Accounting
Standards Codification 825-10-25 (previously referred to as
Statement of Financial Accounting Standards 159) (or any other
Accounting Standards Codification or Financial Accounting Standard
having a similar result or effect) to value any Indebtedness or
other liabilities of the Company at “fair value”, as
defined therein, and (ii) any treatment of Indebtedness in respect
of convertible debt instruments under Accounting Standards
Codification 470-20 (or any other Accounting Standards Codification
or Financial Accounting Standard having a similar result or effect)
to value any such Indebtedness in a reduced or bifurcated manner as
described therein, and such Indebtedness shall at all times be
valued at the full stated principal amount thereof).

 

 

 

 

(c) Construction. The words
“hereof”,
“herein” and
“hereunder” and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section, schedule and exhibit references are to this
Agreement unless otherwise specified. The meanings given to terms
defined herein shall be equally applicable to both the singular and
plural forms of such
terms.

 

(d) UCC Terms. Terms used in this
Agreement that are defined in the UCC shall, unless the context
indicates otherwise or are
otherwise defined in this Agreement, have the meanings provided for
by the UCC.

 

ARTICLE
2

PURCHASE
AND SALE

 

2.1 Closing. On the Closing Date,
upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Purchasers each agree to purchase,
the Securities in such amounts as indicated on Schedule 1
hereto. Each Purchaser shall deliver to the Company, via
wire transfer immediately available funds equal to the Purchase
Price, and the Company shall deliver to the Purchaser the Note on
the Closing Date, and the Company and the Purchaser shall deliver
the other items set forth in Section 2.2 deliverable at the
Closing. Upon satisfaction of the covenants and conditions set
forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of the Company or such other location as the parties shall
mutually agree.

 

2.2 Deliveries.

 

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

 

(i)

this Agreement duly
executed by the Company;

 

(ii)

a Note
registered in the name of the Purchaser with such principal amount
as set forth on Schedule
1;

 

(iii)

the
Warrant, registered in the name of the Purchaser, to purchase such
number of shares of Common Stock as set forth on Schedule 1;

 

(iv)

the Subordination
Agreement, duly executed by the Company and the
Purchasers;

 

(v)

the
Company and the Subsidiaries shall
have delivered to the Purchasers such other documents, instruments,
opinions or certificates relating to the transactions contemplated
by this Agreement as the Purchasers or its counsel may reasonably
request.

 

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

 

(i)

this Agreement duly
executed by the Company;

 

(ii)

the
Purchase Price subject to the closing by wire transfer;
and

 

(iii)

the
Subordination Agreement, duly executed by such
Purchaser. 

  

 

 

2.3 Conditions to Purchase the
Securities. Subject to the terms and conditions of this
Agreement, each Purchaser will at a Closing purchase from the
Company the Securities in the amounts and for the Purchase Price as
set forth on Schedule 1, provided the
following:

 

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

 

(i)

the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the date of the Closing of the
representations and warranties of the Purchaser contained herein
(unless as of a specific date therein in which case they shall be
accurate as of such date);

 

(ii)

all
obligations, covenants and agreements of each Purchaser required to
be performed at or prior to the date of the Closing shall have been
performed;

 

(iii)

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

 

(iv)

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

 

(v)

no statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or other federal,
state, local or other governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the
Transaction Documents.

  

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

 

(i)

the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the date of the Closing of the
representations and warranties of the Company contained herein
(unless as of a specific date therein in which case they shall be
accurate as of such date);

 

(ii)

all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing shall have been performed in
all material respects;

 

(iii)

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

 

(iv)

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

 

(v)

the Company shall have obtained all governmental,
regulatory and third party consents and approvals, if any,
necessary for the entry into the Transaction Documents and the sale
of the Securities;

 

(vi)

the closing of the transactions contemplated by
the terms of that certain share exchange agreement, dated on even
date herewith, by and between the Company and Transworld
Enterprises, Inc.; and

 

(vii)

no statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or other federal,
state, local or other governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the
Transaction Documents;

2.4 Purchase Price and Payment of the
Purchase Price for the Securities. The Purchase Price for
the Securities to be purchased by the Purchasers at a Closing shall
be as set forth on Schedule 1 and shall be
paid at the Closing (less all of the Purchaser’s Expenses (as
defined below)) by the Purchaser by wire transfer of immediately
available funds to the Company in accordance with the
Company’s written wiring instructions, against delivery of
the Securities.

 

2.5    
Subsequent Closing.
Each of the
Company and the Purchasers may, but are not obligated to, mutually
agree in writing to conduct a second closing on or before June 8,
2020 (the “Second
Closing”) to be held at
such place and time as the Company and the Purchasers may mutually
agree in writing (the “Second Closing
Date”).  The
Company agrees that if the Purchasers does not agree to conduct a
Second Closing, the Company may not conduct a Second Closing with
another Investor.  At such Second Closing, the Company
will deliver to the Purchasers the Note and Warrant to be purchased
by the Purchasers, against receipt by the Company of the
corresponding Purchase Price set forth on Schedule I hereto.  Each
of the Notes and Warrants will be registered in such
Investor’s name in the Company’s records and will be on
the same terms and conditions as set forth
herein.

 

 

 

 

ARTICLE
3

 

REPRESENTATIONS
AND WARRANTIES; OTHER ITEMS

 

3.1 Representation and Warranties of the
Company. Except as set forth in
the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation or
otherwise made herein to the extent of the disclosure contained in
the corresponding section of the Disclosure Schedules (but in no
event shall qualify any indemnity obligation of the Company
hereunder), the Company (which for purposes of this
Section 3.1
means the Company and all of its Subsidiaries) represents and
warrants to the Purchasers that on the Closing Date (unless as of a
specific date set forth below):

 

(a) Subsidiaries. All of the direct
and indirect subsidiaries of the Company and the locations thereof
are set forth on Schedule
3.1(a). Except as set forth on Schedule 3.1(a), the Company
owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary free and clear of any Liens,
and all of the issued and outstanding shares of capital stock or
other interests of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar
rights to subscribe for or
purchase securities. Schedule 3.1(a) sets forth, as
of the Closing Date, the jurisdiction of organization and the
location of the Company’s and its subsidiaries’
executive offices and other places of business.

 

(b) Organization, Etc. The Company
and each of the Subsidiaries is duly organized, validly existing
and in good standing under the laws of the state of their
respective organization and are duly qualified and in good standing or has
applied for qualification as a foreign corporation authorized to do
business in each jurisdiction where, because of the nature of its
activities or properties, such qualification is required except
where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.

 

(c) Authorization: No Conflict. The
execution, delivery and performance of the Transaction Documents
and the transactions contemplated thereby by the Company,
including, but not limited to, the sale and issuance of the
Securities for the Purchase Price, subject to the Reverse Split,
the reservation for issuance of
the Underlying Shares required to be reserved pursuant to the terms
of the Notes and the Warrants, of the
issuance the Underlying Shares into which the Notes and Warrants
are convertible and/or exercisable (i) are within the
Company’s corporate powers, (ii) have been duly authorized by all necessary action by
or on behalf of the Company (and/or its stockholders to the extent
required by law), (iii) the Company has received all necessary
and/or required governmental, regulatory and other approvals and
consents (if any shall be required), (iv) do not and shall not
contravene or conflict with any provision of, or require any
consents under (1) any law, rule, regulation or ordinance, (2) the
Company’s organizational documents; and/or (3) any agreement,
credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected except
as would not reasonably be expected to have a Material Adverse
Effect, and (v) do not result in, or require, the creation or
imposition of any Lien and/or encumbrance on any of the
Company’s properties or revenues pursuant to any law, rule,
regulation or ordinance or otherwise.

 

(d) Validity and Binding Nature.
The Transaction Documents to which the Company is a party are the
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization and other similar laws of general application
affecting the rights and remedies of creditors and by general
equitable principles (whether enforcement is sought by proceedings
in equity or at law).

 

(e) Title to Assets. The Company
and the Subsidiaries have good and marketable title in fee simple
to all real property owned by them and good and marketable title in
all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear
of all Liens, except for (i) Liens as do not materially affect the
value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and
the Subsidiaries, (ii) Liens for the payment of federal, state or
other taxes, for which appropriate reserves have been made therefor
in accordance with GAAP and the payment of which is not delinquent,
and (iii) Permitted Liens. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance.

 

(f) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or
in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any judgment, decree or order of any court,
arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws relating to securities, corporate
law, taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor
matters, except in each case as could not have or reasonably be
expected to result in a Material Adverse
Effect.

 

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

 

 

 

 

(h) Licenses and
Permits. The Company possesses
all certificates, authorizations, consents, approvals, orders,
licenses and permits issued by the appropriate federal, state or
foreign regulatory authorities (collectively, the
“Permits”),
including the FDA and any other state, federal or foreign agencies
or bodies engaged in the regulation of pharmaceuticals or
biohazardous materials, amongst other, necessary to conduct its
business as now conducted. All of such Permits are valid and in
full force and effect. There is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or
investigation that individually or in the aggregate would
reasonably be expected to lead to the revocation, modification,
termination, suspension or any other impairment of the rights of
the holder of any such Permit.

 

(i) Investment Company. The Company
is not (i) an “investment company” or a company
“controlled”, whether directly or indirectly, by an
“investment company”, within the meaning of the
Investment Company Act of 1940, as amended; or (ii) engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve
System).

 

(j) Absence of Defaults
and Conflicts.
The Company
is not (i) in violation of its charter, by-laws or similar
incorporation or organizational documents or (ii) in violation
or default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company is a
party or by which it may be bound, or to which any of the property
or assets of the Company is subject (collectively,
“Agreements
and Instruments”),
except in the case of clause (ii), for such violations and defaults
that would not result in a Material Adverse Effect on the Company;
and the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated in this
Agreement, and compliance by the Company with its obligations under
this Agreement, do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
result in a breach of any of the terms and provisions of, or
constitute a default or Repayment Event (as defined below) under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to,
the Agreements and Instruments, nor will such action result in any
violation of the provisions of the charter, by-laws or similar
organizational documents of the Company or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its assets,
properties or operations, except in each case (other than with
respect to such charter, by-laws or similar
organizational documents of the Company) for such conflicts,
violations, breaches or defaults which would not reasonably be
expected to result in a Material Adverse Effect on the Company. As
used herein, a “Repayment
Event”
means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness that is material to the operations
or financial results of the Company (or any person acting on such
holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by
the Company.

 

(k) Foreign Corrupt
Practices Act. Neither the Company
nor, to the Company’s knowledge, any of its affiliates,
directors, officers, employees, agents or other person acting on
behalf of the Company is aware of or has taken any action, directly
or indirectly, that would result in a material violation by such
person of the Foreign Corrupt Practices Act of 1977, as amended,
and the rules and regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means
or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the
payment of money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the
FCPA and the Company and, to the Company’s knowledge, its
affiliates have conducted their businesses in material compliance
with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance
therewith.

 

(l) Rule 506(d) Bad Actor Disqualification
Representations and Covenants.

 

(i) No Disqualification Events.
Neither the Company, nor any of its predecessors, affiliates, any
manager, executive officer, other officer of the Company
participating in the offering, any beneficial owner (as that term
is defined in Rule 13d-3 under the Exchange Act) of 20% or more of
the Company’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the Securities Act) connected
with the Company in any capacity as of the date of this Agreement
and on the Closing Date (each, a “Company Covered Person”
and, together, “Company Covered Persons”)
is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act
(a “Disqualification
Event”), except for a Disqualification Event covered
by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine (A) the identity of each person that is a
Company Covered Person; and (B) whether any Company Covered
Person is subject to a Disqualification Event. The Company will
comply with its disclosure obligations under Rule
506(e).

 

(ii) Other
Covered Persons. The Company is not aware of any person
(other than any Company Covered Person) who has been or will be
paid (directly or indirectly) remuneration in connection with the
purchase and sale of the Notes, and/or the Warrants who is subject
to a Disqualification Event (each, an “Other Covered
Person”).

 

(iii) Reasonable
Notification Procedures. With respect to each Company
Covered Person, the Company has established procedures reasonably
designed to ensure that the Company receives notice from each such
Company Covered Person of (A) any Disqualification Event relating
to that Company Covered Person, and (B) any event that would, with
the passage of time, become a Disqualification Event relating to
that Company Covered Person; in each case occurring up to and
including the Closing Date.

 

(iv) Notice
of Disqualification Events. The Company will notify the
Purchaser immediately in writing upon becoming aware of (A) any
Disqualification Event relating to any Company Covered Person and
(B) any event that would, with the passage of time, become a
Disqualification Event relating to any Company Covered Person
and/or Other Covered Person.

 

 

 

 

(m) Accuracy of Information, etc.
No statement or information contained in this Agreement, any other
Transaction Document or any other document, certificate or
statement furnished to the Purchaser by or on behalf of the Company
in writing for use in connection with the transactions contemplated
by this Agreement and/or the other Transaction Documents contained,
as of the date such statement, information, document or certificate
was made or furnished, as the case may be, any untrue statement of
a material fact or omitted to state a material fact necessary to
make the statements contained herein or therein, taken as a whole,
not materially misleading. There is no fact known to the Company
that would reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in the other
Transaction Documents, or in any other documents, certificates and
statements furnished to the Purchaser for use in connection with
the transactions contemplated hereby and by the other
Documents.

 

(n) Solvency.
Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder: (i) the
fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule 3.1(n)
sets forth
as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. Neither the Company nor
any Subsidiary is in default with respect to any
Indebtedness.

 

(o) Transactions With
Affiliates and Employees. None of the officers
or directors of the Company or any Subsidiary and, to the knowledge
of the Company, none of the employees of the Company or any
Subsidiary is presently a party to any transaction with the Company
or any Subsidiary (other than for services as employees, officers
and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from
providing for the borrowing of money from or lending of money to,
or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for: (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.

 

(p) Intellectual Property. The
Company has, or has rights to use, all patents, patent
applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and
other intellectual property rights and similar rights as described
on Schedule 3.1(p) as necessary or required for use in connection
with its business and which the failure to so have would reasonably
be expected to have a Material Adverse Effect (collectively, the
“Intellectual
Property Rights”). The Company has not received a
notice (written or otherwise) that any material Intellectual
Property Right has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned. The Company has
not received, since the date of the Balance Sheet Date, a written
notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of
any Person, except as would not have or reasonably be expected to
have a Material Adverse Effect. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the
Intellectual Property Rights. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of its intellectual property, except where failure to do so
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

(q) USA Patriot Act. The Company is
in compliance, in all material respects, with (i) the Trading with
the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 C.F.R.,
Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (ii) the USA
Patriot Act (Title III of Pub. L. 107-56, signed into law on
October 26, 2001) (the “Act”). No part of the
proceeds of the Notes will be used, directly or indirectly, for any
payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or
anyone else acting in an official capacity, in order to obtain,
retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

 

(r) Office of Foreign
Assets Control. Neither the
Company nor any Subsidiary nor, to the Company's knowledge, any
director, officer, agent, joint venture employee or affiliate of
the Company or any Subsidiary is currently, or in the past 5 years,
been subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).

 

(s) Filings, Consents and
Approvals. Except as set forth
on Schedule
3.1(s), the Company is not
required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental
authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction
Documents, other than: (i) the filings required pursuant to the
Registration Rights Agreement and the declaration of effectiveness
by the SEC of the Registration Statement (ii) the notice and/or
application(s) to each applicable Trading Market for the issuance
and sale of the Securities and the listing of the Underlying Shares
for trading thereon in the time and manner required thereby, and
(iii) the filing of Form D with the Commission and such filings as
are required to be made under applicable state securities laws
(collectively, the “Required
Approvals”).

 

 

 

 

(t) Authorization; Enforcement. All
corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization,
execution and delivery of the Transaction Documents and the
performance of all obligations of the Company under the Transaction
Documents and have been taken on or prior to the date hereof. Each
of the Transaction Documents has been duly executed by the Company
and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except: (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by general equitable principles regardless of whether such
enforcement is considered in a proceeding in equity or at law,
(iii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iv)
insofar as indemnification and contribution provisions may be
limited by applicable law.

 

(u) Valid Issuance of Securities.
Each of the Notes has been duly authorized and, when issued and
paid for in accordance with this Agreement, will be duly and
validly issued, fully paid and nonassessable, free and clear of all
Liens and all restrictions on transfer other than those expressly
imposed by the federal securities laws and vest in the Purchaser
full and sole title and power to the Notes purchased hereby by the
Purchaser, free and clear of all Liens, and restrictions on
transfer other than those imposed by the federal securities laws.
All Underlying Shares, when issued pursuant to conversion of the
Notes and/or exercise of the Warrants, when issued pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable, will be free and clear of all Liens and vest in the
holder full and sole title and power to such securities. The
Company has reserved from its duly authorized unissued Common
Stock, the Required Minimum (as defined in the Notes), which
Required Minimum shall be continuously determined by the Company to
ensure that the Required Minimum is in reserve with the Transfer
Agent at all times. The Notes, the Warrants and the Underlying
Shares shall sometimes be collectively referred to as the
“Securities.”

 

(v) Offering. The offer and sale of
the Securities, as contemplated by this Agreement, are exempt from
the registration requirements of the Securities Act, and the
qualification or registration requirements of state securities laws
or other applicable blue sky laws. Neither the Company nor any
authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such
exemptions.

 

(w) Capitalization and Voting
Rights. The capitalization of
the Company is as set forth on Schedule
3.1(w), which
Schedule
3.1(w) shall also include the
number of shares of Common Stock owned beneficially, and of record,
by Affiliates of the Company as of the date hereof. The
authorized capital stock of the Company and all securities of the
Company issued and outstanding are set forth on Schedule 3.1(w) as
of the dates reflected therein. All of the outstanding shares of
Common Stock and other securities of the Company have been duly
authorized and validly issued, and are fully paid and
nonassessable. Except as set forth
on Schedule
3.1(w), 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 3.1(w), there are no
agreements or arrangements under which the Company is obligated to
register the sale of any of the Company’s securities under
the Securities Act. Except as set forth on Schedule 3.1(w), no shares of
Common Stock and/or other securities of the Company are entitled to
preemptive rights and there are no outstanding debt securities and
no contracts, commitments, understandings, or arrangements by which
the Company is or may become bound to issue additional shares of
the capital stock and/or other securities of the Company or
options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, any shares of
capital stock of the Company other than those issued or granted in
the ordinary course of business pursuant to the Company’s
equity incentive and/or compensatory plans or arrangements. Except
for customary transfer restrictions contained in agreements entered
into by the Company to sell restricted securities and/or as set
forth on Schedule
3.1(w), the Company is not a party to, and it has no
knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock and/or other securities of the
Company. Except as set forth on Schedule 3.1(w), the offer and
sale of all capital stock, convertible or exchangeable securities,
rights, warrants, options and/or any other securities of the
Company when any such securities of the Company were issued
complied with all applicable federal and state securities laws, and
no current and/or prior holder of any securities of the Company has
any right of rescission or damages or any “put” or
similar right with respect thereto that would reasonably be
expected to have a Material Adverse Effect. Except as set forth on
Schedule 3.1(w),
there are no securities or instruments of the Company containing
anti-dilution or similar provisions that will be triggered by the
issuance and/or sale of the Securities and/or the consummation of
the transactions described herein or in any of the other
Transaction Documents.

 

(x) Shell Company Status; Financial
Statements. The Company has been an issuer subject to Rule
144(i) under the Securities Act. The unaudited balance sheet of the
Company as of April 30, 2020 is included in Schedule 3.1(x) hereto. The
financial statements of the Company included on Schedule 3.1(x) have been
prepared in accordance with GAAP, except as may be otherwise
specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material
respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject to
normal, immaterial, year-end audit adjustments. For purposes of
this Section 3.1, April 30, 2020 is referred to as the
“Balance Sheet
Date”.

 

(y) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the Balance Sheet Date:
(i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or
disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company
stock option plans. Except for the issuance of the Securities
contemplated by this Agreement or as set forth on Schedule 3.1(y), no event,
liability, fact, circumstance, occurrence or development has
occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective
businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least 1
Trading Day prior to the date that this representation is
made.

 

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

 

 

 

 

(aa) Disclosure.
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf
has provided any Purchaser or its respective agents or counsel with
any information that constitutes material, non-public information.
The Company understands that the Purchasers may rely on the
Transaction Documents, the information included therein, including,
but not limited to, the foregoing representation in purchasing the
Securities. All of the disclosure furnished by or on behalf of the
Company to the Purchaser in the Transaction Documents regarding,
among other matters relating to the Company, its business and the
transactions contemplated in the Transaction Documents, is true and
correct in all material respects as of the date made and does not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made,
not misleading. The Company acknowledges and agrees that none of
the Purchasers makes nor has made any representations or warranties
with respect to the transactions contemplated in the Transaction
Documents other than those specifically set forth in Section 3.2
hereof.

 

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

 

(cc) Insurance.
The Company
is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged; the Company
has not been refused any coverage sought or applied for; and the
Company does not have any reason to believe that it will not be
able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect on the
Company.

 

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

 

(ee) Registration
Rights. Except as set forth
on Schedule
3.1(ee), no Person has any
right to cause the Company to effect the registration under the
Securities Act of any securities of the Company or any
Subsidiaries.

 

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

 

(gg) Dilutive
Effect. The Company understands and acknowledges that the
number of Underlying Shares issuable upon conversion and/or
exercise of the Notes and/or Warrants, pursuant to the terms
thereof, will increase in certain circumstances. The Company
further acknowledges that its obligations to issue Underlying
Shares pursuant to the terms of the Notes and/or Warrants in
accordance with this Agreement, the Notes and the Warrants is
absolute and unconditional regardless of the dilutive effect that
any such issuances may have on the percentage ownership interests
of other stockholders of the Company.

 

(hh) Application
of Takeover Protections; Rights Agreement.  The Company
and its board of directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provisions under
the Company’s articles of incorporation, as amended, or the
laws of the jurisdiction of its formation that are or could become
applicable to the Purchaser as a result of the transactions
contemplated by this Agreement and/or the other Transaction
Documents, including, without limitation, the Company’s
issuance of the Securities and the Purchaser’s ownership of
the Securities. The Company has not adopted a stockholder rights
plan or similar arrangement relating to accumulations of beneficial
ownership of Common Stock or a change in control of the
Company.

 

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

 

(jj) DTC
Eligible. The Common Stock is DTC eligible and DTC has not
placed a “freeze” or a “chill” on the
Common Stock and the Company has no reason to believe that DTC has
any intention to make the Common Stock not DTC eligible, or place a
“freeze” or “chill” on the Common Stock. No
federal or state regulatory authority has indicated that it will
prohibit the listing of the Company’s securities based upon
its prior business in the cannabis or cannabis-related markets nor
will the Purchasers be prohibited from depositing, clearing or
settling the Securities, including through the DTC or
otherwise, on account of the Company’s prior business in the
cannabis or cannabis-related markets.

 

 

 

 

(kk) Listing
and Maintenance Requirements. The Company has not, in the 12 months preceding
the date hereof, received notice from any Trading Market on which
the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Common Stock is
eligible for quotation on the Principal Market and the Company has
no reason to believe that the Principal Market has any intention of
delisting the Common Stock from the Principal Market. The issuance and sale of the Securities hereunder
does not contravene the rules and regulations of the Trading
Market. All Underlying Shares have been approved, if so
required, for listing or quotation on the Trading Market, subject
only to notice of issuance.

 

(ll) No
General Solicitation.  Neither the Company, nor any of
its affiliates, nor, to the knowledge of the Company, any Person
acting on its behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the
Securities. 

 

(mm) Acknowledgment
Regarding the Purchaser’s Purchase of Securities.
 The Company acknowledges and agrees that the Purchaser is
acting solely in the capacity of an arm’s length purchaser
with respect to the other Transaction Documents and the
transactions contemplated hereby and thereby and that such
Purchaser is not (i) an officer or director of the Company,
(ii) an Affiliate of the Company or (iii) to the
knowledge of the Company, a “beneficial owner” of more
than 10% of the shares of Common Stock (as defined for purposes of
Rule 13d-3 of the Exchange Act.  The Company further
acknowledges that the Purchaser is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by such
Purchaser or any of its representatives or agents in connection
with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Purchaser’s
purchase of the Securities.  The Company further represents to
the Purchaser that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.

 

(nn) Off-Balance
Sheet Arrangements.  There is no transaction,
arrangement, or other relationship between the Company and an
unconsolidated or other off-balance sheet entity that is required
to be disclosed by the Company in its Exchange Act filings and is
not so disclosed or that otherwise would be reasonably likely to
have a Material Adverse Effect.

 

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

 

(pp) Money
Laundering. The operations of the
Company and its Subsidiaries are and have been conducted at all
times in compliance with applicable financial record-keeping and
reporting requirements, including but not limited to, Currency and
Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations
thereunder (collectively, the “Money Laundering
Laws”), and no Action
or Proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any
Subsidiary with respect to the Money Laundering Laws is pending or,
to the knowledge of the Company or any Subsidiary,
threatened.

 

(qq) Environmental
Laws. The Company and its
Subsidiaries, to the best of the Company’s knowledge, (i) are
in compliance with all federal, state, local and foreign laws
relating to pollution or protection of human health or the
environment (including ambient air, surface water, groundwater,
land surface or subsurface strata), including laws relating to
emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous
Materials”) into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands, or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or
regulations, issued, entered, promulgated or approved thereunder
(“Environmental
Laws”); (ii) have
received all permits licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where in each
clause (i), (ii) and (iii), the failure to so comply could be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

(rr) Seniority.
As of the Closing Date, no Indebtedness or other claim against the
Company is senior to the Notes in right of payment, whether with
respect to interest or upon liquidation or dissolution, or
otherwise, other than indebtedness secured by purchase money
security interests (which is senior only as to underlying assets
covered thereby) and capital lease obligations (which is senior
only as to the property covered thereby).

 

3.2 Representation and Warranties of The
Purchaser. Each Purchaser, severally and not jointly, hereby
represents and warrants as of the date hereof and as of the Closing
Date to the Company as follows:

 

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

 

 

 

 

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

 

(c) Purchaser
Status. At the time such
Purchaser was offered the Securities, it was, and as of the date
hereof it is an “accredited investor” as defined in
Rule 501(a) under the Securities Act.

 

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

 

(e)  General
Solicitation. Such Purchaser is
not, to such Purchaser’s knowledge, purchasing the Securities
as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or
general advertisement.

 

(f) Access to
Information. Such Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and
conditions of the offering of the Securities and the merits and
risks of investing in the Securities; (ii) access to information
about the Company and its financial condition, results of
operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with
respect to the investment. 

 

(g) Certain Transactions and
Confidentiality. Such Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser, executed any purchases or
sales, including Short Sales, of the securities of the Company
during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or
any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle, whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above
shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other
Persons party to this Agreement or to such Purchaser's
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction
(including the existence and terms of this
transaction).

 

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

 

 

 

                       

  ARTICLE
4

OTHER
AGREEMENTS OF THE PARTIES

 

4.1 Transfer
Restrictions.

 

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

 

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

 

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

  

 The
Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and who agrees to be bound by the provisions of
this Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are then
registered for resale on a registration statement, the preparation
and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of
the Securities Act to appropriately amend the list of Selling
Stockholders thereunder.

 

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

 

(d) In
addition to a Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, the greater of (i) as
partial liquidated damages and not as a penalty, for each $1,000 of
Underlying Shares (based on the VWAP of the Common Stock on the
date such Securities are submitted to the Transfer Agent) delivered
for removal of the restrictive legend and subject to Section
4.1(c), $5 per Trading Day (increasing to $10 per Trading Day five
(5) Trading Days after such damages have begun to accrue) for each
Trading Day after the Legend Removal Date until such certificate is
delivered without a legend and (ii) if the Company fails to (i)
issue and deliver (or cause to be delivered) to a Purchaser by the
Legend Removal Date a certificate representing the Securities so
delivered to the Company by such Purchaser that is free from all
restrictive and other legends or (ii) if after the Legend Removal
Date such Purchaser purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Purchaser of all or any portion of the number of
shares of Common Stock, or a sale of a number of shares of Common
Stock equal to all or any portion of the number of shares of Common
Stock that such Purchaser anticipated receiving from the Company
without any restrictive legend, then, an amount equal to the excess
of such Purchaser’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including brokerage
commissions and other out-of-pocket expenses, if any) (the
“Buy-In
Price”) over the
product of (A) such number of Shares or Conversion Shares, as
applicable, that the Company was required to deliver to such
Purchaser by the Legend Removal Date multiplied by (B) the lowest
closing sale price of the Common Stock on any Trading Day during
the period commencing on the date of the delivery by such Purchaser
to the Company of the applicable Shares or Conversion Shares (as
the case may be) and ending on the date of such delivery and
payment under this clause (ii).

 

 

 

 

4.2 Furnishing of
Information. Beginning on the
Closing Date, the Company shall use commercially reasonable efforts
to comply with the Pink Basic Disclosure Guidelines which set forth
the disclosure obligations that make up the “Alternative
Reporting Standard” for OTC Pink companies as such
obligations are published by the OTC Markets Group, Inc. In
addition, the Company shall file a Registration Statement on Form
8-A as soon as practicable, but in no event no later than five (5)
Trading Days, after the Effective Date of the Initial Registration
Statement (as defined in the Registration Rights Agreement).
If after the date hereof the Company becomes subject to the rules
and regulations of the Exchange Act and as long as any Purchaser
owns Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the
date hereof pursuant to the Exchange Act. As long as any Purchaser
owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell
the Securities, including without limitation, under Rule 144. The
Company further covenants that it will take such further action as
any holder of Securities may reasonably request, to the extent
required from time to time to enable such Person to sell such
Securities without registration under the Securities Act, including
without limitation, within the requirements of the exemption
provided by Rule 144.

 

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

 

4.4 Securities Laws
Disclosure; Publicity. The
Company shall (a) by 9:00am on the 2nd
Trading Day after the date of this
Agreement, issue a press release disclosing the material terms of
the transactions contemplated hereby. From and after the issuance
of such press release, the Company represents to the Purchaser that
it shall have publicly disclosed all material, non-public
information delivered to any of the Purchaser by the Company or any
of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. In addition, effective
upon the issuance of such press release, the Company acknowledges
and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company,
any of its Subsidiaries or any of their respective officers,
directors, agents, employees or Affiliates on the one hand, and any
of the Purchaser or any of their Affiliates on the other hand,
shall terminate. The Company and the Purchaser shall consult with
each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any
Purchaser shall issue any such press release nor otherwise make any
such public statement without the prior consent of the Company,
with respect to any press release of any Purchaser, or without the
prior consent of the Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of such
Purchaser, except (a) as required by federal securities law in
connection with the filing of final Transaction Documents with the
Commission and (b) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company
shall provide the Purchaser with prior notice of such disclosure
permitted under this clause (b).

 

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

 

4.6 Non-Public
Information.    Except
with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, which shall
be disclosed pursuant to Section 4.4, the Company covenants
and agrees that neither it, nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any
information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless
prior thereto the Purchaser shall have consented to the receipt of
such information and agreed with the Company to keep such
information confidential. The Company understands and confirms that
the Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company. To the extent
that the Company delivers any material, non-public information to a
Purchaser without such Purchaser’s consent, the Company
hereby covenants and agrees that such Purchaser shall not have any
duty of confidentiality to the Company, any of its Subsidiaries, or
any of their respective officers, directors, agents, employees or
Affiliates, or a duty to the Company, any of its Subsidiaries or
any of their respective officers, directors, agents, employees or
Affiliates not to trade on the basis of, such material,
non-public information, provided
that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information regarding
the Company or any Subsidiaries, the Company shall simultaneously
file such notice with the Commission pursuant to a Current Report
on Form 8-K or if not subject
to the reporting requirements under the Commission, file a press
release. The Company understands
and confirms that the Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the
Company.

 

4.7 Use of
Proceeds. Except as set forth
on Schedule 4.7
attached
hereto, the Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and shall not use
such proceeds: (a) for the satisfaction of any portion of the
Company’s debt (other than payment of trade payables in the
ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Common Stock or Common
Stock Equivalents, (c) for the settlement of any outstanding
litigation or (d) in violation of FCPA, OFAC regulations or
Money Laundering Laws. The net proceeds from this offering and the
sale of the Securities to be sold hereunder will be held in the a
Control Account to be agreed upon between the parties on or after
the Closing Date.

 

 

 

 

4.8 Indemnification of
Purchaser.    Subject
to the provisions of this Section 4.8, the Company will
indemnify and hold each Purchaser and its respective directors,
officers, shareholders, members, partners, employees and agents
(and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or
any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers,
shareholders, agents, members, partners or employees (and any other
Persons with a functionally equivalent role of a Person holding
such titles notwithstanding a lack of such title or any other
title) of such controlling persons (each, a
“Purchaser
Party”) harmless from
any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, as incurred, arising
out of or relating to (i) any untrue or alleged untrue
statement of a material fact contained in such registration
statement, any prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any prospectus or
supplement thereto, in the light of the circumstances under which
they were made) not misleading, except to the extent, but only to
the extent, that such untrue statements or omissions are based
solely upon information regarding such Purchaser Party furnished in
writing to the Company by such Purchaser Party expressly for use
therein, or (ii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state
securities law, or any rule or regulation thereunder in connection
therewith. If any action shall be brought against any Purchaser
Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company
in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party. Any Purchaser Party shall have
the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Purchaser Party except
to the extent that (x) the employment thereof has been
specifically authorized by the Company in writing, (y) the
Company has failed after a reasonable period of time to assume such
defense and to employ counsel or (z) in such action there is,
in the reasonable opinion of counsel, a material conflict on any
material issue between the position of the Company and the position
of such Purchaser Party, in which case the Company shall be
responsible for the reasonable fees and expenses of no more than
one such separate counsel. The Company will not be liable to any
Purchaser Party under this Agreement (1) for any settlement by
a Purchaser Party effected without the Company’s prior
written consent, which shall not be unreasonably withheld or
delayed; or (2) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser
Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents. The
indemnification required by this Section 4.8 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or are
incurred. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser
Party against the Company or others and any liabilities the Company
may be subject to pursuant to law.

 

4.9 Reservation of Common
Stock. As of the date
hereof, subject to the Reverse Split, the Company has reserved and
the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of
Common Stock equal to the Required Minimum (as defined in the
Notes) for the purpose of enabling the Company to issue the
Conversion Shares and any other shares that may be issuable
pursuant to the Notes and all the Warrant Shares issuable pursuant
to the Warrants. If, on any date, the number of authorized
but unissued (and otherwise unreserved) shares of Common Stock is
less than the Required Minimum on such date, then the Board of
Directors shall use commercially reasonable efforts to amend the
Company’s certificate or articles of incorporation to
increase the number of authorized but unissued shares of Common
Stock to at least the Required Minimum at such time, as soon as
possible and in any event not later than the 75th day after such
date

 

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

 

4.11 Certain
Transactions and Confidentiality. The Purchaser
covenants that neither it nor any Affiliate acting on its behalf or
pursuant to any understanding with it will execute any purchases or
sales, including Short Sales of any of the Company’s
securities during the period commencing with the execution of this
Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in
Section 4.4.  The Purchaser, severally and not jointly
with the other Purchaser, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and
the information included in the Disclosure
Schedules. Notwithstanding the foregoing and notwithstanding
anything contained in this Agreement to the contrary, the Company
expressly acknowledges and agrees that (i) no Purchaser makes
any representation, warranty or covenant hereby that it will not
engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement
are first publicly announced, (ii) no Purchaser shall be restricted
or prohibited from effecting any transactions in any securities of
the Company in accordance with applicable securities laws from and
after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release
as described in Section 4.4, (iii) the Purchaser has
not been asked by the Company to agree, nor has any Purchaser
agreed, to desist from purchasing or selling Securities which have
been issued under the terms of the Purchase Agreement, this Note or
any other Transaction Document, or “derivative”
securities based on securities issued by the Company or to hold the
Securities for any specified term, (iv)  Purchaser shall not
be deemed to have any affiliation with or control over any
arm’s length counter-party in any “derivative”
transaction, (y) the Purchaser may engage in hedging
activities, other than Short Sales at various times during the
period that the Securities are outstanding,  and (vi) no
Purchaser shall have any duty of confidentiality or duty not to
trade in the securities of the Company to the Company or its
Subsidiaries after the issuance of the initial press
release.  Except as contemplated above, Company
acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction
Documents.

 

4.12 Conversion
and Exercise Procedures. Each of the form of
Notice of Conversion in the Notes and the Notice of Exercise in the
Warrants set forth the totality of the procedures required of the
Purchasers in order to convert the Notes or exercise the Warrants.
No additional legal opinion, other information or instructions
shall be required of the Purchaser to exercise the Note or exercise
the Warrant. Without limiting the preceding sentences, no
ink-original Notice of Exercise or
Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Exercise or Notice of Conversion form be required in
order to covert and/or exercise the Securities. The Company shall
honor conversions and/or exercises of the Securities and shall
deliver applicable Underlying Shares in accordance with the terms,
conditions and time periods set forth in the Transaction
Documents.

 

 

 

 

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

 

4.14 Maintenance
of Property. So long as any Notes remain outstanding, the
Company shall use its commercially reasonable efforts to keep all
of its property, which is necessary or useful to the conduct of its
business, in good working order and condition, ordinary wear and
tear excepted.

 

4.15 Preservation
of Corporate Existence. So long as any Notes remain
outstanding, the Company shall preserve and maintain its corporate
existence, rights, privileges and franchises in the jurisdiction of
its incorporation, and qualify and remain qualified, as a foreign
corporation in each jurisdiction in which such qualification is
necessary in view of its business or operations and where the
failure to qualify or remain qualified would reasonably be expected
to have a Material Adverse Effect.

 

4.16 DTC
Program. At all times that the Securities are outstanding,
the Company will employ as the transfer agent for the Common Stock
and Conversion Shares a participant in the Depository Trust Company
Automated Securities Transfer Program and cause the Common Stock to
be transferable pursuant to such program.

 

4.17 Subsequent
Equity Sales. From the date hereof until such time as no
Purchaser holds any of the Notes, the Company shall be prohibited
from effecting or entering into an agreement to effect any issuance
by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents (or a combination of units thereof) involving a
Variable Rate Transaction. “Variable Rate
Transaction” means a transaction which is not
Permitted Indebtedness (including the transactions contemplated by
this Agreement) and in which the Company (i) issues or sells any
debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive additional
shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock or (ii) enters into, or effects a transaction under, any
agreement, including, but not limited to, an equity line of credit,
whereby the Company may issue securities at a future determined
price. Any Purchaser shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy
shall be in addition to any right to collect damages.

 

ARTICLE
5

 

MISCELLANEOUS

 

5.1 Fees and Expenses. Except as
expressly set forth below and in the Transaction Documents to the
contrary, each party shall pay the reasonable, documented fees and
expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance
of this Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and
any exercise notice delivered by a Purchaser), stamp taxes and
other taxes and duties levied in connection with the delivery of
any Securities to the Purchaser.

 

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

 

5.3 Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile or email
attachment at the facsimile number or email address as set forth on
the signature pages attached hereto at or prior to 5:30 p.m. (New
York City time) on a Business Day, (b) the next Business Day after
the date of transmission, if such notice or communication is
delivered via facsimile or email attachment at the facsimile number
or email address as set forth on the signature pages attached
hereto on a day that is not a Business Day or later than 5:30 p.m.
(New York City time) on any Business Day, (c) the second
(2nd)
Business Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto.

 

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

 

 

 

 

5.5 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser then holding
outstanding Notes (other than by merger). Purchaser may assign any
or all of its rights under this Agreement to any Person to whom
Purchaser assigns or transfers any Securities in compliance with
the Transaction Documents, provided that such transferee agrees in
writing to be bound, with respect to the transferred Securities, by
the provisions of the Transaction Documents that apply to the
“Purchaser,” and provided further that (i) such
transferee is an “accredited investor” within the
meaning of Rule 501 under the Securities Act and (ii) such
transferee is not a direct competitor of the Company or any
Subsidiary.

 

5.6 No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person.

 

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

 

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

 

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

 

5.10 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired, or invalidated, as long as the essential terms and
conditions of this Note for each party remain valid, binding, and
enforceable. The parties shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term,
provision, covenant or restriction.

 

5.11 Rescission
and Withdrawal Right. Notwithstanding
anything to the contrary contained in (and without limiting any
similar provisions of) any of the other Transaction Documents,
whenever any Purchaser exercises a right, election, demand or
option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein
provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company,
any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights; provided,
however,
that, in the case of a rescission of a conversion of the Note, the
Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded conversion or exercise notice
concurrently with the return to such Purchaser of the aggregate
exercise price paid to the Company for such shares and the
restoration of such Purchaser’s right to acquire such shares
pursuant to such Purchaser’s Warrant (including, issuance of
a replacement warrant certificate evidencing such restored
right).

 

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

 

5.13 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of
the Purchaser and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert
in any Action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

 

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

 

 

 

 

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

 

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

 

 

 

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

 

5.18 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto.

 

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

 

(Signature Pages Follow)

 

 

 

 

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

 

 

	

GOIP GLOBAL, INC.

 

 

	

Address for Notice:

 

	

By:__________________________________________

 Name:

 Title:

 

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

	

Email:

	
 

	
 

 

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

 

 

 

PURCHASER
SIGNATURE PAGES TO GOIG SECURITIES PURCHASE AGREEMENT

 

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

 

Name of
Purchaser:
_____________________________________________

 

Signature of Authorized Signatory of
Purchaser: __________________________________

 

Name of
Authorized Signatory:
_______________________________________

 

Title
of Authorized Signatory: _____
_______________________________________

 

Email
Address of Authorized Signatory: _____________________

 

Facsimile Number of
Authorized Signatory:
__________________________________________

 

Address
for Notice to Purchaser:

 

 

 

 

 

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

 

 

 

 

 

EIN
Number: ________________

 

 

 

 

 

 

 

 

EXHIBIT A

 

Form of Note

 

 

 

 

 

 

EXHIBIT B

 

Form of Security Agreement

 

 

 

 

 

 

EXHIBIT C

 

 

Form of Subordination Agreement

 

 

 

 

EXHIBIT D

 

Form of Registration Rights Agreement

 

 

 

 

EXHIBIT E

 

Form of Warrant

 

 

 

 

EXHIBIT F

 

Form of Lock-Up Agreement

 

 

 

 

 

Schedule 1

 

Purchase Price; Securities Purchased

 

	
Name of
Purchaser

	
 
Purchase
Price

 

	
 
Aggregate
Principal Amount

of Notes being
Purchased

 

	
 
Number of
Warrant Shares

issuable upon
exercise of

Warrant being
Purchased

 

	
 
Second Closing
Purchase Price

 

	
 
Aggregate
Principal Amount

of Second
Closing Notes

being
Purchased

 

	
 
Number of
Warrant Shares

issuable upon
exercise of

Warrant for
Second

Closing being
Purchasedtwhi_ex106

 

Exhibit 10.6

SECURITIES PURCHASE AGREEMENT

 

THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of
______________, 2020, by and among GoIP Global, Inc., a Colorado
corporation (and together with all of its current and future,
direct and/or indirect, wholly owned and/or partially owned
Subsidiaries, collectively, the “Company”), and the Purchaser identified on the signature
pages hereto (each, including its successors and assigns, a
“Purchaser”
and, collectively, the “Purchasers”).

 

RECITALS

 

A.           The
Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act (as
defined below), and/or Rule 506(b) of Regulation D
(“Regulation
D”) as promulgated by the United States Securities and
Exchange Commission under the Securities Act.

 

B.           The
Purchasers, wishes to purchase, and the Company wishes to sell at
closing, upon the terms and conditions stated in this Agreement,
the Securities (as defined herein), all in the amounts and for the
price set forth on Schedule 1
hereto.

 

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

ARTICLE
1

DEFINITIONS

 

1.1 Defined Terms. In addition to
terms defined elsewhere in this Agreement or in any supplement,
amendment or exhibit hereto, when used herein, the following terms
shall have the following meanings:

 

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

 

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

 

(c) “Closing”
shall have the meaning ascribed to such term in Section
2.1(a).

 

(d) “Closing
Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to
pay the Purchase Price and (ii) the Company’s obligations to
deliver the Securities has been satisfied or waived with respect to
the Closing.

 

(e) “Common Stock” means (i)
the Company’s common stock, par value $0.001 per share, and
(ii) any capital stock into which such common stock shall have been
changed or any share capital resulting from a reclassification of
such common stock.

 

(f) “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, rights,
options, warrants 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.

 

(g) “Contingent Obligation”
means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid
or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect
thereto.

 

 

-1-

 

 

(h) “Conversion Date” has the
meaning set forth in the Notes.

 

(i) “Conversion Shares” means
all shares of Common Stock issuable upon conversion of any portion
of the Notes, and/or as any other payment due under the Notes
including, but not limited to interest and/or otherwise, but solely
to the extent and subject to any conditions set forth in the
Notes.

 

(j) “Dollar(s)” and
“$”
means lawful money of the United States.

 

(k) “Event of Default” shall
have the meaning set forth in the Notes.

 

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

 

(m) “Exempt Issuance” means
the issuance of (a) shares of Common Stock or options to employees,
officers, consultants, advisors or directors of the Company
pursuant to any stock or option plan duly adopted for such purpose
by a majority of the members of the Board of Directors or a
majority of the members of a committee of directors established for
such purpose, (b) securities upon the exercise or exchange of or
conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such
securities or to decrease the exercise, exchange or conversion
price of such securities or (c) Permitted Indebtedness incurred in
satisfaction with clause 1.1(v)(c) hereunder.

 

(n) “GAAP” means generally
accepted accounting principles in the United States of America as
in effect from time to time.

 

(o) “Indebtedness” means, with
respect to any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase
price of property or services (but excluding trade payables
incurred in the ordinary course of business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or the Purchaser under
such agreement in the event of default are limited to repossession
or sale of such property), (e) all capital lease obligations
of such Person, (f) all obligations of such Person, contingent
or otherwise, as an account party or applicant under acceptance,
letter of credit, surety bond or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase,
redeem, retire or otherwise acquire for value any capital stock of
such Person, (h) all obligations for any earn-out consideration,
(i) the liquidation value of preferred capital stock of such
Person, (j) all guarantee obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (i)
above, (k) all obligations of the kind referred to in
clauses (a) through (i) above secured by (or for which the
holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for
the payment of such obligation and all obligations of such Person
in respect of hedge agreements; and (l) all Contingent Obligations
in respect to indebtedness or obligations of any Person of the kind
referred to in clauses (a)-(k) above. The Indebtedness of any
Person shall include, without duplication, the Indebtedness of any
other entity (including any partnership in which such Person is a
general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of
such Indebtedness expressly provide that such Person is not liable
therefor.

 

(p) “Liens” or
“liens”
means a lien, mortgage, charge pledge, security interest,
encumbrance, right of first refusal, preemptive right or other
restriction, or other clouds on title.

 

(q) “Liabilities” means all
direct or indirect liabilities, Indebtedness and obligations of any
kind of Company to the Purchaser, howsoever created, arising or
evidenced, whether now existing or hereafter arising (including
those acquired by assignment), absolute or contingent, due or to
become due, primary or secondary, joint or several, whether
existing or arising through discount, overdraft, purchase, direct
loan, participation, operation of law, or otherwise, including, but
not limited to, pursuant to the Notes, this Agreement and/or any of
the other Transaction Documents, all accrued but unpaid interest on
the Notes the principal, any letter of credit, any standby letter
of credit, and/or outside attorneys’ and paralegals’
fees or charges relating to the preparation of the Transaction
Documents and the enforcement of the Purchaser’s rights,
remedies and powers under this Agreement, the Notes and/or the
other Transaction Documents.

 

(r)  “Material
Adverse Effect” means a material adverse effect on
(a) the business, assets, property, operations, or condition
(financial or otherwise) of the Company, (b) the validity or
enforceability of this Agreement or any of the other Transaction
Documents or (c) the rights or remedies of the Purchaser
hereunder or thereunder.

 

 

-2-

 

 

(s) “Notes” means all of the
Original Issue Discount Convertible Promissory Notes due
____________, 2021 that are owned by the Purchasers, which, subject
to the terms and conditions set forth in this Agreement, shall be
purchased from the Company pursuant to this Agreement; the form of
Note is annexed hereto as Exhibit A
and any and all Note(s) issued in exchange, transfer or replacement
of the Notes.

 

(t) “Permitted Indebtedness”
means (a) the indebtedness evidenced by the Notes, and (b) lease
obligations and purchase money indebtedness incurred in connection
with the acquisition of capital assets and lease obligations with
respect to newly acquired or leased assets in the ordinary course
of business, (c) any indebtedness issued to funds affiliated with
Arena Investors LP and (d) any indebtedness issued by the Company
to any SBA-approved lender.

 

(u) “Permitted Lien” means the
individual and collective reference to the following: (a) Liens for
taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges
or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment
of the management of the Company) have been established in
accordance with GAAP; (b) Liens imposed by law which were incurred
in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising
in the ordinary course of the Company’s business, and which
(x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (y) are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien; and (c) Liens incurred in
connection with Permitted Indebtedness thereunder; (d) Pledges and
deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other
social security laws or regulations; (e) Deposits to secure the
performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course
of business; and (f) any Liens in favor of the
Purchaser.

 

(v) “Person” means any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, institution,
entity, party or government (whether national, federal, state,
county, city, municipal or otherwise including, without limitation,
any instrumentality, division, agency, body or department
thereof).

 

(w)  “Principal
Market” means the principal Trading Market on which
the Common Stock is listed or quoted for trading on the date in
question.

 

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

 

(y) “Purchase
Price” shall have the
meaning as set forth on Schedule 1 next to the heading
“Purchase Price,” in United States
Dollars.

 

(z) “Reverse Stock Split”
means the 500 for 1 reverse stock split of the Company’s
common stock which will take effect after the Closing
Date;

 

(aa) “SEC”
or “Commission” means the
United States Securities and Exchange Commission.

 

(bb) “Securities”
means the Notes and the Warrants purchased pursuant to this
Agreement and all Underlying Shares and any securities of the
Company issued in replacement, substitution and/or in connection
with any exchange, conversion and/or any other transaction pursuant
to which all or any of such securities of the Company to the
Purchasers.

 

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

 

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

 

 

-3-

 

 

(ee) Subordination
Agreement” means the
Subordination Agreement, dated as of the date hereof, by and among
funds affiliated with Arena Investors LP, and the Purchasers, as
the Creditors therein, which Subordination Agreement is
annexed hereto as Exhibit B.

 

(ff)  “Subsidiary”
means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person all of
the Company’s Subsidiaries are set forth on Schedule 3.1(a)
hereto.

 

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

 

(hh) “Trading
Market” means any of the following markets or
exchanges on which the Common Stock is listed or quoted for trading
on the date in question: the NYSE MKT, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, any market or quotation service of the OTC
Markets Group or the OTC Bulletin Board (or any successors to any
of the foregoing).

 

(ii) “Transaction
Documents” means, collectively, this Agreement, the
Notes, the Warrant, the Subordination Agreement and such other
documents, instruments, certificates, supplements, amendments,
exhibits and schedules required and/or attached pursuant to this
Agreement and/or any of the above documents, and/or any other
document and/or instrument related to the above agreements,
documents and/or instruments, and the transactions hereunder and/or
thereunder and/or any other agreement, documents or instruments
required or contemplated hereunder or thereunder, whether now
existing or at any time hereafter arising.

 

(jj) “Transfer
Agent” means Manhattan Transfer Registrar Co. the
current transfer agent of the Company, with a mailing address of
38B Sheep Pasture Road, Port Jefferson, NY 11777 and a phone number
of 631-928-7655,
and any successor transfer agent of the Company.

 

(kk) “UCC”
means the Uniform Commercial Code of as in effect from time to time
in the State of New York; provided, however, that, in the event
that, by reason of mandatory provisions of law, any or all of the
attachment, perfection, priority, or remedies with respect to the
Purchaser’ Liens on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York, the term “UCC” shall mean the
Uniform Commercial code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating
to such attachment, perfection, priority, or remedies.

 

(ll) “Underlying
Shares” means all Conversion Shares and Warrant
Shares.

 

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

 

(nn) “Warrant(s)”
means the two (2)-year Common Stock Purchase Warrants of the
Company, to be issued at the Closing, the form of which is annexed
hereto as Exhibit C.

 

(oo)  “Warrant
Shares” means all shares of Common Stock issuable upon
exercise of the Warrants and/or any other securities issuable upon
exercise of the Warrants.

 

 

-4-

 

 

1.2 Other Definitional
Provisions.

 

(a) Use of Defined Terms. Unless
otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the other Transaction
Documents or any certificate or
other document made or delivered pursuant hereto or
thereto.

 

(b) Accounting Terms. As used
herein and in the other Transaction Documents, and any certificate
or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company not defined in
Section 1.1
and accounting terms partly
defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under
GAAP (provided that
all terms of an accounting or financial nature used herein shall be
construed, and all computations of amounts referred to herein shall
be made without giving effect to (i) any election under Accounting
Standards Codification 825-10-25 (previously referred to as
Statement of Financial Accounting Standards 159) (or any other
Accounting Standards Codification or Financial Accounting Standard
having a similar result or effect) to value any Indebtedness or
other liabilities of the Company at “fair value”, as
defined therein, and (ii) any treatment of Indebtedness in respect
of convertible debt instruments under Accounting Standards
Codification 470-20 (or any other Accounting Standards Codification
or Financial Accounting Standard having a similar result or effect)
to value any such Indebtedness in a reduced or bifurcated manner as
described therein, and such Indebtedness shall at all times be
valued at the full stated principal amount thereof).

 

(c) Construction. The words
“hereof”,
“herein” and
“hereunder” and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section, schedule and exhibit references are to this
Agreement unless otherwise specified. The meanings given to terms
defined herein shall be equally applicable to both the singular and
plural forms of such
terms.

 

(d) UCC Terms. Terms used in this
Agreement that are defined in the UCC shall, unless the context
indicates otherwise or are
otherwise defined in this Agreement, have the meanings provided for
by the UCC.

 

 

-5-

 

 

ARTICLE
2

PURCHASE
AND SALE

 

2.1 Closing. On the Closing Date,
upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Purchasers each agree to purchase,
the Securities in such amounts as indicated on Schedule 1
hereto. Each Purchaser shall deliver to the Company, via
wire transfer immediately available funds equal to the Purchase
Price, and the Company shall deliver to the Purchaser the Note on
the Closing Date, and the Company and the Purchaser shall deliver
the other items set forth in Section 2.2 deliverable at the
Closing. Upon satisfaction of the covenants and conditions set
forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of the Company or such other location as the parties shall
mutually agree.

 

2.2 Deliveries.

 

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

 

(i)           this
Agreement duly executed by the Company;

 

(ii)           a
Note registered in the name of the Purchaser with such principal
amount as set forth on Schedule 1;

 

(iii)           the
Warrant, registered in the name of the Purchaser, to purchase such
number of shares of Common Stock as set forth on Schedule 1;

 

(iv)           the
Subordination Agreement, duly executed by the Company and the
Purchasers;

 

(xv)           the
Company and the Subsidiaries shall
have delivered to the Purchasers such other documents, instruments,
opinions or certificates relating to the transactions contemplated
by this Agreement as the Purchasers or its counsel may reasonably
request.

 

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

 

(i)           this
Agreement duly executed by such Purchaser;

 

(ii)           the
Purchase Price subject to the closing by wire transfer;
and

 

(v)           
the Subordination Agreement, duly executed by such
Purchaser.

 

2.3 Conditions to Purchase the
Securities. Subject to the terms and conditions of this
Agreement, each Purchaser will at a Closing purchase from the
Company the Securities in the amounts and for the Purchase Price as
set forth on Schedule 1, provided the
following:

 

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

 

(i)           the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) when made and on the date
of the Closing of the representations and warranties of the
Purchaser contained herein (unless as of a specific date therein in
which case they shall be accurate as of such date);

 

 

-6-

 

 

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

 

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

 

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

 

(v)           no
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or other federal, state, local or
other governmental authority of
competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction
Documents.

 

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

 

(i)           the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) when made and on the date
of the Closing of the representations and warranties of the Company
contained herein (unless as of a specific date therein in which
case they shall be accurate as of such date);

 

(ii)           all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing shall have been performed in
all material respects;

 

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

 

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

 

(v)           the
Company shall have obtained all governmental, regulatory and third
party consents and approvals, if any, necessary for the entry into
the Transaction Documents and the sale of the
Securities;

 

(vi)           the
closing of the transactions contemplated by the terms of that
certain share exchange agreement, dated on even date herewith, by
and between the Company and Transworld Enterprises, Inc.;
and

 

(vi)           no
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or other federal, state, local or
other governmental authority of
competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction
Documents;

 

2.4 Purchase Price and Payment of the
Purchase Price for the Securities. The Purchase Price for
the Securities to be purchased by the Purchasers at a Closing shall
be as set forth on Schedule 1 and shall be
paid at the Closing (less all of the Purchaser’s Expenses (as
defined below)) by the Purchaser by wire transfer of immediately
available funds to the Company in accordance with the
Company’s written wiring instructions, against delivery of
the Securities.

 

 

-7-

 

 

ARTICLE
3

 

REPRESENTATIONS
AND WARRANTIES; OTHER ITEMS

 

3.1 Representation and Warranties of the
Company. Except as set forth in
the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation or
otherwise made herein to the extent of the disclosure contained in
the corresponding section of the Disclosure Schedules (but in no
event shall qualify any indemnity obligation of the Company
hereunder), the Company (which for purposes of this
Section 3.1
means the Company and all of its Subsidiaries) represents and
warrants to the Purchasers that on the Closing Date (unless as of a
specific date set forth below):

 

(a) Subsidiaries. All of the direct
and indirect subsidiaries of the Company and the locations thereof
are set forth on Schedule
3.1(a). Except as set forth on Schedule 3.1(a), the Company
owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary free and clear of any Liens,
and all of the issued and outstanding shares of capital stock or
other interests of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar
rights to subscribe for or
purchase securities. Schedule 3.1(a) sets forth, as
of the Closing Date, the jurisdiction of organization and the
location of the Company’s and its subsidiaries’
executive offices and other places of business.

 

(b) Organization, Etc. The Company
and each of the Subsidiaries is duly organized, validly existing
and in good standing under the laws of the state of their
respective organization and are duly qualified and in good standing or has
applied for qualification as a foreign corporation authorized to do
business in each jurisdiction where, because of the nature of its
activities or properties, such qualification is required except
where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.

 

(c) Authorization: No Conflict. The
execution, delivery and performance of the Transaction Documents
and the transactions contemplated thereby by the Company,
including, but not limited to, the sale and issuance of the
Securities for the Purchase Price, subject to the Reverse Split,
the reservation for issuance of
the Underlying Shares required to be reserved pursuant to the terms
of the Notes and the Warrants, of the
issuance the Underlying Shares into which the Notes and Warrants
are convertible and/or exercisable (i) are within the
Company’s corporate powers, (ii) have been duly authorized by all necessary action by
or on behalf of the Company (and/or its stockholders to the extent
required by law), (iii) the Company has received all necessary
and/or required governmental, regulatory and other approvals and
consents (if any shall be required), (iv) do not and shall not
contravene or conflict with any provision of, or require any
consents under (1) any law, rule, regulation or ordinance, (2) the
Company’s organizational documents; and/or (3) any agreement,
credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected except
as would not reasonably be expected to have a Material Adverse
Effect, and (v) do not result in, or require, the creation or
imposition of any Lien and/or encumbrance on any of the
Company’s properties or revenues pursuant to any law, rule,
regulation or ordinance or otherwise.

 

(d) Validity and Binding Nature.
The Transaction Documents to which the Company is a party are the
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization and other similar laws of general application
affecting the rights and remedies of creditors and by general
equitable principles (whether enforcement is sought by proceedings
in equity or at law).

 

(e) Title to Assets. The Company
and the Subsidiaries have good and marketable title in fee simple
to all real property owned by them and good and marketable title in
all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear
of all Liens, except for (i) Liens as do not materially affect the
value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and
the Subsidiaries, (ii) Liens for the payment of federal, state or
other taxes, for which appropriate reserves have been made therefor
in accordance with GAAP and the payment of which is not delinquent,
and (iii) Permitted Liens. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance.

 

(f) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or
in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any judgment, decree or order of any court,
arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws relating to securities, corporate
law, taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor
matters, except in each case as could not have or reasonably be
expected to result in a Material Adverse
Effect.

 

 

-8-

 

 

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

 

(h) Licenses and
Permits. The Company possesses
all certificates, authorizations, consents, approvals, orders,
licenses and permits issued by the appropriate federal, state or
foreign regulatory authorities (collectively, the
“Permits”),
including the FDA and any other state, federal or foreign agencies
or bodies engaged in the regulation of pharmaceuticals or
biohazardous materials, amongst other, necessary to conduct its
business as now conducted. All of such Permits are valid and in
full force and effect. There is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or
investigation that individually or in the aggregate would
reasonably be expected to lead to the revocation, modification,
termination, suspension or any other impairment of the rights of
the holder of any such Permit.

 

(i) Investment Company. The Company
is not (i) an “investment company” or a company
“controlled”, whether directly or indirectly, by an
“investment company”, within the meaning of the
Investment Company Act of 1940, as amended; or (ii) engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve
System).

 

(j) Absence of Defaults
and Conflicts.
The Company
is not (i) in violation of its charter, by-laws or similar
incorporation or organizational documents or (ii) in violation
or default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company is a
party or by which it may be bound, or to which any of the property
or assets of the Company is subject (collectively,
“Agreements
and Instruments”),
except in the case of clause (ii), for such violations and defaults
that would not result in a Material Adverse Effect on the Company;
and the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated in this
Agreement, and compliance by the Company with its obligations under
this Agreement, do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
result in a breach of any of the terms and provisions of, or
constitute a default or Repayment Event (as defined below) under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to,
the Agreements and Instruments, nor will such action result in any
violation of the provisions of the charter, by-laws or similar
organizational documents of the Company or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its assets,
properties or operations, except in each case (other than with
respect to such charter, by-laws or similar
organizational documents of the Company) for such conflicts,
violations, breaches or defaults which would not reasonably be
expected to result in a Material Adverse Effect on the Company. As
used herein, a “Repayment
Event”
means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness that is material to the operations
or financial results of the Company (or any person acting on such
holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by
the Company.

 

(k) Foreign Corrupt
Practices Act. Neither the Company
nor, to the Company’s knowledge, any of its affiliates,
directors, officers, employees, agents or other person acting on
behalf of the Company is aware of or has taken any action, directly
or indirectly, that would result in a material violation by such
person of the Foreign Corrupt Practices Act of 1977, as amended,
and the rules and regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means
or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the
payment of money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the
FCPA and the Company and, to the Company’s knowledge, its
affiliates have conducted their businesses in material compliance
with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance
therewith.

 

(l) Rule 506(d) Bad Actor Disqualification
Representations and Covenants.

 

(i) No Disqualification Events.
Neither the Company, nor any of its predecessors, affiliates, any
manager, executive officer, other officer of the Company
participating in the offering, any beneficial owner (as that term
is defined in Rule 13d-3 under the Exchange Act) of 20% or more of
the Company’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the Securities Act) connected
with the Company in any capacity as of the date of this Agreement
and on the Closing Date (each, a “Company Covered Person”
and, together, “Company Covered Persons”)
is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act
(a “Disqualification
Event”), except for a Disqualification Event covered
by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine (A) the identity of each person that is a
Company Covered Person; and (B) whether any Company Covered
Person is subject to a Disqualification Event. The Company will
comply with its disclosure obligations under Rule
506(e).

 

 

-9-

 

 

(ii) Other
Covered Persons. The Company is not aware of any person
(other than any Company Covered Person) who has been or will be
paid (directly or indirectly) remuneration in connection with the
purchase and sale of the Notes, and/or the Warrants who is subject
to a Disqualification Event (each, an “Other Covered
Person”).

 

(iii) Reasonable
Notification Procedures. With respect to each Company
Covered Person, the Company has established procedures reasonably
designed to ensure that the Company receives notice from each such
Company Covered Person of (A) any Disqualification Event relating
to that Company Covered Person, and (B) any event that would, with
the passage of time, become a Disqualification Event relating to
that Company Covered Person; in each case occurring up to and
including the Closing Date.

 

(iv) Notice
of Disqualification Events. The Company will notify the
Purchaser immediately in writing upon becoming aware of (A) any
Disqualification Event relating to any Company Covered Person and
(B) any event that would, with the passage of time, become a
Disqualification Event relating to any Company Covered Person
and/or Other Covered Person.

 

(m) Accuracy of Information, etc.
No statement or information contained in this Agreement, any other
Transaction Document or any other document, certificate or
statement furnished to the Purchaser by or on behalf of the Company
in writing for use in connection with the transactions contemplated
by this Agreement and/or the other Transaction Documents contained,
as of the date such statement, information, document or certificate
was made or furnished, as the case may be, any untrue statement of
a material fact or omitted to state a material fact necessary to
make the statements contained herein or therein, taken as a whole,
not materially misleading. There is no fact known to the Company
that would reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in the other
Transaction Documents, or in any other documents, certificates and
statements furnished to the Purchaser for use in connection with
the transactions contemplated hereby and by the other
Documents.

 

(n) Solvency.
Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder: (i) the
fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule 3.1(n)
sets forth
as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. Neither the Company nor
any Subsidiary is in default with respect to any
Indebtedness.

 

(o) Transactions With
Affiliates and Employees. None of the officers
or directors of the Company or any Subsidiary and, to the knowledge
of the Company, none of the employees of the Company or any
Subsidiary is presently a party to any transaction with the Company
or any Subsidiary (other than for services as employees, officers
and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from
providing for the borrowing of money from or lending of money to,
or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for: (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.

 

(p) Intellectual Property. The
Company has, or has rights to use, all patents, patent
applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and
other intellectual property rights and similar rights as described
on Schedule 3.1(p) as necessary or required for use in connection
with its business and which the failure to so have would reasonably
be expected to have a Material Adverse Effect (collectively, the
“Intellectual
Property Rights”). The Company has not received a
notice (written or otherwise) that any material Intellectual
Property Right has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned. The Company has
not received, since the date of the Balance Sheet Date, a written
notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of
any Person, except as would not have or reasonably be expected to
have a Material Adverse Effect. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the
Intellectual Property Rights. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of its intellectual property, except where failure to do so
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

 

-10-

 

 

(q) USA Patriot Act. The Company is
in compliance, in all material respects, with (i) the Trading with
the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 C.F.R.,
Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (ii) the USA
Patriot Act (Title III of Pub. L. 107-56, signed into law on
October 26, 2001) (the “Act”). No part of the
proceeds of the Notes will be used, directly or indirectly, for any
payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or
anyone else acting in an official capacity, in order to obtain,
retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

 

(r) Office of Foreign
Assets Control. Neither the
Company nor any Subsidiary nor, to the Company's knowledge, any
director, officer, agent, joint venture employee or affiliate of
the Company or any Subsidiary is currently, or in the past 5 years,
been subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).

 

(s) Filings, Consents and
Approvals. Except as set forth
on Schedule
3.1(s), the Company is not
required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental
authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction
Documents, other than: (i) the filings required pursuant to the
Registration Rights Agreement and the declaration of effectiveness
by the SEC of the Registration Statement (ii) the notice and/or
application(s) to each applicable Trading Market for the issuance
and sale of the Securities and the listing of the Underlying Shares
for trading thereon in the time and manner required thereby, and
(iii) the filing of Form D with the Commission and such filings as
are required to be made under applicable state securities laws
(collectively, the “Required
Approvals”).

 

(t) Authorization; Enforcement. All
corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization,
execution and delivery of the Transaction Documents and the
performance of all obligations of the Company under the Transaction
Documents and have been taken on or prior to the date hereof. Each
of the Transaction Documents has been duly executed by the Company
and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except: (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by general equitable principles regardless of whether such
enforcement is considered in a proceeding in equity or at law,
(iii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iv)
insofar as indemnification and contribution provisions may be
limited by applicable law.

 

(u) Valid Issuance of Securities.
Each of the Notes has been duly authorized and, when issued and
paid for in accordance with this Agreement, will be duly and
validly issued, fully paid and nonassessable, free and clear of all
Liens and all restrictions on transfer other than those expressly
imposed by the federal securities laws and vest in the Purchaser
full and sole title and power to the Notes purchased hereby by the
Purchaser, free and clear of all Liens, and restrictions on
transfer other than those imposed by the federal securities laws.
All Underlying Shares, when issued pursuant to conversion of the
Notes and/or exercise of the Warrants, when issued pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable, will be free and clear of all Liens and vest in the
holder full and sole title and power to such securities. The
Company has reserved from its duly authorized unissued Common
Stock, the Required Minimum (as defined in the Notes), which
Required Minimum shall be continuously determined by the Company to
ensure that the Required Minimum is in reserve with the Transfer
Agent at all times. The Notes, the Warrants and the Underlying
Shares shall sometimes be collectively referred to as the
“Securities.”

 

(v) Offering. The offer and sale of
the Securities, as contemplated by this Agreement, are exempt from
the registration requirements of the Securities Act, and the
qualification or registration requirements of state securities laws
or other applicable blue sky laws. Neither the Company nor any
authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such
exemptions.

 

(w) Capitalization and Voting
Rights. The capitalization of
the Company is as set forth on Schedule
3.1(w), which
Schedule
3.1(w) shall also include the
number of shares of Common Stock owned beneficially, and of record,
by Affiliates of the Company as of the date hereof. The
authorized capital stock of the Company and all securities of the
Company issued and outstanding are set forth on Schedule 3.1(w) as
of the dates reflected therein. All of the outstanding shares of
Common Stock and other securities of the Company have been duly
authorized and validly issued, and are fully paid and
nonassessable. Except as set forth
on Schedule
3.1(w), 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 3.1(w), there are no
agreements or arrangements under which the Company is obligated to
register the sale of any of the Company’s securities under
the Securities Act. Except as set forth on Schedule 3.1(w), no shares of
Common Stock and/or other securities of the Company are entitled to
preemptive rights and there are no outstanding debt securities and
no contracts, commitments, understandings, or arrangements by which
the Company is or may become bound to issue additional shares of
the capital stock and/or other securities of the Company or
options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, any shares of
capital stock of the Company other than those issued or granted in
the ordinary course of business pursuant to the Company’s
equity incentive and/or compensatory plans or arrangements. Except
for customary transfer restrictions contained in agreements entered
into by the Company to sell restricted securities and/or as set
forth on Schedule
3.1(w), the Company is not a party to, and it has no
knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock and/or other securities of the
Company. Except as set forth on Schedule 3.1(w), the offer and
sale of all capital stock, convertible or exchangeable securities,
rights, warrants, options and/or any other securities of the
Company when any such securities of the Company were issued
complied with all applicable federal and state securities laws, and
no current and/or prior holder of any securities of the Company has
any right of rescission or damages or any “put” or
similar right with respect thereto that would reasonably be
expected to have a Material Adverse Effect. Except as set forth on
Schedule 3.1(w),
there are no securities or instruments of the Company containing
anti-dilution or similar provisions that will be triggered by the
issuance and/or sale of the Securities and/or the consummation of
the transactions described herein or in any of the other
Transaction Documents.

 

 

-11-

 

 

(x) Shell Company Status; Financial
Statements. The Company has been an issuer subject to Rule
144(i) under the Securities Act. The unaudited balance sheet of the
Company as of April 30, 2020 is included in Schedule 3.1(x) hereto. The
financial statements of the Company included on Schedule 3.1(x) have been
prepared in accordance with GAAP, except as may be otherwise
specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material
respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject to
normal, immaterial, year-end audit adjustments. For purposes of
this Section 3.1, April 30, 2020 is referred to as the
“Balance Sheet
Date”.

 

(y) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the Balance Sheet Date:
(i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or
disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company
stock option plans. Except for the issuance of the Securities
contemplated by this Agreement or as set forth on Schedule 3.1(y), no event,
liability, fact, circumstance, occurrence or development has
occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective
businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least 1
Trading Day prior to the date that this representation is
made.

 

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

 

(aa) Disclosure.
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf
has provided any Purchaser or its respective agents or counsel with
any information that constitutes material, non-public information.
The Company understands that the Purchasers may rely on the
Transaction Documents, the information included therein, including,
but not limited to, the foregoing representation in purchasing the
Securities. All of the disclosure furnished by or on behalf of the
Company to the Purchaser in the Transaction Documents regarding,
among other matters relating to the Company, its business and the
transactions contemplated in the Transaction Documents, is true and
correct in all material respects as of the date made and does not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made,
not misleading. The Company acknowledges and agrees that none of
the Purchasers makes nor has made any representations or warranties
with respect to the transactions contemplated in the Transaction
Documents other than those specifically set forth in Section 3.2
hereof.

 

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

 

(cc) Insurance.
The Company
is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged; the Company
has not been refused any coverage sought or applied for; and the
Company does not have any reason to believe that it will not be
able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect on the
Company.

 

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

 

 

-12-

 

 

(ee) Registration
Rights. Except as set forth
on Schedule
3.1(ee), no Person has any
right to cause the Company to effect the registration under the
Securities Act of any securities of the Company or any
Subsidiaries.

 

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

 

(gg) Dilutive
Effect. The Company understands and acknowledges that the
number of Underlying Shares issuable upon conversion and/or
exercise of the Notes and/or Warrants, pursuant to the terms
thereof, will increase in certain circumstances. The Company
further acknowledges that its obligations to issue Underlying
Shares pursuant to the terms of the Notes and/or Warrants in
accordance with this Agreement, the Notes and the Warrants is
absolute and unconditional regardless of the dilutive effect that
any such issuances may have on the percentage ownership interests
of other stockholders of the Company.

 

(hh) Application
of Takeover Protections; Rights Agreement.  The Company
and its board of directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provisions under
the Company’s articles of incorporation, as amended, or the
laws of the jurisdiction of its formation that are or could become
applicable to the Purchaser as a result of the transactions
contemplated by this Agreement and/or the other Transaction
Documents, including, without limitation, the Company’s
issuance of the Securities and the Purchaser’s ownership of
the Securities. The Company has not adopted a stockholder rights
plan or similar arrangement relating to accumulations of beneficial
ownership of Common Stock or a change in control of the
Company.

 

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

 

(jj) DTC
Eligible. The Common Stock is DTC eligible and DTC has not
placed a “freeze” or a “chill” on the
Common Stock and the Company has no reason to believe that DTC has
any intention to make the Common Stock not DTC eligible, or place a
“freeze” or “chill” on the Common Stock. No
federal or state regulatory authority has indicated that it will
prohibit the listing of the Company’s securities based upon
its prior business in the cannabis or cannabis-related markets nor
will the Purchasers be prohibited from depositing, clearing or
settling the Securities, including through the DTC or
otherwise, on account of the Company’s prior business in the
cannabis or cannabis-related markets.

 

(kk) Listing
and Maintenance Requirements. The Company has not, in the 12 months preceding
the date hereof, received notice from any Trading Market on which
the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Common Stock is
eligible for quotation on the Principal Market and the Company has
no reason to believe that the Principal Market has any intention of
delisting the Common Stock from the Principal Market. The issuance and sale of the Securities hereunder
does not contravene the rules and regulations of the Trading
Market. All Underlying Shares have been approved, if so
required, for listing or quotation on the Trading Market, subject
only to notice of issuance.

 

(ll) No
General Solicitation.  Neither the Company, nor any of
its affiliates, nor, to the knowledge of the Company, any Person
acting on its behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the
Securities. 

 

(mm) Acknowledgment
Regarding the Purchaser’s Purchase of Securities.
 The Company acknowledges and agrees that the Purchaser is
acting solely in the capacity of an arm’s length purchaser
with respect to the other Transaction Documents and the
transactions contemplated hereby and thereby and that such
Purchaser is not (i) an officer or director of the Company,
(ii) an Affiliate of the Company or (iii) to the
knowledge of the Company, a “beneficial owner” of more
than 10% of the shares of Common Stock (as defined for purposes of
Rule 13d-3 of the Exchange Act.  The Company further
acknowledges that the Purchaser is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by such
Purchaser or any of its representatives or agents in connection
with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Purchaser’s
purchase of the Securities.  The Company further represents to
the Purchaser that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.

 

 

-13-

 

 

(nn) Off-Balance
Sheet Arrangements.  There is no transaction,
arrangement, or other relationship between the Company and an
unconsolidated or other off-balance sheet entity that is required
to be disclosed by the Company in its Exchange Act filings and is
not so disclosed or that otherwise would be reasonably likely to
have a Material Adverse Effect.

 

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

 

(pp) Money
Laundering. The operations of the
Company and its Subsidiaries are and have been conducted at all
times in compliance with applicable financial record-keeping and
reporting requirements, including but not limited to, Currency and
Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations
thereunder (collectively, the “Money Laundering
Laws”), and no Action
or Proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any
Subsidiary with respect to the Money Laundering Laws is pending or,
to the knowledge of the Company or any Subsidiary,
threatened.

 

(qq) Environmental
Laws. The Company and its
Subsidiaries, to the best of the Company’s knowledge, (i) are
in compliance with all federal, state, local and foreign laws
relating to pollution or protection of human health or the
environment (including ambient air, surface water, groundwater,
land surface or subsurface strata), including laws relating to
emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous
Materials”) into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands, or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or
regulations, issued, entered, promulgated or approved thereunder
(“Environmental
Laws”); (ii) have
received all permits licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where in each
clause (i), (ii) and (iii), the failure to so comply could be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

(rr) Seniority.
As of the Closing Date, no Indebtedness or other claim against the
Company is senior to the Notes in right of payment, whether with
respect to interest or upon liquidation or dissolution, or
otherwise, other than indebtedness secured by purchase money
security interests (which is senior only as to underlying assets
covered thereby) and capital lease obligations (which is senior
only as to the property covered thereby).

 

3.2 Representation and Warranties of The
Purchaser. Each Purchaser, severally and not jointly, hereby
represents and warrants as of the date hereof and as of the Closing
Date to the Company as follows:

 

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

 

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

 

(c) Purchaser
Status. At the time such
Purchaser was offered the Securities, it was, and as of the date
hereof it is an “accredited investor” as defined in
Rule 501(a) under the Securities Act.

 

 

-14-

 

 

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

 

(e)  General
Solicitation. Such Purchaser is
not, to such Purchaser’s knowledge, purchasing the Securities
as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or
general advertisement.

 

(f) Access to
Information. Such Purchaser
acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules
thereto) and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and
conditions of the offering of the Securities and the merits and
risks of investing in the Securities; (ii) access to information
about the Company and its financial condition, results of
operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with
respect to the investment. 

 

(g) Certain Transactions and
Confidentiality. Such Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser, executed any purchases or
sales, including Short Sales, of the securities of the Company
during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or
any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle, whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above
shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other
Persons party to this Agreement or to such Purchaser's
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction
(including the existence and terms of this
transaction).

 

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

 

 

-15-

 

 

ARTICLE
4

OTHER
AGREEMENTS OF THE PARTIES

 

4.1 Transfer
Restrictions.

 

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

 

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

 

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

  

 The
Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and who agrees to be bound by the provisions of
this Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are then
registered for resale on a registration statement, the preparation
and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of
the Securities Act to appropriately amend the list of Selling
Stockholders thereunder.

 

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

 

 

-16-

 

 

(d) In
addition to a Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, the greater of (i) as
partial liquidated damages and not as a penalty, for each $1,000 of
Underlying Shares (based on the VWAP of the Common Stock on the
date such Securities are submitted to the Transfer Agent) delivered
for removal of the restrictive legend and subject to Section
4.1(c), $5 per Trading Day (increasing to $10 per Trading Day five
(5) Trading Days after such damages have begun to accrue) for each
Trading Day after the Legend Removal Date until such certificate is
delivered without a legend and (ii) if the Company fails to (i)
issue and deliver (or cause to be delivered) to a Purchaser by the
Legend Removal Date a certificate representing the Securities so
delivered to the Company by such Purchaser that is free from all
restrictive and other legends or (ii) if after the Legend Removal
Date such Purchaser purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Purchaser of all or any portion of the number of
shares of Common Stock, or a sale of a number of shares of Common
Stock equal to all or any portion of the number of shares of Common
Stock that such Purchaser anticipated receiving from the Company
without any restrictive legend, then, an amount equal to the excess
of such Purchaser’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including brokerage
commissions and other out-of-pocket expenses, if any) (the
“Buy-In
Price”) over the
product of (A) such number of Shares or Conversion Shares, as
applicable, that the Company was required to deliver to such
Purchaser by the Legend Removal Date multiplied by (B) the lowest
closing sale price of the Common Stock on any Trading Day during
the period commencing on the date of the delivery by such Purchaser
to the Company of the applicable Shares or Conversion Shares (as
the case may be) and ending on the date of such delivery and
payment under this clause (ii).

 

4.2 Furnishing of
Information. Beginning on the
Closing Date, the Company shall use commercially reasonable efforts
to comply with the Pink Basic Disclosure Guidelines which set forth
the disclosure obligations that make up the “Alternative
Reporting Standard” for OTC Pink companies as such
obligations are published by the OTC Markets Group, Inc. In
addition, the Company shall file a Registration Statement on Form
8-A as soon as practicable, but in no event no later than five (5)
Trading Days, after the Effective Date of the Initial Registration
Statement (as defined in the Registration Rights Agreement).
If after the date hereof the Company becomes subject to the rules
and regulations of the Exchange Act and as long as any Purchaser
owns Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the
date hereof pursuant to the Exchange Act. As long as any Purchaser
owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell
the Securities, including without limitation, under Rule 144. The
Company further covenants that it will take such further action as
any holder of Securities may reasonably request, to the extent
required from time to time to enable such Person to sell such
Securities without registration under the Securities Act, including
without limitation, within the requirements of the exemption
provided by Rule 144.

 

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

 

4.4 Securities Laws
Disclosure; Publicity. The
Company shall (a) by 9:00am on the 2nd
Trading Day after the date of this
Agreement, issue a press release disclosing the material terms of
the transactions contemplated hereby. From and after the issuance
of such press release, the Company represents to the Purchaser that
it shall have publicly disclosed all material, non-public
information delivered to any of the Purchaser by the Company or any
of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. In addition, effective
upon the issuance of such press release, the Company acknowledges
and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company,
any of its Subsidiaries or any of their respective officers,
directors, agents, employees or Affiliates on the one hand, and any
of the Purchaser or any of their Affiliates on the other hand,
shall terminate. The Company and the Purchaser shall consult with
each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any
Purchaser shall issue any such press release nor otherwise make any
such public statement without the prior consent of the Company,
with respect to any press release of any Purchaser, or without the
prior consent of the Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of such
Purchaser, except (a) as required by federal securities law in
connection with the filing of final Transaction Documents with the
Commission and (b) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company
shall provide the Purchaser with prior notice of such disclosure
permitted under this clause (b).

 

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

 

4.6 Non-Public
Information.    Except
with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, which shall
be disclosed pursuant to Section 4.4, the Company covenants
and agrees that neither it, nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any
information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless
prior thereto the Purchaser shall have consented to the receipt of
such information and agreed with the Company to keep such
information confidential. The Company understands and confirms that
the Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company. To the extent
that the Company delivers any material, non-public information to a
Purchaser without such Purchaser’s consent, the Company
hereby covenants and agrees that such Purchaser shall not have any
duty of confidentiality to the Company, any of its Subsidiaries, or
any of their respective officers, directors, agents, employees or
Affiliates, or a duty to the Company, any of its Subsidiaries or
any of their respective officers, directors, agents, employees or
Affiliates not to trade on the basis of, such material,
non-public information, provided
that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information regarding
the Company or any Subsidiaries, the Company shall simultaneously
file such notice with the Commission pursuant to a Current Report
on Form 8-K or if not subject
to the reporting requirements under the Commission, file a press
release. The Company understands
and confirms that the Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the
Company.

 

 

-17-

 

 

4.7 Use of
Proceeds. Except as set forth
on Schedule 4.7
attached
hereto, the Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and shall not use
such proceeds: (a) for the satisfaction of any portion of the
Company’s debt (other than payment of trade payables in the
ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Common Stock or Common
Stock Equivalents, (c) for the settlement of any outstanding
litigation or (d) in violation of FCPA, OFAC regulations or
Money Laundering Laws. The net proceeds from this offering and the
sale of the Securities to be sold hereunder will be held in the a
Control Account to be agreed upon between the parties on or after
the Closing Date.

 

4.8 Indemnification of
Purchaser.    Subject
to the provisions of this Section 4.8, the Company will
indemnify and hold each Purchaser and its respective directors,
officers, shareholders, members, partners, employees and agents
(and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or
any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers,
shareholders, agents, members, partners or employees (and any other
Persons with a functionally equivalent role of a Person holding
such titles notwithstanding a lack of such title or any other
title) of such controlling persons (each, a
“Purchaser
Party”) harmless from
any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, as incurred, arising
out of or relating to (i) any untrue or alleged untrue
statement of a material fact contained in such registration
statement, any prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any prospectus or
supplement thereto, in the light of the circumstances under which
they were made) not misleading, except to the extent, but only to
the extent, that such untrue statements or omissions are based
solely upon information regarding such Purchaser Party furnished in
writing to the Company by such Purchaser Party expressly for use
therein, or (ii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state
securities law, or any rule or regulation thereunder in connection
therewith. If any action shall be brought against any Purchaser
Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company
in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party. Any Purchaser Party shall have
the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Purchaser Party except
to the extent that (x) the employment thereof has been
specifically authorized by the Company in writing, (y) the
Company has failed after a reasonable period of time to assume such
defense and to employ counsel or (z) in such action there is,
in the reasonable opinion of counsel, a material conflict on any
material issue between the position of the Company and the position
of such Purchaser Party, in which case the Company shall be
responsible for the reasonable fees and expenses of no more than
one such separate counsel. The Company will not be liable to any
Purchaser Party under this Agreement (1) for any settlement by
a Purchaser Party effected without the Company’s prior
written consent, which shall not be unreasonably withheld or
delayed; or (2) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser
Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents. The
indemnification required by this Section 4.8 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or are
incurred. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser
Party against the Company or others and any liabilities the Company
may be subject to pursuant to law.

 

4.9 Reservation of Common
Stock. As of the date
hereof, subject to the Reverse Split, the Company has reserved and
the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of
Common Stock equal to the Required Minimum (as defined in the
Notes) for the purpose of enabling the Company to issue the
Conversion Shares and any other shares that may be issuable
pursuant to the Notes and all the Warrant Shares issuable pursuant
to the Warrants. If, on any date, the number of authorized
but unissued (and otherwise unreserved) shares of Common Stock is
less than the Required Minimum on such date, then the Board of
Directors shall use commercially reasonable efforts to amend the
Company’s certificate or articles of incorporation to
increase the number of authorized but unissued shares of Common
Stock to at least the Required Minimum at such time, as soon as
possible and in any event not later than the 75th day after such
date

 

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

 

 

-18-

 

 

4.11 Certain
Transactions and Confidentiality. The Purchaser
covenants that neither it nor any Affiliate acting on its behalf or
pursuant to any understanding with it will execute any purchases or
sales, including Short Sales of any of the Company’s
securities during the period commencing with the execution of this
Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in
Section 4.4.  The Purchaser, severally and not jointly
with the other Purchaser, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and
the information included in the Disclosure
Schedules. Notwithstanding the foregoing and notwithstanding
anything contained in this Agreement to the contrary, the Company
expressly acknowledges and agrees that (i) no Purchaser makes
any representation, warranty or covenant hereby that it will not
engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement
are first publicly announced, (ii) no Purchaser shall be restricted
or prohibited from effecting any transactions in any securities of
the Company in accordance with applicable securities laws from and
after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release
as described in Section 4.4, (iii) the Purchaser has
not been asked by the Company to agree, nor has any Purchaser
agreed, to desist from purchasing or selling Securities which have
been issued under the terms of the Purchase Agreement, this Note or
any other Transaction Document, or “derivative”
securities based on securities issued by the Company or to hold the
Securities for any specified term, (iv)  Purchaser shall not
be deemed to have any affiliation with or control over any
arm’s length counter-party in any “derivative”
transaction, (y) the Purchaser may engage in hedging
activities, other than Short Sales at various times during the
period that the Securities are outstanding,  and (vi) no
Purchaser shall have any duty of confidentiality or duty not to
trade in the securities of the Company to the Company or its
Subsidiaries after the issuance of the initial press
release.  Except as contemplated above, Company
acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction
Documents.

 

4.12 Conversion
and Exercise Procedures. Each of the form of
Notice of Conversion in the Notes and the Notice of Exercise in the
Warrants set forth the totality of the procedures required of the
Purchasers in order to convert the Notes or exercise the Warrants.
No additional legal opinion, other information or instructions
shall be required of the Purchaser to exercise the Note or exercise
the Warrant. Without limiting the preceding sentences, no
ink-original Notice of Exercise or
Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Exercise or Notice of Conversion form be required in
order to covert and/or exercise the Securities. The Company shall
honor conversions and/or exercises of the Securities and shall
deliver applicable Underlying Shares in accordance with the terms,
conditions and time periods set forth in the Transaction
Documents.

 

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

 

4.14 DTC
Program. At all times that the Securities are outstanding,
the Company will employ as the transfer agent for the Common Stock
and Conversion Shares a participant in the Depository Trust Company
Automated Securities Transfer Program and cause the Common Stock to
be transferable pursuant to such program.

 

4.15 Subsequent
Equity Sales. From the date hereof until such time as no
Purchaser holds any of the Notes, the Company shall be prohibited
from effecting or entering into an agreement to effect any issuance
by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents (or a combination of units thereof) involving a
Variable Rate Transaction. “Variable Rate
Transaction” means a transaction which is not
Permitted Indebtedness (including the transactions contemplated by
this Agreement) and in which the Company (i) issues or sells any
debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive additional
shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock or (ii) enters into, or effects a transaction under, any
agreement, including, but not limited to, an equity line of credit,
whereby the Company may issue securities at a future determined
price. Any Purchaser shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy
shall be in addition to any right to collect damages.

 

 

-19-

 

 

ARTICLE
5

MISCELLANEOUS

 

5.1 Fees and Expenses. Except as
expressly set forth below and in the Transaction Documents to the
contrary, each party shall pay the reasonable, documented fees and
expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance
of this Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and
any exercise notice delivered by a Purchaser), stamp taxes and
other taxes and duties levied in connection with the delivery of
any Securities to the Purchaser.

 

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

 

5.3 Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile or email
attachment at the facsimile number or email address as set forth on
the signature pages attached hereto at or prior to 5:30 p.m. (New
York City time) on a Business Day, (b) the next Business Day after
the date of transmission, if such notice or communication is
delivered via facsimile or email attachment at the facsimile number
or email address as set forth on the signature pages attached
hereto on a day that is not a Business Day or later than 5:30 p.m.
(New York City time) on any Business Day, (c) the second
(2nd)
Business Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto.

 

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

 

5.5 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser then holding
outstanding Notes (other than by merger). Purchaser may assign any
or all of its rights under this Agreement to any Person to whom
Purchaser assigns or transfers any Securities in compliance with
the Transaction Documents, provided that such transferee agrees in
writing to be bound, with respect to the transferred Securities, by
the provisions of the Transaction Documents that apply to the
“Purchaser,” and provided further that (i) such
transferee is an “accredited investor” within the
meaning of Rule 501 under the Securities Act and (ii) such
transferee is not a direct competitor of the Company or any
Subsidiary.

 

5.6 No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person.

 

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

 

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

 

 

-20-

 

 

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

 

5.10 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired, or invalidated, as long as the essential terms and
conditions of this Note for each party remain valid, binding, and
enforceable. The parties shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term,
provision, covenant or restriction.

 

5.11 Rescission
and Withdrawal Right. Notwithstanding
anything to the contrary contained in (and without limiting any
similar provisions of) any of the other Transaction Documents,
whenever any Purchaser exercises a right, election, demand or
option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein
provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company,
any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights; provided,
however,
that, in the case of a rescission of a conversion of the Note, the
Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded conversion or exercise notice
concurrently with the return to such Purchaser of the aggregate
exercise price paid to the Company for such shares and the
restoration of such Purchaser’s right to acquire such shares
pursuant to such Purchaser’s Warrant (including, issuance of
a replacement warrant certificate evidencing such restored
right).

 

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

 

5.13 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of
the Purchaser and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert
in any Action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

 

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

 

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

 

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

 

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

 

5.18 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto.

 

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

 

 

-21-

 

 

 

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

 

 

	

GOIP GLOBAL, INC.

 

 

	

Address for Notice:

 

	

By:__________________________________________

 Name:

 Title:

 

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

	

Email:

	
 

	
 

 

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

 

-22-

 

 

PURCHASER
SIGNATURE PAGES TO GOIG SECURITIES PURCHASE AGREEMENT

 

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

 

Name of
Purchaser:
_____________________________________________

 

Signature of Authorized Signatory of
Purchaser: __________________________________

 

Name of
Authorized Signatory:
_______________________________________

 

Title
of Authorized Signatory: _____
_______________________________________

 

Email
Address of Authorized Signatory: _____________________

 

Facsimile Number of
Authorized Signatory:
__________________________________________

 

Address
for Notice to Purchaser:

 

 

 

 

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

 

 

 

 

 

EIN
Number: ________________

 

 

 

-23-

 

 

EXHIBIT A

 

Form of Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-24-

 

 

EXHIBIT B

 

Form of Subordination Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-25-

 

 

EXHIBIT C

 

Form of Warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-26-

 

 

Schedule 1

 

Purchase Price; Securities Purchased

	

Name
of

Purchaser

 

	

Purchase
Price

 

	

Aggregate
Principal Amount of Notes being Purchased

 

	

Number
of Warrant Shares issuable upon exercise of Warrant being
Purchased

 

	
 

	
 

	
 

	
 

 

 

 

-27-

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