Document:

twhi_ex10-7

 

Exhibit 10.7

 

SUBORDINATION AGREEMENT

 

SUBORDINATION
AGREEMENT (this “Agreement”), dated as of
___________, 2020, among the purchasers signatory to the Securities
Purchase Agreement (as defined below) (together with its respective
successors and assigns, including, any future holder of Senior Debt
(as defined below), the “Senior Creditors”),
_________________ (collectively, the “Subordinated Creditors” and each,
individually, a “Subordinated
Creditor”), and GoIP Global, Inc., a Colorado
corporation (the “Company”).

 

WHEREAS, pursuant
to a Securities Purchase Agreement, dated as of May 8, 2020 (as
amended and in effect from time to time, including any replacement
agreement therefor, the “Securities Purchase Agreement”),
among the Company and the Senior Creditors, the Senior Creditors
has extended credit to the Company as evidenced by certain Senior
Secured Convertible Notes due May 8, 2021 in the aggregate
principal amount of $3,000,000.00 issued by the Company to the
Senior Creditors (together with any notes issued in exchange
therefor or replacement thereof or any additional investment made
by the Senior Creditors and as the same may be amended,
supplemented, restated or otherwise modified from time to time, the
“Senior Notes”);
and

 

WHEREAS, each
Subordinated Creditor has extended or agreed to extend credit to
the Company pursuant to certain promissory notes, dated on or about
the date hereof, issued by the Company in favor of such
Subordinated Creditor (as amended with the consent of the Senior
Creditors as provided herein and in effect from time to time,
collectively, the “Subordinated Agreements” and each,
individually, a “Subordinated
Agreement”); and

 

WHEREAS, in order
to induce the Senior Creditors to purchase Senior Notes and
otherwise extend credit to the Company pursuant to the Securities
Purchase Agreement, the Company and the Subordinated Creditors have
agreed to enter into this Agreement with and the Senior
Creditors.

 

NOW,
THEREFORE, in consideration of the foregoing, the mutual agreements
herein contained and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as
follows:

 

1. Definitions. Terms not otherwise
defined herein have the same respective meanings given to them in
the Securities Purchase Agreement. In addition, the following terms
shall have the following meanings:

 

“Senior Debt” shall mean all
principal, interest, fees, costs, enforcement expenses (including
legal fees and disbursements), collateral protection expenses and
other reimbursement or indemnity obligations created or evidenced
by the Securities Purchase Agreement, the Senior Notes or any of
the other Transaction Documents or any prior, concurrent, or
subsequent notes, instruments or agreements of indebtedness,
liabilities or obligations of any type or form whatsoever relating
thereto in favor of the Senior Creditors (including without
limitation, the Senior Creditors’ respective successors,
assigns and participants). Without limiting any term contained in
the immediately preceding sentence, Senior Debt shall expressly
include any and all interest accruing or out of pocket costs or
expenses incurred after the date of any filing by or against any
Credit Party of any petition under any Bankruptcy Law regardless of
whether the Senior Creditors’ claim therefor is allowed or
allowable in the case or proceeding relating thereto.

 

“Subordinated Debt” shall mean all
principal, interest, fees, costs, enforcement expenses (including
legal fees and disbursements), collateral protection expenses and
other reimbursement and indemnity obligations of the Company to
each Subordinated Creditor created or evidenced by the applicable
Subordinated Agreement or any prior, concurrent or subsequent
guaranty, notes, instruments or agreements of indebtedness,
liabilities or obligations of any type or form whatsoever relating
thereto executed and delivered by the Company in favor of such
Subordinated Creditor.

 

“Subordinated Documents” shall mean
collectively, the Subordinated Agreements and any and all other
guaranties and security interests, mortgages and other liens
directly or indirectly guarantying or securing any of the
Subordinated Debt, and any and all other documents or instruments
evidencing or further guarantying or securing directly or
indirectly any of the Subordinated Debt, whether now existing or
hereafter created, copies of which Subordinated Documents are
attached hereto as Exhibit
A.

 

 

-1-

 

 

 

 

 

 

2. General. The Subordinated Debt and
any and all Subordinated Documents shall be and hereby are
subordinated and the Company is not permitted to pay, and no
Subordinated Creditor is permitted to receive, any payment on its
Subordinated Debt until the full and final payment in cash of the
Senior Debt, whether now or hereafter incurred or owed by the
Company. Notwithstanding the immediately preceding sentence, the
Company shall be permitted to pay, and each Subordinated Creditor
shall be permitted to receive,

 

3. Enforcement. No Subordinated Creditor
will take or omit to take any action or assert any claim with
respect to its Subordinated Debt or otherwise which is inconsistent
with the provisions of this Agreement. Without limiting the
foregoing, no Subordinated Creditor will assert, collect or enforce
its Subordinated Debt or any part thereof or take any action to
foreclose or realize upon its Subordinated Debt or any part thereof
or enforce any of its Subordinated Documents except to the extent
(but only to such extent) that the commencement of a legal action
may be required to toll the running of any applicable statute of
limitation. Until the Senior Debt has been finally paid in full in
cash, no Subordinated Creditor shall have any right of subrogation,
reimbursement, restitution, contribution or indemnity whatsoever
from any assets of the Company or any guarantor of or provider of
collateral security for the Senior Debt. Each Subordinated Creditor
further waives any and all rights with respect to
marshalling.

 

4. Payments Held in Trust. No
Subordinated Creditor will hold in trust and immediately pay over
to the Senior Creditors in the same form of payment received, with
appropriate endorsements, for application to the Senior Debt any
cash amount that the Company pays to such Subordinated Creditor
with respect to its Subordinated Debt, or as collateral for the
Senior Debt any other assets of the Company that such Subordinated
Creditor may receive with respect to its Subordinated Debt, except
with respect to payments expressly permitted pursuant to
Section 2. The Senior Creditors is irrevocably authorized to
supply any required endorsement or assignment which may have been
omitted.

 

5. Evidence of Subordination. The
Company and each Subordinated Creditor shall make appropriate
notations in their books to show the subordinate character of all
applicable Subordinated Debt which may now or hereafter be carried
on open account. Until the Senior Debt has been indefeasibly paid
in full, the Company shall not issue any instrument, security or
other writing evidencing any part of its Subordinated Debt except
as described in this Section 5 or at the request of and in the
manner requested by the Senior Creditors; and no Subordinated
Creditor shall subordinate any part of its Subordinated Debt except
to or in favor of the Senior Creditors.

 

6. Defense to Enforcement. If any
Subordinated Creditor, in contravention of the terms of this
Agreement, shall commence, prosecute or participate in any suit,
action or proceeding against the Company, then the Company may
interpose as a defense or plea the making of this Agreement, and
the Senior Creditors may intervene and interpose such defense or
plea in its name or in the name of the Company. If any Subordinated
Creditor, in contravention of the terms of this Agreement, shall
attempt to collect any of its Subordinated Debt or enforce any of
its Subordinated Documents, then the Senior Creditors or the
Company may, by virtue of this Agreement, restrain the enforcement
thereof in the name of the Senior Creditors or in the name of the
Company. If any Subordinated Creditor, in contravention of the
terms of this Agreement, obtains any cash or other assets of the
Company as a result of any administrative, legal or equitable
actions, or otherwise, such Subordinated Creditor agrees forthwith
to pay, deliver and assign to the Senior Creditors with appropriate
endorsements, any such cash for application to the Senior Debt and
any such other assets as collateral for the Senior
Debt.

 

7.
Bankruptcy, Etc.

 

(a)
Until all Senior Debt shall have been indefeasibly paid in full in
cash, no Subordinated Creditor will commence or join with any other
creditor or creditors of the Company in commencing any bankruptcy,
reorganization or insolvency proceedings against the
Company.

 

(b) At
any meeting of creditors of the Company or in the event of any case
or proceeding, voluntary or involuntary, for the distribution,
division or application of all or part of the assets of the Company
or the proceeds thereof, whether such case or proceeding be for the
liquidation, dissolution or winding up of the Company or its
businesses, a receivership, insolvency or bankruptcy case or
proceeding, an assignment for the benefit of creditors or a
proceeding by or against the Company for relief under any
bankruptcy law or any other law relating to the relief of debtors,
readjustment of indebtedness, reorganization, arrangement,
composition or extension or marshalling of assets or otherwise, the
Senior Creditors is hereby irrevocably authorized on behalf of each
Subordinated Creditor at any such meeting or in any such
proceeding:

 

 

-2-

 

 

 

 

 

 

(i) to
enforce claims comprising the Subordinated Debt either in its own
name or in the name of such Subordinated Creditor, by proof of
debt, proof of claim, suit or otherwise;

 

(ii) to
receive or collect any cash or other assets of the Company
distributed, divided or applied by way of dividend or payment, or
any securities issued on account of any Subordinated Debt, and
apply such cash to or to hold such other assets or securities as
collateral for the Senior Debt, and to apply to the Senior Debt any
cash proceeds of any realization upon such other assets or
securities that the Senior Creditors elects to effect, until all of
the Senior Debt shall have been paid in full in cash, rendering to
such Subordinated Creditor any surplus to which such Subordinated
Creditor is then entitled;

 

(iii)
to vote claims comprising the Subordinated Debt, to accept or
reject any plan of partial or complete liquidation, reorganization,
arrangement, composition or extension; and

 

(iv) to
take generally any action in connection with any such meeting or
proceeding which such Subordinated Creditor might otherwise
take.

 

8.
Lien Subordination.

 

(a) The
Subordinated Debt shall be unsecured and the Company shall not
grant any Liens to secure any of the Subordinated Debt. To the
extent any Lien is ever granted, the Senior Debt, the Securities
Purchase Agreement and the other Transaction Documents and any and
all other documents and instruments evidencing or creating the
Senior Debt and all guaranties, mortgages, security agreements,
pledges and other collateral guarantying or securing the Senior
Debt or any part thereof shall be senior to the Subordinated Debt
and the Subordinated Documents irrespective of the time of the
execution, delivery or issuance of any thereof or the filing or
recording for perfection of any thereof or the filing of any
financing statement or continuation statement relating to any
thereof. Each Subordinated Creditor hereby agrees, upon request of
the Senior Creditors at any time and from time to time, to execute
such other documents or instruments as may be requested by the
Senior Creditors further to evidence of public record or otherwise
the senior priority of the Senior Debt as contemplated hereby. Each
Subordinated Creditor further agrees to maintain on its books and
records such notations as the Senior Creditors may reasonably
request to reflect the subordination contemplated hereby and to
perfect or preserve the rights of the Senior Creditors
hereunder.

 

(b)
Each Subordinated Creditor agrees that, within two (2) days
following the Senior Creditors’s written request therefor,
such Subordinated Creditor will execute, deliver and file any and
all such termination statements, mortgage discharges, lien releases
and other agreements and instruments as the Senior Creditors
reasonably deems necessary or appropriate in order to give effect
to the preceding sentence. Each Subordinated Creditor hereby
irrevocably appoints the Senior Creditors, and its successors and
assigns, and their respective officers, with full power of
substitution, the true and lawful attorney(s) of such Subordinated
Creditor for the purpose of effecting any such executions,
deliveries and filings if and to the extent that such Subordinated
Creditor shall have failed to perform such obligations pursuant to
the foregoing provisions of this Section 8(b) within such
period.

 

9. Senior Creditors’ Freedom of
Dealing. Each Subordinated Creditor agrees, with respect to
the Senior Debt and any and all collateral therefor or guaranties
thereof, that the Company and the Senior Creditors, as applicable,
may agree to increase the amount of the Senior Debt or otherwise
modify, in any respect whatsoever, the terms of any of the Senior
Debt, and the Senior Creditors may grant extensions of the time of
payment or performance to and make compromises, including releases
of collateral or guaranties, and settlements with the Company and
all other Persons, in each case without the consent of such
Subordinated Creditor or the Company and without affecting the
agreements of such Subordinated Creditor or the Company contained
in this Agreement; provided, however, that nothing contained in
this Section 9 shall constitute a waiver of the right of the
Company itself to agree or consent to a settlement or compromise of
a claim which the Senior Creditors may have against the Company. To
the extent any Senior Creditors sells or assigns any of its Senior
Debt, each Subordinated Creditor agrees to execute and deliver any
and all documents and/or agreements reasonably requested by such
Senior Creditors to reflect the continued subordination by such
Subordinated Creditor of its Subordinated Debt in favor of such
purchaser or assignee of such Senior Debt.

 

10. Modification or Sale of the Subordinated
Debt. No Subordinated Creditor will, at any time while this
Agreement is in effect, modify any of the terms of any of its
Subordinated Debt or any of its Subordinated Documents; nor will
such Subordinated Creditor sell, transfer, pledge, assign,
hypothecate or otherwise dispose of any or all of its Subordinated
Debt unless such Subordinated Creditor provides prior written
notice of such event to the Senior Creditors and the person or
entity acquiring such interest in such Subordinated Debt enters
into a subordination agreement with the Senior Creditors in the
form of this Agreement along with any other documents and/or
agreements reasonably requested by the Senior Creditors. Any
transfer in violation of this Agreement shall be void ab
initio.

 

 

-3-

 

 

 

 

 

11. Company’s Obligations
Absolute. Nothing contained in this Agreement shall impair,
as between the Company and any Subordinated Creditor, the
obligation of the Company to pay to such Subordinated Creditor all
amounts payable in respect of its Subordinated Debt as and when the
same shall become due and payable in accordance with the terms
thereof, or prevent such Subordinated Creditor (except as expressly
otherwise provided in Section 3 or Section 6) from
exercising all rights, powers and remedies otherwise permitted by
its Subordinated Documents and by applicable law upon a default in
the payment of its Subordinated Debt or under its Subordinated
Documents, all, however, subject to the rights of the Senior
Creditors as set forth in this Agreement.

 

12. Termination of Subordination. This
Agreement shall continue in full force and effect, and the
obligations and agreements of each Subordinated Creditor and the
Company hereunder shall continue to be fully operative, until all
of the Senior Debt shall have been paid and satisfied in full in
cash and such full payment and satisfaction shall be final and not
avoidable. To the extent that the Company or any guarantor of or
provider of collateral for the Senior Debt makes any payment on the
Senior Debt that is subsequently invalidated, declared to be
fraudulent or preferential or set aside or is required to be repaid
to a trustee, receiver or any other party under any bankruptcy,
insolvency or reorganization act, state or federal law, common law
or equitable cause (such payment being hereinafter referred to as a
“Voided
Payment”), then to the extent of such Voided Payment,
that portion of the Senior Debt that had been previously satisfied
by such Voided Payment shall be revived and continue in full force
and effect as if such Voided Payment had never been made. In the
event that a Voided Payment is recovered from the Senior Creditors,
an Event of Default shall be deemed to have existed and to be
continuing under the Securities Purchase Agreement from the date of
the Senior Creditors’ initial receipt of such Voided Payment
until the full amount of such Voided Payment is restored to the
Senior Creditors. During any continuance of any such Event of
Default, this Agreement shall be in full force and effect with
respect to all of the Subordinated Debt. To the extent that any
Subordinated Creditor has received any payments with respect to its
Subordinated Debt subsequent to the date of the Senior
Creditors’ initial receipt of such Voided Payment and such
payments have not been invalidated, declared to be fraudulent or
preferential or set aside or are required to be repaid to a
trustee, receiver, or any other party under any bankruptcy act,
state or federal law, common law or equitable cause, such
Subordinated Creditor shall be obligated and hereby agrees that any
such payment so made or received shall be deemed to have been
received in trust for the benefit of the such Senior Creditors, and
such Subordinated Creditor hereby agrees to pay to the Senior
Creditors, upon demand, the full amount so received by such
Subordinated Creditor during such period of time to the extent
necessary fully to restore to the Senior Creditors the amount of
such Voided Payment. Upon the payment and satisfaction in full in
cash of all of the Senior Debt, which payment shall be final and
not avoidable, this Agreement will automatically terminate without
any additional action by any party hereto.

 

13. Specific Performance. The Senior
Creditors is hereby authorized to demand specific performance of
this Agreement, whether or not the Company shall have complied with
the provisions hereof applicable to it, at any time when any
Subordinated Creditor shall have failed to comply with any
provision hereof. Each Subordinated Creditor hereby irrevocably
waives any defense based on the adequacy of a remedy at law which
might be asserted as a bar to the remedy of specific performance
hereof in any action brought therefor by the Senior Creditors.
Except as required hereunder or under any of the other Transaction
Documents, each Subordinated Creditor further waives presentment,
notice and protest in connection with all negotiable instruments
evidencing Senior Debt to which it may be a party, notice of the
acceptance of this Agreement by the Senior Creditors, notice of any
loan made, extension granted or other action taken in reliance
hereon and all demands and notices of every kind in connection with
this Agreement or the Senior Debt.

 

14. Representations and Warranties. Each
Subordinated Creditor represents and warrants as
follows:

 

(a)
Such Subordinated Creditor which is not an individual is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation and has all
requisite corporate or limited liability company, as applicable,
power and authority to enter into and perform this
Agreement.

 

 

-4-

 

 

 

 

 

 

(b) The
execution, delivery and performance by such Subordinated Creditor
of this Agreement and the transactions contemplated hereby
(i) have been duly authorized by all necessary corporate or
limited liability company, as applicable, action (except in the
case of individual Subordinated Creditors), and (ii) do not
(A) contravene such Subordinated Creditor’s constituent
documents, if applicable, (B) violate any requirement of law
to which such Subordinated Creditor is subject, or
(C) conflict with or result in the breach of, or constitute a
default under, any contractual obligation binding on such
Subordinated Creditor.

 

(c) No
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any
other third party is required for the due execution, delivery,
recordation, filing or performance by such Subordinated Creditor of
this Agreement.

 

(d)
This Agreement has been duly executed and delivered by such
Subordinated Creditor. This Agreement is the legal, valid and
binding obligation of such Subordinated Creditor, enforceable
against such Subordinated Creditor in accordance with its
terms.

 

15. Accuracy of Representations and
Warranties. If any representation or warranty contained
herein shall prove to have been materially false when made or in
the event of any breach by the Company or any Subordinated Creditor
in the performance of any of the terms hereof, the Senior Creditors
may, at their option, declare all Senior Debt to be due and
payable, without presentment, demand, protest, or notice of any
kind, notwithstanding any time or credit otherwise
allowed.

 

16. Additional Documents. The Company
and each Subordinated Creditor shall execute and deliver to the
Senior Creditors such further instruments and shall take such
further action as the Senior Creditors may at any time or times
request in order to carry out the provisions and intent of this
Agreement.

 

17. Legends. Any instrument or agreement
evidencing the Subordinated Debt shall specifically provide by an
appropriate legend conspicuously placed thereon that payment of any
and all amounts thereunder has been subordinated to prior payment
of Senior Debt in the manner and to the extent set forth in this
Subordination Agreement.

 

18. Notices. All notices and other
communications which are required and may be given pursuant to the
terms of this Agreement shall be in writing and shall be sufficient
and effective in all respects if given in writing or telecopied,
delivered or mailed by registered or certified mail, postage
prepaid, as follows:

 

(a)           if
to a Senior Creditors or the Company, at the address set forth in
the Securities Purchase Agreement; and

 

(b)           if
to the Subordinated Creditor, at:

 

[NAME]

 

or such
other address or addresses as any party hereto shall have
designated by written notice to the other parties hereto. Notices
shall be deemed given and effective upon the earlier to occur of
(x) the third day following deposit thereof in the U.S. mail
or (y) receipt by the party to whom such notice is
directed.

 

19. Governing Law. THIS AGREEMENT SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF NEW
YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE
THAT WOULD PERMIT THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.

 

20. Waiver of Jury Trial. EACH OF THE
SUBORDINATED CREDITORS AND THE COMPANY IRREVOCABLY WAIVE ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE ACTIONS OF THE
SENIOR CREDITORS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT HEREOF OR THEREOF.

 

 

-5-

 

 

 

 

 

 

21.
Personal Jurisdiction.

 

(a)
Each of the Subordinated Creditors and the Company irrevocably
submits to the non-exclusive jurisdiction of any New York state or
federal court sitting in the Borough of Manhattan, The City of New
York, over any suit, action or proceeding arising out of or
relating to this Agreement or any of the agreements, documents or
instruments delivered in connection herewith or therewith. To the
fullest extent permitted by applicable law, each of the
Subordinated Creditors irrevocably waives and agrees not to assert,
by way of motion, as a defense or otherwise, any claim that it is
not subject to the jurisdiction of any such court, any objection
that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.

 

(b)
Nothing in this Section 21 shall affect the right of the
Senior Creditors to serve process in any manner permitted by law,
or limit any right that the Senior Creditors may have to bring
proceedings against any Subordinated Creditor or the Company in the
courts of any appropriate jurisdiction or to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other
jurisdiction.

 

22. Expenses. Each of the Subordinated
Creditors and the Company jointly and severally agree to pay upon
demand to any of the Senior Creditors the amount of any and all
out-of-pocket expenses, including the reasonable fees and expenses
of their counsel and of any experts or agents, which any Senior
Creditors may incur in connection with the exercise or enforcement
of any of the rights of any Senior Creditors
hereunder.

 

23. Miscellaneous. This Agreement may be
executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be
an original, and all of which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier or pdf shall be effective as
delivery of a manually executed counterpart of this Agreement. In
proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by the party
against which enforcement is sought. The Senior Creditors may, in
their sole and absolute discretion, waive any provisions of this
Agreement benefiting the Senior Creditors; provided, however, that
such waiver shall be effective only if in writing and signed by the
Senior Creditors and shall be limited to the specific provision or
provisions expressly so waived. This Agreement shall be binding
upon the successors, assigns and participants of each Subordinated
Creditor and the Company and shall inure to the benefit of the
Senior Creditors and its respective successors, assigns and
participants, any purchaser or purchasers refunding or refinancing
any of the Senior Debt and their respective successors, assigns and
participants, but shall not otherwise create any rights or benefits
for any third party.

 

[Remainder
of page intentionally left blank; Next page is signature
page.]

 

 

 

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IN
WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date first above
written.

 

 

	
 

	

[NAME]

 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	
 

	

Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

ARENA ORIGINATING CO., LLC

 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	
 

	

Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

ARENA SPECIAL OPPORTUNITIES FUND, LP

 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	
 

	

Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

ARENA SPECIAL OPPORTUNITIES PARTNERS I, LP

 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	
 

	

Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

GOIP GLOBAL, INC.

 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	

Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

[NAME]

 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	
 

	

Title:

	
 

	
 

	
 

 

 

 

-7-twhi_ex10-8

  Exhibit 10.8

 

SECURITIES PURCHASE AGREEMENT

 

THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of
November 3, 2020, by and among Transworld Holdings, Inc., a
Delaware corporation (which was formerly known as 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 (including its successors and assigns, the
“Purchaser”).

 

RECITALS

 

A.           The
Company and the Purchaser 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
Purchaser, 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) “Additional
Note Financing” shall have the meaning ascribed to such term in
Section 2.3(b).

 

(b) “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, including, among others,
executive officers, directors, large stockholders, subsidiaries,
parent entities and sister companies.

 

(c) “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.

 

 

-1-

 

 

(d) “Charge
Acquisition Agreement” means that
certain Stock Acquisition Agreement, dated September 25, 2020, by
and among the Company, Transworld Enterprises, Inc., GetCharged,
Inc., the stockholders of GetCharged, Inc. and Andrew Fox, as
representative of the stockholders.

 

(e) “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 the parties’ obligations hereunder
have been satisfied or waived, including (i) the Purchaser’s
obligations to pay the Purchase Price, including the
occurrence of the Closing Event and (ii) the
Company’s obligations to deliver the
Securities.

 

(f) “Closing Event” shall
refer to the closing of the transactions contemplated by the Charge
Acquisition Agreement, the occurrence of which shall be a condition
precedent to the Closing.

 

(g) “Collateral”
shall have the meaning ascribed to such term as set forth in the
Security Agreement.

 

(h) “Commitment
Shares” means 903,226
shares of the Company’s Common Stock to be issued to the
Purchaser at Closing.

 

(i) “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.

 

(j) “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.

 

(k) “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.

 

(l) “Controlled Account” means
a deposit account pursuant to which the written authorization an
officer of the Purchaser is required to direct disposition of the
funds in such deposit account.

 

(m)  “Conversion
Date” has the meaning set forth in the
Note.

 

 

 

 

 

-2-

 

 

(n) “Conversion Shares” means
all shares of Common Stock issuable upon conversion of any portion
of the Note (including, at the Purchaser’s election pursuant
to the conditions set forth in the Note, accrued and unpaid
interest thereon), but solely to the extent and subject to any
conditions set forth in the Note.

 

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

 

(p) “Effective Date” means the
date that the initial Registration Statement filed by the Company
pursuant to the Registration Rights Agreement is first declared
effective by the Commission.

 

(q) “Event of Default” shall
have the meaning set forth in the Note.

 

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

 

(s) “Exempt Issuance” means
the issuance of (a) shares of Common Stock or options to employees,
officers, consultants, advisors or directors of the Company in
consideration of services to 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, (c)
Permitted Indebtedness incurred in accordance with Section
1.1(cc)(e) hereunder or (d) any securities issued to shareholders
of GetCharged, Inc.
in accordance with the terms of the Charge Acquisition
Agreement.

 

(t) “FedEx Route Acquisition
Agreements” means, collectively, the transactions
contemplated by (i) that certain Asset
Purchase Agreement, dated August 27, 2020, by and between
Transworld Enterprises, Inc. and APS Transportation, Inc., a New York
corporation, and (ii)
that
certain Asset Purchase Agreement, dated August 10, 2020, by and
between Transworld Enterprises, Inc. and Romolos Corp., a New York
corporation.

 

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

 

(v) “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.

 

 

 

-3-

 

 

(w) “Investment” means any
investment (including, without limitation, any loan or advance) in
or to any Person, whether payment therefor is made in cash or
capital stock or other equity interests or otherwise, and whether
such Investment is by acquisition of capital stock or other equity
interests or Indebtedness, or by loan, advance, transfer of
property out of the ordinary course of business, capital
contribution, equity or profit sharing interest, extension of
credit on terms other than those normal in the ordinary course of
business or otherwise.

 

(x)  “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.

 

(y) “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 Note, this Agreement and/or any of
the other Transaction Documents, all accrued but unpaid interest on
the Note 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 Note and/or the other Transaction
Documents.

 

(z) “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, (c) the rights or
remedies of the Purchaser hereunder or thereunder, or (d) the
ability of the Company to perform its obligations under any
Transaction Document.

 

(aa) “May
2020 Financing” means the Company’s financing
which closed on May 8, 2020 involving the sale and issuance of
senior secured notes in an aggregate principal amount of
$3,000,000, warrants for the purchase of an aggregate of 7,600,000 shares of Common
Stock and 7.5 shares of series
G convertible preferred stock to Affiliates of the Purchaser
for an aggregate purchase price of $2,700,000.

 

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

 

 

 

-4-

 

 

(cc) “Permitted
Indebtedness” means (a) the indebtedness evidenced by
the Note, (b) any indebtedness of the Company outstanding as of the
date of this Agreement, (c) 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, (d) indebtedness
for up to $2,500,000 to be issued in the Additional Note Financing
and the Subsequent Financing as contemplated by this Agreement,
that (1) is subordinated in right of payment to the Note and the
convertible promissory notes issued to Affiliates of the Purchaser
in the May 2020 Financing, and (2) matures at a date later than 90
days after the Maturity Date, (e) any indebtedness issued by the
Company to any SBA-approved lender and (f) any indebtedness issued
by PTGI upon consummation of the transactions contemplated by the
PTGI Acquisition Agreement, on or after the date hereof, provided
such indebtedness is non-recourse to the Company and its
Subsidiaries (other than PTGI).

 

(dd) “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; (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; (f) any Liens in favor of the Purchaser; and (g) Liens
securing Indebtedness of the type described in clause (f) of the
definition of Permitted Indebtedness, provided such Liens do not
extend to any Collateral.

 

(ee) “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).

 

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

 

 

 

-5-

 

 

(gg) “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.

 

(hh) “PTGI”
means PTGI International Carrier Services Inc., a Delaware
corporation.

 

(ii) “PTGI
Acquisition Agreement” means that
certain Stock Purchase Agreement, dated October 2, 2020, by and
among the Company, ICS Group Holdings Inc., a Delaware corporation,
HC2 Holdings Inc., a Delaware corporation and
PTGI.

 

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

 

(kk) “Registration
Rights Agreement” means the Registration Rights
Agreement, dated as of the Closing Date, by and between the Company
and the Purchaser as hereinafter amended and/or supplemented
altogether with all exhibits, schedules and annexes to such
Registration Rights Agreement, which Registration Rights Agreement
is annexed hereto as Exhibit D.

 

(ll)  “Registration
Statement” means a
registration statement meeting the requirements set forth in the
Registration Rights Agreement and covering the resale of the
Conversion
Shares issuable upon conversion of the Note and the Commitment
Shares as provided for in the Registration Rights
Agreement.

 

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

 

(nn) “Securities”
means the Note and the Commitment
Shares purchased pursuant to this Agreement and all
Underlying Shares and any securities of the Company issued to the
Purchaser in replacement, substitution and/or in connection with
any exchange, conversion and/or any other transaction involving all
or any of such securities of the Company.

 

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

 

(pp) “Security
Agreement” means the Amended and Restated Security
Agreement, dated on or about the date hereof, by and among the
Company, the Subsidiaries of the Company, and the Purchaser as
hereinafter amended and/or supplemented altogether with all
exhibits, schedules and annexes to such Security Agreement,
pursuant to which the Note is secured by the Collateral, which
security interest in the Collateral shall be perfected by the
Purchaser’s UCC-1, filed with the Secretary of State of the
State of Delaware, to the extent perfectable by the filing of a
UCC-1 Financing Statement and such other documents and instruments
related thereto, which Security Agreement is annexed hereto as
Exhibit B.

 

 

 

-6-

 

 

(qq) “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).

 

(rr) “SMRH”
means Sheppard, Mullin, Richter & Hampton LLP, with offices
located at 30 Rockefeller Plaza, 39th
Floor, New
York, New York 10112.

 

(ss) “Subordinated
Note Financing” mean the subordinate promissory
notes with
an aggregate principal amount of $1,096,444 issued by the Company
between May 8, 2020 and the date of this Agreement.

 

(tt) “Subordination
Agreement” means
the Amended and Restated Subordination Agreement, dated as of the
date hereof, by and among  KORR Value L.P., the Purchaser and
the Affiliates of the Purchaser who were issued convertible
promissory notes in the May 2020 Financing, as the Creditors
therein, and the Company which Subordination Agreement is annexed
hereto as Exhibit C, as amended,
restated, supplemented or otherwise modified from time to time in
accordance with its terms.

 

(uu) “Subsequent
Financing”
shall have the meaning ascribed to such term in Section
4.20.

 

(vv) “Subsequent
Financing
Closing” shall have the
meaning ascribed to such term in Section 4.20.

 

(ww) “Subsequent
Financing
Deadline Date” shall have the
meaning ascribed to such term in Section 4.20.

 

(xx) “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.

 

(yy) “Subsidiary
Guaranty Agreement” means each Guaranty Agreement,
substantially in the form of annexed hereto as Exhibit E, between a Subsidiary
and the Purchaser, as amended, restated, supplemented or otherwise
modified from time to time.

 

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

 

(aa) “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).

 

 

 

-7-

 

 

(bb) “Transaction
Documents” means, collectively, this Agreement, the
Note, the Registration Rights Agreement, the Security Agreement,
each Subsidiary Guaranty Agreement, and all financing statements
(or comparable documents now or hereafter filed in accordance with
the UCC or other comparable or similar laws, rules or regulations)
in favor of the Purchaser as secured parties perfecting all Liens
the Purchaser have on the Collateral (which security interests and
Liens of the Purchaser shall be senior to all Indebtedness of the
Company), the Subordination Agreement, any control agreement or
similar agreement related the Controlled Account, 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.

 

(cc) “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.

 

(dd) “UCC”
means the Uniform Commercial Code 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’s 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.

 

(ee) “Underlying
Shares” means all Conversion Shares.

 

(ff) “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.

 

 

 

-8-

 

 

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,
time being of the essence, subject to the occurrence of the Closing
Event and the other conditions set forth in Section 2.3, upon the
terms and subject to the conditions set forth herein, the Company
agrees to sell, and the Purchaser agrees to purchase, the
Securities in such amounts as indicated on 
Schedule 1 hereto. The
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 SMRH or such
other location as the parties shall mutually agree.

 

 

 

-9-

 

 

2.2 Deliveries.

 

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

 

(i)           this
Agreement duly executed by the Company;

 

(ii)           a
Security Agreement providing the Purchaser with a lien on all of
the assets of the Company, duly executed by the
Company;

 

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

 

(iv)           the
Commitment Shares, registered in the name of the Purchaser as set
forth on Schedule
1;

 

(v)           the
Registration Rights Agreement duly executed by the
Company;

 

(vi)           a
certificate, in the form acceptable to the Purchaser and its
counsel, executed by the secretary of the Company dated as of the
Closing Date, as to (i) the resolutions as adopted by the
Company’s board of directors relating to the transactions
contemplated by this Agreement in a form acceptable to the
Purchaser, (ii) Certificate of Incorporation or other similar
organizational document of the Company, and (iii) the Bylaws or
other similar organizational document of the Company, each as in
effect at the Closing;

 

(vii)           a
certificate for each Subsidiary of the Company, in the form
acceptable to the Purchaser and its counsel, executed by the
secretary of such Subsidiary dated as of the Closing Date, as to
(i) the resolutions as adopted by the Subsidiary’s board of
directors or other governing body relating to the transactions
contemplated by this Agreement in a form acceptable to the
Purchaser, (ii) Certificate of Incorporation or other similar
organizational document of such Subsidiary, and (iii) the Bylaws or
other similar organizational document of such Subsidiary, each as
in effect at the Closing;

 

(vii)           a
certificate, duly executed by the Chief Executive Officer of the
Company, dated as of the Closing Date, confirming compliance with
Section 2.3(a)(i) and (ii) below and as to such other matters as
may be reasonably requested by the Purchaser and its counsel in the
form acceptable to the Purchaser;

 

(viii)                      certificates
evidencing the good standing of the Company and each Company
Subsidiary in such entity’s jurisdiction of incorporation
issued by the Secretary of State (or comparable office) of such
jurisdiction of formation as of a date within five (5) days of the
Closing Date;

 

(ix)           an
opinion of counsel to the Company, in such form as reasonably
acceptable to the Purchaser;

 

 

 

-10-

 

 

(x)           the
Subordination Agreement, duly executed by the Company and the
lenders party thereto;

 

(xi)           a
Subsidiary Guaranty Agreement for each Subsidiary of the
Company;

 

(xii)         
evidence showing the closing of the Additional Note Financing on or
prior to the Closing Date; and

 

(xiii)        
such other documents, instruments,
opinions or certificates relating to the transactions contemplated
by this Agreement as the Purchaser or its counsel may reasonably
request.

 

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

 

(i)           this
Agreement duly executed by the Purchaser;

 

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

 

(iii)           the
Security Agreement duly executed by the Purchaser;

 

(iv)           

the Registration
Rights Agreement duly executed by thePurchaser; and

 

(v)           

the Subordination Agreement, duly executed by the
Purchaser.

 

2.3 Conditions to Purchase the
Securities. Subject to the terms and conditions of this
Agreement, the Purchaser will at the 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 the Purchaser required to
be performed at or prior to the date of the Closing shall have been
performed;

 

(iii)           the
delivery by the 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

 

 

 

-11-

 

 

(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 the 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)           satisfaction
of the Closing Event;

 

(vii)           consummation
of a debt financing by the Company on or prior to the Closing Date,
the gross proceeds of which, in the aggregate, equal $500,000 and is subordinated to the
Note and matures 90 days after the Note (the
“Additional
Note Financing”); 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 Purchaser at the 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.

 

 

 

-12-

 

 

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 Purchaser 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). 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, the reservation for issuance of the Underlying
Shares required to be reserved pursuant to the terms of the Note,
of the issuance the Underlying Shares
into which the Note is convertible and the issuance and sale of the
Commitment Shares (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) have 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 in any material respect 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, and (v) other than the Liens granted to the Purchaser
pursuant to the Transaction Documents, 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.

 

 

 

-13-

 

 

(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”),
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.

 

 

 

-14-

 

 

(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 material
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”). The execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated in this Agreement and the other
Transaction Documents, and compliance by the Company with its
obligations under this Agreement and the other Transaction
Documents, do not and will not, whether with or without the giving
of notice or passage of time or both, (w) 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, (x) result in
the creation or imposition of any lien, charge or encumbrance
(other than Permitted Liens) upon any property or assets of the
Company pursuant to, the Agreements and Instruments, (y) result in
any violation of the provisions of the charter, by-laws or similar
organizational documents of the Company, or (z) result in 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 the case of this
clause (z) 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.

 

 

 

-15-

 

 

(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 has
complied 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 Note and the Commitment Shares 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 materially affect the Company
that has not been expressly disclosed herein, in the other
Transaction Documents, or in any other documents, certificates and
written statements furnished to the Purchaser for use in connection
with the transactions contemplated hereby and by the other
Transaction Documents.

 

 

 

-16-

 

 

(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)
that are material to the conduct of its business (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 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 commercially reasonable security
measures to protect the secrecy, confidentiality and value of all
of its intellectual property.

 

 

 

-17-

 

 

(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 Note 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, has 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. 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 Conversion Shares
and Commitment 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.

 

 

 

-18-

 

 

(u) Valid Issuance of Securities.
The Note 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 Note 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 Conversion
Shares, when issued pursuant to conversion of the Note, and all
Commitment Shares, 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 Note), 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.

 

(v) Offering. The offer and sale of
the Note and the Commitment Shares, when issued pursuant to this
Agreement, 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 in all material respects 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. 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.

 

 

 

-19-

 

 

(x) Shell Company Status; Financial
Statements. The Company has been an issuer subject to Rule
144(i) under the Securities Act. The unaudited financial statements
of the Company as of June 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, June 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 be materially adverse to
the Company, (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 (if the Company is an
issuer required to file periodic reports under the Exchange Act),
(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.
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.

 

 

 

-20-

 

 

(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 Purchaser 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 the
Purchaser does not make 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 that would
invalidate the exemptions from registration relied upon by the
Company, 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.

 

(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.

 

 

 

-21-

 

 

(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 of the Note,
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
Note in accordance with this Agreement and the Note 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 certificate 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.

 

 

 

-22-

 

 

(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 Purchaser 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 or no longer quoting 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 Commitment Shares and 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 the 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 the 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 the 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.

 

 

 

-23-

 

 

(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) Anti-Money
Laundering, Anti-Bribery and Anti-Corruption;
Sanctions.

 

(i) Neither the Company
nor, any of its Subsidiaries or Affiliates or any director or
officer of any of them is an individual or entity currently, or has
not in the past 5 years been, subject to any Sanctions or is on any
Sanctions List.

 

(ii) Each
of the Company, any of its Subsidiaries and Affiliates and their
respective directors, officers, employees and, to the knowledge of
the Company, agents and any other person or entity acting on behalf
of the Company, has complied with the Money Laundering,
Anti-Corruption and Anti-Bribery Laws, in each case as applicable
to them, and no action, suit or proceeding by or before any court
or any arbitrator or any governmental agency, authority or body
involving the Company and any of its Subsidiaries or their
respective directors or officers and, to the knowledge of the
Company, the employees, agents, or representatives of each of them,
is pending or threatened with respect to Money Laundering,
Anti-Corruption and Anti-Bribery Laws.

 

(iii) Neither
the Company nor any of its Subsidiaries nor their respective
directors or officers, nor, to the knowledge of the Company, the
employees or agents of any of them has:

 

A.

used any corporate
funds (nor will it use any proceeds from the Notes) for any
unlawful contribution, gift, entertainment or unlawful expense
relating to political activity;

 

B.

taken any action in
furtherance of an unlawful offer, payment, promise to pay, or
authorization or approval of the payment or giving of money,
property, gifts or (anything else of value, directly or indirectly,
to any “government official” (including any officer or
employee of a government or government owned or controlled entity
or of a public international organization, or any person acting in
an official capacity for or on behalf of any of the foregoing, or
any political party or party official or candidate for public
office) or made any other bribe, rebate, payoff, influence payment
or kickback intended to improperly influence official action or
secure an improper advantage;

 

 

 

-24-

 

 

C.

nor will it use any
proceeds from the Notes in furtherance of any such unlawful payment
or violation of Sanctions or Money Laundering, Anti-Corruption and
Anti-Bribery Laws.

 

(iv) The
Company and each Subsidiary will promote and ensure compliance with
Money Laundering, Anti-Corruption and Anti-Bribery Laws in all
jurisdictions where they operate and with the representations and
warranties contained herein.

 

(v) As used in this
Section 3.1(pp):

 

A.

 “Money
Laundering, Anti-Corruption and Anti-Bribery Laws”
means money laundering and anti- corruption statutes of all
jurisdictions (including, the Foreign Corrupt Practices Act of
1977, the OECD Convention on Bribery of Foreign Public Officials in
International Business Transactions, and any similar national or
local law or regulation in the United Kingdom or elsewhere where
the Company and each other Subsidiary conducts business), the rules
and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency or any such jurisdiction.

 

B.

“Sanctions” means any laws
or regulations or restrictive measures relating to economic or
financial sanctions or trade embargoes imposed, administered or
enforced from time to time by a Sanctions Authority.

 

C.

 “Sanctions
Authority” means (i) the United Nations Security
Council; (ii) the United States government; (iii) the European
Union; (iv) the United Kingdom government; (v) the respective
governmental institutions and agencies of any of the foregoing,
including without limitation, OFAC, the United States Department of
State and Department of Commerce, and Her Majesty's Treasury; and
(vi) any other governmental institution or agency with
responsibility for imposing, administering or enforcing Sanctions
with jurisdiction over the Company or any of its subsidiaries
(together, “Sanctions
Authorities”).

 

D.

 “Sanctions
List” means the Specially Designated Nationals and
Blocked Persons List maintained by OFAC, the Denied Persons List
maintained by the U.S. Department of Commerce, the Consolidated
List of Financial Sanctions Targets maintained by Her Majesty's
Treasury, or any other list issued or maintained by any Sanctions
Authority of persons subject to Sanctions (including investment or
related restrictions), each as amended, supplemented or substituted
from time to time.

 

 

 

-25-

 

 

(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, (i) all Indebtedness, other than the Note
and the indebtedness issued to Affiliates of the Purchaser in the
May 2020 Financing, is subordinated to the Note and the
indebtedness issued to Affiliates of the Purchaser in the May 2020
Financing, and (ii) no Indebtedness or other claim against the
Company is senior to or pari passu with the Note or indebtedness
issued to Affiliates of the Purchaser in the May 2020 Financing in
right of payment (except that the Note and the indebtedness issued
to Affiliates of the Purchaser in the May 2020 Financing are pari
passu with each other), 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. The 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. The 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 the
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 the Purchaser. Each Transaction Document
to which it is a party has been duly executed by the Purchaser, and
when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of
the 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.

 

 

 

-26-

 

 

(b)  Own
Account. The 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 the Purchaser’s
right to sell the Securities pursuant to an effective registration
statement or otherwise in compliance with applicable federal and
state securities laws). The Purchaser is acquiring the Securities
hereunder in the ordinary course of its
business.

 

(c) Purchaser
Status. At the time the
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
Purchaser. The 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. The 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. The Purchaser is not,
to the 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. The 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. 

 

 

 

-27-

 

 

(g) Certain Transactions and
Confidentiality. The Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with the Purchaser, executed any purchases or
sales, including Short Sales, of the securities of the Company
during the period commencing as of the time that the 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, if the Purchaser is a multi-managed investment
vehicle, whereby separate portfolio managers manage separate
portions of the Purchaser’s assets and the portfolio managers
have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of the 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 the Purchaser's representatives, including,
without limitation, its officers, directors, partners, legal and
other advisors, employees, agents and Affiliates, the 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 the
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 the 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:

 

 

 

-28-

 

 

[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 the 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, the 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 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.

 

 

 

-29-

 

 

(c) Certificates
evidencing the Commitment Shares and the Underlying Shares shall
not contain any legend (including the legend set forth in Section
4.1(b) hereof): (i) when they
have been sold while a registration
statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (ii)
following any sale of such Commitment Shares and/or the Underlying
Shares pursuant to Rule 144, (iii) if such Commitment Shares and/or
the Underlying Shares are eligible for sale under Rule 144 and a
sale or transfer will be taking place prior to the Company’s
next periodic report becomes due under the Exchange Act or (iv) if
such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company
shall cause its counsel to issue a legal opinion to the Transfer
Agent promptly after the Effective Date or at 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 the Purchaser. If any portion of the
Note is converted at a time when there is an effective registration
statement to cover any sale of the Underlying Shares, or if such
Commitment Shares and/or the Underlying Shares have been sold under
Rule 144 and the Company is then in compliance with the current
public information required under Rule 144, or if the Commitment
Shares and/or 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
Commitment Shares and/or Underlying Shares and without volume or
manner-of-sale restrictions provided the conditions of Rule
144(i)(2) have been satisfied and a sale of such shares will be
taking place prior to the Company’s next annual or quarterly
report becoming due under its reporting obligations under the
Exchange Act 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 Commitment Shares and/or the Underlying
Shares shall be issued free of all legends. The Company agrees that
following the Effective Date or 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 the Purchaser to the Company or
the Transfer Agent of certificate(s) representing the Commitment
Shares and/or the Underlying Shares, as applicable, issued with a
restrictive legend (such date, the “Legend Removal
Date”), deliver or
cause to be delivered to the 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 Commitment
Shares and/or 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 the 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 the Commitment Shares and/or the Underlying Shares, as
applicable, issued with a restrictive legend.

 

 

 

-30-

 

 

(d) In
addition to the Purchaser’s other available remedies, the
Company shall pay to the Purchaser, in cash, the greater of (i) as
partial liquidated damages and not as a penalty, for each $1,000 of
Commitment Shares and/or 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 (x) issue and deliver (or cause to be delivered)
to the Purchaser by the Legend Removal Date a certificate
representing the Securities so delivered to the Company by the
Purchaser that is free from all restrictive and other legends or
(y) if after the Legend Removal Date the Purchaser purchases (in an
open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the 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 the Purchaser anticipated
receiving from the Company without any restrictive legend, then, an
amount equal to the excess of the 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 Commitment Shares or Conversion
Shares, as applicable, that the Company was required to deliver to
the 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 the
Purchaser to the Company of the applicable Commitment 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 first registration
statement filed by the Company that is declared effective by the
SEC which registers securities held by the Purchaser or any of its
Affiliates. If after the date hereof the Company becomes
subject to the rules and regulations of the Exchange Act and as
long as the 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 the Purchaser
owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the
Purchaser and make publicly available in accordance with Rule
144(c) such information as is required for the Purchaser to sell
the Securities, including without limitation, under Rule 144. In
addition, the Company shall file with Commission current
“Form 10 information”, as defined in Rule 144(i)(3), as
soon as practicable after the date the Company becomes subject to
the rules and regulations of the Exchange Act, reflecting its
status as an entity that is no longer an issuer described in Rule
144(i)(1)(i). 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.

 

 

 

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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 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, which press release shall
have been approved by the Purchaser prior to its release (which
approval shall not unreasonably be withheld or delayed). 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 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 the
Purchaser or any of its 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 the
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 the 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, without the
prior written consent of the Purchaser, (a) use the name of the
Purchaser, “Arena Investors LP,” “Arena” or
any other derivative thereof (each, a “Trade
Name”) in any press
releases or other public disclosures (including in any filing with
the Commission or any regulatory agency or Trading Market),
offering documents, sales materials, brochures or similar publicity
or promotional materials, or for promotional purposes, whether
orally or in writing, except (x) as required by federal
securities law and the rules and regulations promulgated thereunder
in connection with the filing of final Transaction Documents, any
disclosure required pursuant to any reports required to be
filed by the Company pursuant to the Exchange Act after the date
hereof or the Registration Statement
with the Commission, (y) to the extent such disclosure is
required by law or Trading Market regulations, including
the
“Alternative Reporting Standard” required by OTC
Markets, in which case the
Company shall provide the Purchaser with prior notice of such
disclosure permitted under this clause (y), or (z) as required
under Delaware General Corporation Law or (b) represent that an
investment in the Company or any product or any service provided by
the Company has been approved or endorsed by the Purchaser.
Following any such written consent, which shall not be
unreasonably withheld or delayed, the Company shall provide the Purchaser with a
copy of such written or other materials using the Trade Name if
requested by the Purchaser. The Purchaser shall be deemed to
have provided prior written consent of the disclosure of the
Purchaser’s name to other stockholders and investors in the
Company, and to potential investors in the Company (that to the
extent such information has not already been publicly disclosed,
have been informed of the confidential nature thereof) that in the
course of their due diligence require disclosure of the identity of
the existing investors in the Company.

 

 

 

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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 the 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 the 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 the
Purchaser without the Purchaser’s consent, the Company hereby
covenants and agrees that the 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. Subject to the terms
and conditions 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, Anti-Corruption and Anti-Bribery Laws. $3,000,000
of the Purchase Price will be held in the Controlled Account
established pursuant to Section 4.24(a), subject to restrictions on
release and use as set forth in Schedule 4.7
attached
hereto. Notwithstanding the foregoing, the Company may receive
permission to use such funds to the extent expressly agreed to in
advance, in writing (including electronic mail) by the Purchaser.
Notwithstanding anything to the contrary in the Transaction
Documents or otherwise, neither the Company nor its Subsidiaries
may use any portion of the Purchase Price or any other
proceeds from the Purchaser or any of its Affiliates (including the
proceeds from the sale of the senior secured notes issued to
Affiliates of the Purchaser in the May 2020 Financing) to pay any
liquidated damages, penalties, fees or other amounts due and
payable to the Purchaser or its Affiliates under the Transaction
Documents, the transaction documents relating to the May 2020
Financing or otherwise without the express advance written consent
of the Purchaser (including at the election of the Purchaser, in
the case of an Event of Default under the Note, to repay the
Company’s obligations under the Note, including the
outstanding principal amount of the Note, accrued but unpaid
interest, liquidated damages and/or other amounts owing in respect
thereof through the date of acceleration using the proceeds in the
Controlled Account).

 

 

 

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4.8 Indemnification of
Purchaser.    Subject
to the provisions of this Section 4.8, the Company will
indemnify and hold the 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 the 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 any registration
statement filed by the Company, 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.

 

 

 

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4.9 Reservation of Common
Stock. As of the date
hereof, 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 Note) for the purpose of enabling the
Company to issue the Conversion Shares and any other shares that
may be issuable pursuant to the Note. 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 Commitment Shares and the
Underlying Shares on such Trading Market and promptly secure the
listing of all of the Commitment Shares and 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
(including in accordance with Section 4.23), it will then include
in such application all of the Commitment Shares and the Underlying
Shares, and will take such other action as is necessary to cause
all of the Commitment Shares and 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 such 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 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 the Purchaser
agreed, to desist from purchasing or selling Securities which have
been issued under the terms of this Agreement, the 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)  the Purchaser shall not be
deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction,
(v) 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.

 

 

 

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4.12 Conversion
Procedures. The form of Notice of
Conversion in the Note sets forth the totality of the procedures
required of the Purchaser in order to convert the Note. No
additional legal opinion, other information or instructions shall
be required of the Purchaser to exercise the Note. Without limiting
the preceding sentences, no ink-original Notice of Conversion
shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Conversion form be
required in order to covert the Note. The Company shall honor
conversions of the Note and shall deliver the 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 with the
Commission as required under Regulation D, and with the applicable
securities regulators in the states in which the Securities were
sold, and to provide copies thereof, promptly upon request of the
Purchaser. The Company shall take such further action as the
Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Securities for, sale to the
Purchaser at the Closing under applicable securities or “Blue
Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of the
Purchaser.

 

4.14 Maintenance
of Property. So long as the Note remains 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 the Note remains
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
the
Purchaser no longer holds the Note, 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 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. The foregoing restrictions shall not include any
agreement for an at-the-market offering. The 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.

 

 

 

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4.18 Transfer
Agent Instructions. The Company shall issue irrevocable
instructions to the Transfer Agent in a form acceptable to the
Purchaser (the “Irrevocable Transfer Agent
Instructions”) to issue certificates or credit shares
via DWAC or otherwise to the applicable balance accounts at The
Depository Trust Company (“DTC”), registered in the
name of the Purchaser or its respective nominee(s), for the
Underlying Shares in such amounts as specified from time to time by
the Purchaser to the Company upon conversion of the Note. The
Company represents and warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section
will be given by the Company to its Transfer Agent with respect to
the Securities, and that the Securities shall otherwise be freely
transferable on the books and records of the Company, as
applicable, to the extent provided in this Agreement and the other
Transaction Documents. In the event that such sale, assignment or
transfer involves Conversion Shares sold, assigned or transferred
pursuant to an effective registration statement or in compliance
with Rule 144, the transfer agent shall issue such shares to such
Buyer, assignee or transferee (as the case may be) without any
restrictive legend in accordance with Section 4.1. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to Purchaser. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations
under this Section will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of
this Section, that Purchaser shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining
any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or
other security being required. The Company shall cause its counsel
to issue the legal opinion referred to in the Irrevocable Transfer
Agent Instructions to the Company’s transfer agent from and
after the Applicable Date. Any fees (with respect to the transfer
agent, counsel to the Company or otherwise) associated with the
issuance of such opinion or the removal of any legends on any of
the Securities shall be borne by the Company. “Applicable Date” means
the first date on which all of the Underlying Shares are eligible
to be resold by the Purchaser pursuant to Rule 144 or an effective
registration statement is in effect.

 

4.19 Public
Information. At any time during the period commencing from
the six (6) month anniversary of the Closing Date and ending at
such time that all of the Securities, may be sold without the
requirement for the Company to be in compliance with Rule 144(c)(1)
and otherwise without restriction or limitation pursuant to Rule
144, if the Company shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) (a
“Public Information
Failure”) then, in addition to the Purchaser’s
other available remedies, the Company shall pay to the Purchaser,
in cash, as partial liquidated damages and not as a penalty, by
reason of any such delay in or reduction of its ability to sell the
Securities, an amount in cash equal to two percent (2.0%) of the
aggregate Purchase Price of the
Purchaser’s Securities on the day of a Public Information
Failure and on every thirtieth (30th) day (pro rated for
periods totaling less than thirty days) thereafter until the
earlier of (a) the date such Public Information Failure is cured
and (b) such time that such public information is no longer
required for the Purchaser to transfer the Underlying Shares
pursuant to Rule 144. The payments to which the Purchaser
shall be entitled pursuant to this Section 4.19 are referred to
herein as “Public
Information Failure Payments.” Public Information
Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred and (ii) the
third (3rd) Business Day after
the event or failure giving rise to the Public Information
Failure Payments is
cured. If an Event (as defined in the Registration Rights
Agreement) is occurring at the time of a Public Information
Failure, and the Company is (x) then obligated to pay, and (y)
timely pays the Purchaser partial liquidated damages under Section
2(d) of the Registration Rights Agreement for the period occurring
simultaneous with the applicable Public Information Failure (such
payments, the “Simultaneous Registration Rights
Partial Liquidated Damages”) and (z) has timely paid
the Purchaser all previously accrued partial liquidated damages
under Section 2(d) of the Registration Rights Agreement, the
Company may deduct the amounts paid in connection with such
Simultaneous Registration Rights Partial Liquidated Damages from
such Public Information Failure Payments due for such simultaneous
Public Information Failure. In the event the Company fails to make
Public Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at
the rate of 1.5% per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Purchaser’s right to
pursue actual damages for the Public Information Failure, and
the
Purchaser shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

 

 

 

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4.20 Additional
Financing. Within sixty (60) calendar days of the Closing
Date (the “Subsequent Financing Deadline
Date”), the Company shall sell in one or more closings
indebtedness which shall be subordinated to the Purchaser and shall
mature at least 90 days after the Note (the “Subsequent Financing”)
for aggregate gross proceeds equal to or exceeding $2,000,000
(“Subsequent
Financing Closing”). To the extent the Subsequent
Financing Subsequent Closing does not occur on or prior to the
Subsequent Financing Deadline Date, then, in addition to
the
Purchaser’s other available remedies, an amount in cash, as
partial liquidated damages and not as a penalty, shall be payable
by the Company to the Purchaser equal to $60,000 on the day of the
Subsequent Financing Deadline Date and on every thirtieth
(30th) day
(pro rated for periods totaling less than thirty days) thereafter
until the Subsequent Financing Subsequent Closing occurs; provided,
the amount set forth above shall increase by $30,000 on every
thirtieth (30th) day after the
Subsequent Financing Deadline Date if such closing(s) for the
Subsequent Financing have not taken place. The payments to which
the
Purchaser shall be entitled pursuant to this Section 4.20 are
referred to herein as “Subsequent Financing Failure
Payments.” Subsequent Financing Failure Payments shall be paid on the
earlier of (i) the last day of the calendar month during which such
Subsequent Financing Failure Payments are incurred and (ii) the
third (3rd) Business Day after
the event or failure giving rise to the Subsequent Financing
Failure Payments is
cured. The Company acknowledges and agrees that if the Subsequent
Financing Closing does not occur by the six (6) month anniversary
of the Closing Date, it shall be an Event of Default (as defined in
the Note) under the Note.

 

4.21 Litigation.
For as long as the Note is outstanding, the Company shall promptly,
to the extent not prohibited by law, give the Purchaser notice in
writing of any Action before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) affecting the
Company, any Subsidiary, any director and/or officer including but
not limited to, any Action involving a claim of
violation of or liability under federal or state securities laws, a
claim of breach of fiduciary duty or any investigation by a
governmental or administrative agency or regulatory authority
(federal, state county, local or foreign). Any such
information provided to the Purchaser
shall comply with the requirements of Section 4.6
above.

 

4.22 Access
to Records. The Company shall provide the Purchaser
and/or any of its duly authorized representatives, attorneys or
accountants access to any and all bank records at the premises of
the Company where such records are kept, such access being afforded
without charge, but only during normal business hours. Any such
information provided to the Purchaser
shall comply with the requirements of Section 4.6
above.

 

4.23 OTC
Markets; National Securities Exchange.  

 

(a) As
soon as reasonably practicable after the Closing, the Company shall
use its reasonable best efforts to meet the eligibility
requirements for listing its shares of Common Stock on the OTCQB or
OTCQX and upon meeting such requirements, the Company shall
promptly take all necessary and appropriate actions to quote its
shares of Common Stock on such over-the-counter
market.

 

(b) As soon as reasonably
practicable after the Company meets the qualitative and
quantitative listing standards for listing on a national securities
exchange, the Company shall use reasonable best efforts to
take all necessary and appropriate actions to list its shares of
Common Stock for trading on such national securities
exchange.

 

 

 

-38-

 

 

4.24 Post-Closing
Actions. The
Company shall and shall cause each of its relevant Subsidiaries to
execute and deliver the documents and complete the tasks set forth
in this Section as soon as reasonably practicable and in each case
no later than the time limit specified in this Section or such
longer time as the Purchaser may agree in its sole
discretion:

 

(a) The Company shall establish the
Controlled Account not later than thirty (30) calendar days after
the Closing, in form and substance satisfactory to the Purchaser,
and upon establishment of such Controlled Account, the Company
shall immediately cause $3,000,000 of the Purchase Price proceeds
to be deposited therein. The parties agree that the proceeds in the
Controlled Account shall only be released, transferred, spent or
otherwise utilized with the prior written approval of the Purchaser
and in accordance with the terms of Schedule
4.7. The Company
acknowledges and agrees that until such Controlled Account has been
established and funded, it shall not use more than $500,000 of the
Purchase Price proceeds (net of all Purchaser’s Expenses)
that are payable in connection with this transactions contemplated
by the Transaction Documents) without the prior written consent of
the Purchaser, and subject to the terms and conditions of Section
4.7; and

 

(b) Any Person (other
than PTGI) acquired by the Company, or that otherwise becomes a
Subsidiary of the Company, on or after the date of this Agreement
shall enter into a Subsidiary Guaranty Agreement and be joined to
the Security Agreement as a debtor not later than one (1) calendar
day after the consummation of such acquisition by the Company or
the date the Person otherwise becomes a Subsidiary of the
Company.

 

 

 

4.25 Future
Financings. Except
for Permitted Indebtedness and for so long as Liabilities are
outstanding, neither the Company, nor any of its Subsidiaries,
shall enter into, create, incur, assume, guarantee or suffer
to exist any Indebtedness. Despite the foregoing prohibition and
for so long as Liabilities are outstanding, if at any time the
Company or any of its Subsidiaries issues or incurs any
Indebtedness other than Permitted Indebtedness, in addition to the
Purchaser’s other available remedies, the Company shall pay
to the Purchaser, in cash, as partial liquidated damages and not as
a penalty, on each date of any such issuance or incurrence of
Indebtedness, $30,000. Any such Indebtedness shall be expressly
subordinated to the Note and the convertible promissory notes
issued to Affiliates of the Purchaser in the May 2020 Financing,
and the holders of such Indebtedness shall not be granted any
registration rights, nor shall the Company register, or cause to be
registered, with the SEC or any state securities commission the
notes or other debt instruments representing such Indebtedness or
any equity securities issuable in connection with such
Indebtedness. In addition, the Company shall not grant any
registration rights in connection with the Additional Note
Financing or the Subsequent Financing, nor shall the Company
register, or cause to be registered, with the SEC or any state
securities commission the notes or other debt instruments
representing such Indebtedness issued in the Additional Note
Financing or the Subsequent Financing or any equity securities
issuable in connection with such Indebtedness issued in the
Additional Note Financing or the Subsequent Financing.

 

 

 

-39-

 

 

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 the Purchaser),
stamp taxes and other taxes and duties levied in connection with
the delivery of any Securities to the Purchaser. Notwithstanding
the foregoing, the Company agrees to pay all direct and indirect
costs and expenses of the Purchaser related to the negotiation, due
diligence, preparation, closing, and all other items regarding or
related to this Agreement and the other Transaction Documents and
all of the transactions contemplated herein and/or therein,
including, but not limited to, the legal fees and expenses of the
Purchaser’s legal counsel (collectively, the
“Purchaser’s
Expenses”), all of which will be deducted and paid on
Closing Date.

 

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 5.4 shall be binding upon the
Purchaser and holder of Securities and the Company.

 

 

 

-40-

 

 

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 the
outstanding Note (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.

 

 

 

-41-

 

 

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 the 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 the 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 the 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 the Purchaser of the aggregate
exercise price paid to the Company for such
shares.

 

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.

 

 

 

-42-

 

 

5.14 Payment
Set Aside. To the extent that
the Company makes a payment or payments to the Purchaser pursuant
to any Transaction Document or the 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 the 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 the Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess
shall be applied by the 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 the 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.

 

 

 

-43-

 

 

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)

 

 

-44-

 

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.

 

 

	

TRANSWORLD HOLDINGS, INC.

 

 

	

Address
for Notice:

 

	

By:__________________________________________

 Name:

 Title:

 

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

	

Facsimile
No.:

 

Email:

	
 

	
 

 

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

 

-45-

 

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: Authorized
Signatory

 

Email
Address of Authorized Signatory: lcutler@arenaco.com

 

Facsimile Number of
Authorized Signatory: 212.612.3207

 

Address
for Notice to Purchaser:

 

405
Lexington Avenue, 59th Floor

 

New
York, NY 10174

 

 

 

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

 

 

 

 

 

FEIN
Number: 98-1406045

 

 

 

 

 

 

-46-

 

EXHIBIT A

 

Form of Note

 

 

 

 

-47-

 

EXHIBIT B

 

Form of Amended and Restated Security Agreement

 

 

 

 

-48-

 

EXHIBIT C

 

 

Form of Amended and Restated Subordination Agreement

 

 

-49-

 

 

EXHIBIT D

 

Form of Registration Rights Agreement

 

EXHIBIT E

 

Form of Subsidiary Guaranty Agreement

 

 

 

-50-

 

 

Schedule 1

 

Purchase Price; Securities Purchased

	

Name
ofPurchaser

 

	

Purchase
Price

 

	

Aggregate
Principal Amount of Notes being Purchased

 

	

 

 

 

 

Number
of Commitment Shares to be Issued

	

	

$3,500,000.00

	

$3,888,889.00

	

903,226

	
 

	
 

	
 

	
 

	

TOTAL

	

$3,500,000.00

	

$3,888,889.00

	

903,226

 

 

 

 

 

 

 

 

 

 

 

-51-

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