Document:

intv_ex1018.htm

EXHIBIT 10.18

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO BORROWER. 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.

 

Original Issue Date: December 18, 2017

Commencement of Rule 144 Holding Period: March 28, 2017

Principal Amount: $50,000.00

 

CONVERTIBLE NOTE

DUE DECEMBER 18, 2018

 

THIS CONVERTIBLE NOTE (the “Note”) is issued INTEGRATED VENTURES, INC., a Nevada corporation, (the “Borrower”), pursuant to that certain Exchange Agreement between the Borrower and the Holder dated December 18, 2017 (the “Exchange Agreement”).

 

FOR VALUE RECEIVED, Borrower promises to pay to Global Opportunity Group, LLC or its registered assigns (the “Holder”), with an address at: 1361 East 10th Street, Brooklyn, NY 11730, or shall have paid pursuant to the terms hereunder, the principal sum of Fifty Thousand Dollars ($50,000.00) on December 18, 2018 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid or such later date if extended by the Holder as provided hereunder, and to pay interest, if any, to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof.

 

This Note is subject to the following additional provisions:

 

Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:

 

	 
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“Alternate Consideration” shall have the meaning set forth in Section 5(d).

 

“Asset Disposition” means the sale, transfer, lease, license, contribution or other conveyance of assets of Borrower in one or more dispositions not in the ordinary course of business that results in net cash proceeds to Borrower of $10,000 or more, in the aggregate.

 

“Bankruptcy Event” means any of the following events: (a) Borrower or any Subsidiary thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to Borrower or any Subsidiary thereof, (b) there is commenced against Borrower or any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) Borrower or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) Borrower or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) Borrower or any Subsidiary thereof makes a general assignment for the benefit of creditors, (f) Borrower or any Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) Borrower or any Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(d).

 

“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 required by law or other governmental action to close.

 

“Buy-In” shall have the meaning set forth in Section 4(c)(v).

 

“Change of Control Transaction” means, other than by means of conversion or exercise of the Note and the Securities issued together with the Note, the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of Borrower, by contract or otherwise) of in excess of 50% of the voting securities of Borrower, (b) Borrower merges into or consolidates with any other Person, or any Person merges into or consolidates with Borrower and, after giving effect to such transaction, the stockholders of Borrower immediately prior to such transaction own less than 50% of the aggregate voting power of Borrower or the successor entity of such transaction, (c) Borrower sells or transfers all or substantially all of its assets to another Person and the stockholders of Borrower immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by Borrower of an agreement to which Borrower is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

 

	 
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“Closing Price” means on any particular date (a) the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (b) if there is no such price on such date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (c) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then reported in the “pink sheets” published by OTC Markets Group, 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) if the shares of Common Stock are not then publicly traded the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to Borrower, the fees and expenses of which shall be paid by Borrower.

 

“Conversion” shall have the meaning ascribed to such term in Section 4.

 

“Conversion Date” shall have the meaning set forth in Section 4(a).

 

“Conversion Price” shall have the meaning set forth in Section 4(b).

 

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.

 

“Dilutive Issuance” shall have the meaning set forth in Section 5(e).

 

“Equity Conditions” means, during the period in question, (a) Borrower shall have duly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested or required, if any, (b) Borrower shall have paid all liquidated damages and other amounts owing to the applicable Holder in respect of this Note and the other Transaction Documents, (c) there is an effective registration statement pursuant to which the Holders are permitted to utilize the prospectus thereunder to resell all of the Conversion Shares and Warrant Shares issuable pursuant to the Transaction Documents (and Borrower believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future), and Company counsel has delivered to the Company’s transfer agent and Holder a standing, written unqualified opinion that resales may then be made by the Holder of all of the Holders Conversion Shares and Warrant Shares pursuant to such effective registration statement, (d) the Common Stock is listed or traded on a Trading Market, (e) there is a sufficient number of authorized, but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable pursuant to the Transaction Documents, (f) an Event of Default has not occurred, whether or not such Event of Default has been cured, (g) there is no existing event which, with the passage of time or the giving of notice, would constitute an Event of Default, (h) the issuance of the shares in question to the applicable Holder would not exceed the Beneficial Ownership Limitation, (i) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, and (j) the applicable Holder is not in possession of any information provided by Borrower that constitutes, or may constitute, material non-public information.

 

“Event of Default” shall have the meaning set forth in Section 8(a).

 

“Fundamental Transaction” shall have the meaning set forth in Section 5(d).

 

“Interest Payment Date” shall have the meaning set forth in Section 2(a).

 

“Interest Share Amount” shall have the meaning set forth in Section 2(a).

 

	 
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“Mandatory Default Amount” means the sum of (a) the greater of (i) the outstanding principal amount of this Note divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to create an Event of Default), (B) otherwise due, or (C) paid in full, whichever is lowest, multiplied by the VWAP on the date the Mandatory Default Amount is either (x) demanded, (y) due, or (z) paid in full, whichever is highest, or (ii) 120% of the outstanding principal amount of this Note plus (b) all other amounts, costs, expenses and liquidated damages due in respect of this Note.

 

“New York Courts” shall have the meaning set forth in Section 9(d).

 

“Note Register” shall have the meaning set forth in Section 3(c).

 

“Notice of Conversion” shall have the meaning set forth in Section 4(a).

 

“Original Issue Date” means the date of the first issuance of the Note, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence the Note.

 

“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 Borrower) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of Borrower’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of Borrower’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 Borrower and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien, and (c) Liens in connection with Permitted Indebtedness under clauses (a) and (b) thereunder, and Liens incurred in connection with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not secured by assets of Borrower or its Subsidiaries other than the assets so acquired or leased.

 

“Purchase Agreement” means the Exchange Agreement, as amended, modified or supplemented from time to time in accordance with its terms.

 

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

 

“Share Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

 

“Successor Entity” shall have the meaning set forth in Section 5(d).

 

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

 

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

 

	 
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“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 any of the NASDAQ markets or exchanges is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the volume weighted average price of the Common Stock on the first such facility (or a similar organization or agency succeeding to its functions of reporting prices), 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 Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to Borrower, the fees and expenses of which shall be paid by Borrower.

 

Section 2. Interest and Repayment.

 

a) Interest in Cash or in Kind. Holders shall be entitled to receive, and Borrower shall pay, cumulative interest on the outstanding principal amount of this Note compounded monthly at the annual rate of five percent (5%) (as subject to increase as set forth in this Note) from the Original Issue Date through the Maturity Date. 

 

b) Payment Grace Period. Except as set forth herein, the Borrower shall not have any grace period to pay any monetary amounts due under this Note.

 

c) Conversion Privileges. The Conversion Rights set forth in Section 4 shall remain in full force and effect immediately from the date hereof and until the Note is paid in full regardless of the occurrence of an Event of Default. This Note shall be payable in full on the Maturity Date, unless previously converted into Common Stock in accordance with Section 4 hereof.

 

d) Application of Payments. Interest on this Note shall be calculated on the basis of a 365 or 366-day year as the case may be and the actual number of days elapsed. Payments made in connection with this Note shall be applied first to amounts due hereunder other than principal and interest, thereafter to interest and finally to principal.

 

e) Manner and Place of Payment. Principal and interest on this Note and other payments in connection with this Note shall be payable at the Holder’s offices as designated above in lawful money of the United States of America in immediately available funds without set-off, deduction or counterclaim. Upon assignment of the interest of Holder in this Note, Borrower shall instead make its payment pursuant to the assignee’s instructions upon receipt of written notice thereof. Except as set forth herein, this Note may not be prepaid or mandatorily converted without the consent of the Holder. 

 

Section 3. Registration of Transfers and Exchanges.

 

a) Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.

 

b) Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.

 

c) Reliance on Note Register. Prior to due presentment for transfer to Borrower of this Note, Borrower and any agent of Borrower may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither Borrower nor any such agent shall be affected by notice to the contrary.

 

	 
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Section 4. Conversion.

 

a) Voluntary Conversion. At any time after an Event of Default until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to Borrower a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal amount of this Note and accrued interest, if any, to be converted at the election of the Holder and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to Borrower unless the entire principal amount of this Note has been so converted. Conversions of principal hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and Borrower shall maintain records showing the principal amount(s) converted and the date of such conversion(s). Borrower may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.

 

b) Conversion Price. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 65% multiplied by the Market Price (as defined herein)(representing a discount rate of 35%). “Market Price” means the lowest one (1) Trading Price (as defined below) for the Common Stock during the twelve (12) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets, per share of Common Stock, subject to adjustment as described herein (“Conversion Price”). If at any time the Conversion Price as determined hereunder for any Conversion would be less than the par value of the Common Stock, then the Company shall have right to increase the Conversion Price hereunder for such conversion to par value and increase the Conversion Amount for such Conversion to include, as liquidated damages, Additional Principal. “Additional Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of Conversion Shares issuable upon such Conversion to equal the same number of Conversion Shares as would have been issued had the Conversion Price not been subject to the minimum price set forth in this Section.

 

	 
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c) Mechanics of Conversion.

 

i. Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted plus interest, if any, elected by the Holder to be converted by (y) the Conversion Price.

 

ii. Delivery of Certificate Upon Conversion. Not later than five (5) Trading Days after each Conversion Date (the “Share Delivery Date”), Borrower shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares which shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note. Borrower shall use its commercially reasonable efforts to deliver any certificate or certificates required to be delivered by Borrower under this Section 4(c) electronically through the Depository Trust Company or another established clearing corporation performing similar functions.

 

iii. Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to Borrower at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event Borrower shall promptly return to the Holder any original Note delivered to Borrower and the Holder shall promptly return to Borrower the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.

 

iv. Obligation Absolute. Borrower’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to Borrower or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of Borrower to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by Borrower of any such action Borrower may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof, Borrower may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained, and Borrower posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, Borrower shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If Borrower fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, Borrower shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages being to accrue) for each Trading Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for Borrower’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

	 
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v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if Borrower fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder or Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then Borrower shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if Borrower had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, Borrower shall be required to pay the Holder $1,000. The Holder shall provide Borrower written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of Borrower, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to Borrower’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

 

vi. Reservation of Shares Issuable Upon Conversion. Borrower covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder, not less than three times such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Note and interest which has accrued and would accrue on such principal amount, assuming such principal amount was not converted through three years after the Original Issue Date. Borrower covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

vii. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, Borrower shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

 

	 
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viii. Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, Borrower shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted and Borrower shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to Borrower the amount of such tax or shall have established to the satisfaction of Borrower that such tax has been paid. Borrower shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion.

 

d) Holder’s Conversion Limitations. From and after the date that the Conversion Shares are of a class of equity of the borrower registered under Section 12(g) of the Exchange Act or the Company is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, Borrower shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of Borrower subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to Borrower each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and Borrower shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) Borrower’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by Borrower, or (iii) a more recent written notice by Borrower or Borrower’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, Borrower shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of Borrower, including this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder may decrease the Beneficial Ownership Limitation at any time and the Holder, upon not less than 61 days’ prior notice to Borrower, may increase the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any such increase will not be effective until the 61st day after such notice is delivered to Borrower. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.

 

	 
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Section 5. Certain Adjustments.

 

a) Stock Dividends and Stock Splits. If Borrower, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by Borrower upon conversion of the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of Borrower, then the Fixed Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of Borrower) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time Borrower grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

	 
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c) Pro Rata Distributions. During such time as this Note is outstanding, if Borrower shall declare or make any dividend whether or not permitted, or makes any other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Note (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d) Fundamental Transaction. If, at any time while this Note is outstanding, (i) Borrower, directly or indirectly, in one or more related transactions effects any merger or consolidation of Borrower with or into another Person, (ii) Borrower, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by Borrower or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) Borrower, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) Borrower, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of Borrower, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note). For purposes of any such conversion, the determination of the Fixed Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and Borrower shall apportion the Fixed Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. Borrower shall cause any successor entity in a Fundamental Transaction in which Borrower is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of Borrower under this Note and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 5(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of Borrower and shall assume all of the obligations of Borrower under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as Borrower herein.

 

	 
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e) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the date hereof, the Company issues or sells, or in accordance with this Section 5 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Exempt Issuance issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less than a price equal to the Fixed Conversion Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Fixed Conversion Price then in effect is referred to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Fixed Conversion Price then in effect shall be reduced to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Fixed Conversion Price and consideration per share under this Section 5(e)), the following shall be applicable:

 

Issuance of Options. If the Company in any manner grants or sells any options (other than options that qualify as Exempt Issuances) and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such option or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such option for such price per share. For purposes of this Section 5(e)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such options or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such option, upon exercise of such option and upon conversion, exercise or exchange of any Common Stock Equivalent issuable upon exercise of such option and (y) the lowest exercise price set forth in such option for which one share of Common Stock is issuable upon the exercise of any such options or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such option minus (2) the sum of all amounts paid or payable to the holder of such option (or any other Person) upon the granting or sale of such option, upon exercise of such option and upon conversion, exercise or exchange of any Common Stock Equivalent issuable upon exercise of such option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such option (or any other Person). Except as contemplated below, no further adjustment of the Fixed Conversion Price shall be made upon the actual issuance of such shares of Common Stock or of such Common Stock Equivalents upon the exercise of such options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents.

 

	 
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Issuance of Common Stock Equivalents. If the Company in any manner issues or sells any Common Stock Equivalents (other than Common Stock Equivalents that qualify as Exempt Issuances) and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Common Stock Equivalents for such price per share. For the purposes of this Section 5(e)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Common Stock Equivalent and upon conversion, exercise or exchange of such Common Stock Equivalent and (y) the lowest conversion price set forth in such Common Stock Equivalent for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Common Stock Equivalent (or any other Person) upon the issuance or sale of such Common Stock Equivalent plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Common Stock Equivalent (or any other Person). Except as contemplated below, no further adjustment of the Fixed Conversion Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents, and if any such issue or sale of such Common Stock Equivalents is made upon exercise of any Options for which adjustment of this Note has been or is to be made pursuant to other provisions of this Section 5(e), except as contemplated below, no further adjustment of the Fixed Conversion Price shall be made by reason of such issue or sale.

 

Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Common Stock Equivalents, or the rate at which any Common Stock Equivalents are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Fixed Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Fixed Conversion Price which would have been in effect at such time had such options or Common Stock Equivalents provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 5(e)(iii), if the terms of any option or Common Stock Equivalent that was outstanding as of the date of issuance of this Note are increased or decreased in the manner described in the immediately preceding sentence, then such option or Common Stock Equivalent and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 5(e) shall be made if such adjustment would result in an increase of the Fixed Conversion Price then in effect.

 

	 
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(iv) Calculation of Consideration Received. If any option and/or Common Stock Equivalent and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such option and/or Common Stock Equivalent and/or Adjustment Right, the “Secondary Securities”), together comprising one integrated transaction, the consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued in such integrated transaction (or was deemed to be issued pursuant to Section 5(e)(i) or 5(e)(ii) above, as applicable) solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such option, if any, (II) the fair market value (as determined by the Holder) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as determined by the Holder) of such Common Stock Equivalent, if any, in each case, as determined on a per share basis in accordance with this Section 5(e)(iv). If any shares of Common Stock, options or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, option or Common Stock Equivalent, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, options or Common Stock Equivalents are issued or sold for a consideration other than cash (for the purpose of determining the consideration paid for such Common Stock, option or Common Stock Equivalent, but not for the purpose of the calculation of the Black Scholes Consideration Value), the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity (for the purpose of determining the consideration paid for such Common Stock, option or Common Stock Equivalent, but not for the purpose of the calculation of the Black Scholes Consideration Value), the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, options or Common Stock Equivalents, as the case may be. The fair value of any consideration other than cash or publicly traded securities (for the purpose of determining the consideration paid for such Common Stock, option or Common Stock Equivalent, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

f) Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of Borrower) issued and outstanding.

 

g) Notice to the Holder.

 

i. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, Borrower shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

	 
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ii. Notice to Allow Conversion by Holder. If (A) Borrower shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) Borrower shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) Borrower shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of Borrower shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which Borrower is a party, any sale or transfer of all or substantially all of the assets of Borrower, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) Borrower shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of Borrower, then, in each case, Borrower shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding Borrower or any of the Subsidiaries, Borrower shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 6. Negative Covenants. As long as any principal amount of this Note remains outstanding, Borrower shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

 

a) enter into any transaction pursuant to Section 3(a)(10) of the Securities Act; 

 

b) enter into, create, incur, assume or suffer to exist any liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

c) amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

 

d) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents other than as to the Conversion Shares or Warrant Shares as permitted or required under the Transaction Documents;

 

e) redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other than the Notes if on a pro-rata basis), whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness;

 

	 
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f) declare or make any dividend or other distribution of its assets or rights to acquire its assets to holders of shares of Common Stock, preferred stock, or any other equity security by way of return of capital or otherwise including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction;

 

g) enter into any transaction with any Affiliate of Borrower which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of Borrower (even if less than a quorum otherwise required for board approval); or

 

h) enter into any agreement with respect to any of the foregoing.

 

Section 7. Events of Default.

 

“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 

i. any default in the payment of (A) the principal or interest amount of this Note or (B) liquidated damages and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of a default under clause (B) above, is not cured within 3 Trading Days after Borrower has become or should have become aware of such default;

 

ii. Borrower shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by Borrower of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) five (5) Trading Days after written notice of such failure sent by the Holder to Borrower and (B) ten (10) Trading Days after Borrower has become or should have become aware of such failure;

 

iii. a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents, including but not limited to failure to strictly comply with the provisions of the Transaction Documents, or (B) any other material agreement, lease, document or instrument to which Borrower or any Subsidiary is obligated (and not covered by clause (vi) below), which, in the case of subsection (B), would reasonably be expected to have a Material Adverse Effect;

 

iv. any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;

 

v. Borrower or any Subsidiary shall be subject to a Bankruptcy Event;

 

vi. Borrower or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $100,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

 

	 
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vii. Borrower shall be a party to any Change of Control Transaction or Fundamental Transaction;

 

viii. Borrower does not meet the current public information requirements under Rule 144;

 

ix. Borrower shall fail for any reason to deliver certificates to a Holder prior to the fifth (5th) Trading Day after a Conversion Date pursuant to Section 4(c) or Borrower shall provide at any time notice to the Holder, including by way of public announcement, of Borrower’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;

 

x. any Person shall breach any material term of any agreement delivered to the initial Holders pursuant to Section 2.2(a) of the Purchase Agreement;

 

xi. any monetary judgment, writ or similar final process shall be entered or filed against Borrower, any subsidiary or any of their respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 90 calendar days;

 

xii. any dissolution, liquidation or winding up by Borrower or a material Subsidiary of a substantial portion of their business;

 

xiii. cessation of operations by Borrower or a material Subsidiary;

 

xiv. an event resulting in the Common Stock no longer being listed or quoted on a Trading Market, or notification from a Trading Market that the Borrower is not in compliance with the conditions for such continued quotation and such non-compliance continues for twenty (20) days following such notification;

 

xv. a Commission or judicial stop trade order or suspension from the Borrower’s Principal Trading Market;

 

xvi. the Borrower effectuates a reverse split of its Common Stock without ten (10) days prior written notice to the Holder;

 

xvii. a failure by Borrower to notify Holder of any material event of which Borrower is obligated to notify Holder pursuant to the terms of this Note or any other Transaction Document;

 

xviii. a default by the Borrower of a material term, covenant, warranty or undertaking of any other agreement to which the Borrower and Holder are parties, or the occurrence of an event of default under any such other agreement to which Borrower and Holder are parties which is not cured after any required notice and/or cure period or waived;

 

xix. the occurrence of an Event of Default under any other note issued by Borrower to Holder;

 

	 
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xx. any material provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the Borrower, or the validity or enforceability thereof shall be contested by Borrower, or a proceeding shall be commenced by Borrower or any governmental authority having jurisdiction over Borrower or Holder, seeking to establish the invalidity or unenforceability thereof, or Borrower shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document;

 

xxi. the failure by Borrower or any material Subsidiary to maintain any material intellectual property rights, personal, real property, equipment, leases or other assets which are necessary to conduct its business (whether now or in the future) and such breach is not cured with twenty (20) days after the first day of such occurrence; or

 

xxii. the restatement after the date hereof of any financial statements filed by the Borrower with the Commission for any date or period from and after the Original Issue Date and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statements, have constituted a Material Adverse Effect. For the avoidance of doubt, any restatement related to new accounting pronouncements shall not constitute a default under this Section.

 

xxiii the Conversion Price falls below the par value of the common stock subject to cure as set forth above.

 

In the event more than one grace, cure or notice period is applicable to an Event of Default, then the shortest grace, cure or notice period shall be applicable thereto. 

 

b) Remedies Upon Event of Default, Fundamental Transaction and Change of Control Transaction. If any Event of Default or a Fundamental Transaction or a Change of Control Transaction occurs, the outstanding principal amount of this Note, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Commencing on the Maturity Date and also five (5) days after the occurrence of any Event of Default interest on this Note shall accrue at an interest rate equal to the lesser of 24% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by Borrower. In connection with such acceleration described herein, the Holder need not provide, and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 7(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

	 
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Section 8. Prepayment. 

 

a. Cash. The Borrower will have the option at any time after the Original Issue Date, of prepaying the outstanding amount owed on this Note (“Optional Cash Redemption”), in whole or in part, by paying to the Holder a sum of money in cash equal to one hundred and eighteen percent (118%) of the amount to be redeemed, together with accrued but unpaid interest thereon and any and all other sums due, accrued or payable to the Holder arising under this Note through the Redemption Payment Date as defined below (the “Cash Redemption Amount”). Borrower’s election to exercise its right to prepay must be by notice in writing (“Notice of Cash Redemption”). The Notice of Cash Redemption shall specify the date for such Optional Cash Redemption (the “Redemption Payment Date”), which date shall be a date certain not sooner than five (5) business days and not later than fifteen (15) business days after the date of the Notice of Cash Redemption (the “Redemption Period”). At all times up to the Redemption Payment Date, the Holder may convert any portion of this Note. On the Redemption Payment Date, the Cash Redemption Amount, less any portion of the Cash Redemption Amount against which the Holder has permissibly exercised its conversion rights, shall be paid in good funds to the Holder. In the event the Borrower fails to pay the Cash Redemption Amount on the Redemption Payment Date as set forth herein, then (i) such Notice of Cash Redemption will be null and void, (ii) Borrower will have no right to deliver another Notice of Cash Redemption, and (iii) Borrower’s failure may be deemed by Holder to be a non-curable Event of Default.

 

b. Crypto Currency. The Borrower will have the option once every thirty (30) days after the Original Issue Date, of prepaying the outstanding amount owed on this Note (“Optional Crypto Redemption”), in whole or in part, by paying to the Holder a sum of Crypto Currency, as defined below, equal to one hundred and eighteen percent (118%) of the amount to be redeemed, together with accrued but unpaid interest thereon and any and all other sums due, accrued or payable to the Holder arising under this Note through the date the Optional Crypto Redemption is made (the “Crypto Redemption Amount”). Borrower’s election to exercise its right to prepay in Crypto Currency must be by depositing in the Holder’s account at Coinbase the Crypto Redemption Amount and simultaneously sending a notice in writing to Holder (“Notice of Crypto Redemption”). The Notice of Crypto Redemption the date the Option Crypto Redemption occurred and the calculation of the Crypto Redemption Amount. Crypto Currency shall mean any digital currency (e.g. bitcoin, ethereum, and litecoin) for which there is an active trading market at www.Coinbase.com. For the purposes of calculating the Crypto Redemption Amount the value of the Crypto Currency shall be determined by the closing price for such Crypto Currency as reported on www.Coinbase.com at 4 P.M. Eastern Time on the date such payment is made.

 

Section 9. Miscellaneous.

 

a) Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to Borrower, to: Integrated Ventures, Inc., 73 Buck Rd, Huntingdon Valley, PA 19006, Attn: Steve Rubakh, Chief Executive Officer, email: emsfactory@aol.com, with a copy by email or fax only to (which shall not constitute notice): Michael Paige, Esq. email: MPaigeLaw@outlook.com, and (ii) if to the Holder, to: the address and fax number indicated on the front page of this Note, with an additional copy by fax only to (which shall not constitute notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.

 

	 
	-19-
	

 
	 

 

b) Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of Borrower, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of Borrower. 

 

c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, Borrower shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to Borrower.

 

d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note 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 conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts 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 suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof 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 Note 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 applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding. This Note shall be deemed an unconditional obligation of Borrower for the payment of money and, without limitation to any other remedies of Holder, may be enforced against Borrower by summary proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar rule or statute in the jurisdiction where enforcement is sought. For purposes of such rule or statute, any other document or agreement to which Holder and Borrower are parties or which Borrower delivered to Holder, which may be convenient or necessary to determine Holder’s rights hereunder or Borrower’s obligations to Holder are deemed a part of this Note, whether or not such other document or agreement was delivered together herewith or was executed apart from this Note.

 

	 
	-20-
	

 
	 

 

e) Waiver. Any waiver by Borrower or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of Borrower or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by Borrower or the Holder must be in writing.

 

f) Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.

 

g) Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. Borrower covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive Borrower from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and Borrower (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

h) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

i) Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.

 

j) Amendment. Unless otherwise provided for hereunder, this Note may not be modified or amended, or the provisions hereof waived without the written consent of Borrower and the Holder.

 

k) Facsimile Signature. In the event that the Borrower’s signature is delivered by facsimile transmission, PDF, electronic signature or other similar electronic means, such signature shall create a valid and binding obligation of the Borrower with the same force and effect as if such signature page were an original thereof.

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the Date written above.

 

	 	INTEGRATED VENTURES, INC.	
	 	 	 	 
		By:	
/s/ Steve Rubakh
	
	
 
	
Name:
	Steve Rubakh	 
	 	Title:	Chief Executive Officer	 

 

 

	
-21-Blueprint

 

Exhibit 10.1

 

SHARE PURCHASE AGREEMENT

 

This
SHARE PURCHASE AGREEMENT (this “Agreement”),
is made and entered into as of December 26, 2017, by and among
Cellular Biomedicine Group Inc., a Delaware corporation with its
principal place of business at 19925 Stevens Creek Blvd., Suite
100, Cupertino, California 95014 U.S.A. (the “Company”), and
the purchasers whose names are set forth in Annex A (each, a
“Purchaser”,
and collectively, the “Purchasers”).

 

RECITALS

 

 

             
WHEREAS, the Company wishes to issue and sell to the Purchaser, and
the Purchaser wishes to subscribe for and purchase from the
Company, shares of Common Stock of the Company, par value $0.001
per share (the “Common
Stock”), upon the terms and subject to the conditions
set forth herein.

 

NOW,
THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements herein
contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

ARTICLE
I

DEFINITIONS

 

1.1. Certain Defined Terms. As used in this
Agreement, and unless the context requires a different meaning, the
following terms shall have the following meanings:

 

“Action” means
any notice of noncompliance or violation, or any claim, demand,
charge, action, suit, litigation, audit, settlement, complaint,
stipulation, assessment or arbitration, or any request (including
any request for information), review, inquiry, hearing, proceeding
or investigation, an opposition,
revocation, reexamination, interference or similar
proceeding by any Person or by or before any Governmental
Authority.

 

 “Affiliate”
has the meaning set forth in Rule 12b-2 of the regulations under
the Securities Exchange Act of 1934, as amended.

 

 “the
Purchaser” is defined in
the preamble.

 

“the
Purchaser Indemnified Parties” is defined in Section
10.2.

 

 “Closing”
is defined in Section 2.2.

 

“Closing Date”
is defined in Section 2.2.

 

 “Contract”
means any contract, agreement, binding arrangement, commitment or
understanding, bond, note, indenture, mortgage, debt instrument,
license (or any other contract, agreement or binding arrangement
concerning Intellectual Property), franchise, lease or other
instrument or obligation of any kind, written or oral (including
any amendments or other modifications thereto).

 

 “GAAP”
means United States generally accepted accounting principles
applied on a consistent basis.

 

 

 

“Governmental
Authority” means any foreign, federal or national,
state or provincial, municipal or local government, governmental
authority, regulatory or administrative agency, governmental
commission, department, board, bureau, agency or instrumentality,
political subdivision, court, tribunal, official arbitrator or
arbitral body in each case whether domestic or
foreign.

 

 “Indemnitee”
is defined in Section 10.4(a).

 

“Indemnitor” is
defined in Section 10.4(a).

 

“Intellectual
Property” means all of the following as they exist in
any jurisdiction throughout the world: (a) Patents; (b) trademarks;
(c) Copyrights; (d) trade secrets and other confidential or
proprietary business information, including concepts, ideas,
designs, research or development information, processes,
procedures, techniques, technical information, specifications,
operating and maintenance manuals, drawings, methods, know-how,
data, formulas, compositions, and methods, technical data, customer
and supplier lists, pricing and cost information, and business and
marketing plans and proposals, discoveries, inventions,
modifications, extensions, improvements, and other proprietary
rights (whether or not patentable or subject to copyright,
trademark, or trade secret protection); (e) all domain name and
domain name registrations, web sites and web pages and related
rights, registrations, items and documentation related thereto; (f)
Software; (g) rights of publicity and privacy, and moral rights,
and (h) all licenses, sublicenses, permissions, and other
agreements related to the preceding property.

 

“IRS” means the
U.S. Internal Revenue Service or any successor entity.

 

“Knowledge”
means: (i) with respect to the Company, the knowledge of a
particular matter by a U.S. Security Exchange Act Section 16
officer of the Company (“Officer”) in
each case after due inquiry under the circumstances; (ii) with
respect to each Officer, the knowledge of a particular matter by
such Officer, in each case after due inquiry under the
circumstances; and (iii) with respect to the Purchaser, the actual
present knowledge of a particular matter by any of the directors or
executive officers of the Purchaser,
as applicable, without any duty of inquiry.

 

“Law” means any
federal, state, local, municipal, foreign or other law, statute,
legislation, principle of common law, ordinance, code, edict,
decree, proclamation, treaty, convention, rule, regulation,
directive, requirement, writ, injunction, settlement, Permit or
Order that is or has been issued, enacted, adopted, passed,
approved, promulgated, made, implemented or otherwise put into
effect by or under the authority of any Governmental
Authority.

 

 “Liabilities”
means any and all debts, liabilities and obligations of any nature
whatsoever, whether accrued or fixed, absolute or contingent,
mature or unmatured or determined or determinable, including those
arising under any Law, Action, Order or Contract.

 

 “Lien”
means any interest (including any security interest), pledge,
mortgage, lien, encumbrance, charge, claim or other right of third
parties, whether created by law or in equity, including any such
restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership.

 

“Loss” is
defined in Section 10.2.

 

-2-

 

 

 “Material
Adverse Effect” means, with respect to the Purchaser
and the Company, any event, fact, condition, change, circumstance,
occurrence or effect, which, either individually or in the
aggregate with all other events, facts, conditions, changes,
circumstances, occurrences or effects, (a) that has a material
adverse effect on the business, properties, prospects, assets,
Liabilities, condition (financial or otherwise), operations,
licenses or other franchises or results of operations of business,
or materially diminish the value of the business or its assets or
materially increase the liabilities or (b) that materially impairs
or delays the ability of the Purchaser or the Company to perform
their respective obligations under this Agreement or to consummate
the transactions contemplated hereby and thereby; provided, however, that a Material
Adverse Effect will not include any adverse effect or change
resulting from any change, circumstance or effect relating to (i)
the economy in general, (ii) securities markets, regulatory or
political conditions in the United States or China (including
terrorism or the escalation of any war, whether declared or
undeclared or other hostilities), (iii) changes in applicable Laws
or GAAP or the application or interpretation thereof, (iv) the
industry in which the Company’s or the Company’s
business operates and not specifically relating to the business or
(v) a natural disaster (provided, that in the cases of clauses (i)
through (v), the Company’s or the Purchaser’s business
is not disproportionately affected by such event as compared to
other similar companies and businesses in similar industries and
geographic regions as the Company’s or the Purchaser’s
business).

 

“Order” means
any order, writ, rule, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental
Authority.

 

“Patents” means
all patents, patent applications and the inventions, designs and
improvements described and claimed therein, patentable inventions,
and other patent rights (including any divisionals, continuations,
continuations-in-part, substitutions, or reissues thereof, whether
or not patents are issued on any such applications and whether or
not any such applications are amended, modified, withdrawn, or
refiled).

 

“Permit” means
any federal, state, local, foreign or other third-party permit,
grant, easement, consent, approval, authorization, exemption,
license, franchise, concession, ratification, permission,
clearance, confirmation, endorsement, waiver, certification,
designation, product registration, rating, registration or
qualification that is or has been issued, granted, given or
otherwise made available by or under the authority of any
Governmental Authority or other Person.

 

“Permitted
Exceptions” means bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).

 

 “Person”
shall include any individual, trust, firm, corporation, limited
liability company, partnership, Governmental Authority or other
entity or association, whether acting in an individual, fiduciary
or any other capacity.

 

“Registrable
Securities” is defined in Section 9.6.

 

 “Representative”
means, as to any Person, such Person’s Affiliates and its and
their managers, directors, officers, employees, agents and advisors
(including financial advisors, counsel and
accountants).

 

 “SEC”
means U.S. Securities and Exchange Commission.

 

“Securities
Act” means the Securities Act of 1933, as
amended.

 

-3-

 

 

“the Company ”
is defined in the preamble.

 

 “the Company
Indemnified Parties” is
defined in Section 10.3.

 

“SEC Filings”
mean any forms, reports and documents filed or furnished (including
such documents, as supplemented and amended since the times of
filing) by the Company with the Securities and Exchange Commission
(the “SEC”) under
the Exchange Act filed prior to the date of this
Agreement

 

“Special Reps”
is defined in Section 10.1.

 

 “Survival
Date” is defined in Section 10.1.

 

 “Tax”
means any applicable federal, state, local or foreign income, gross
receipts, license, payroll, parking, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental,
natural resources, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), payroll,
unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on
minimum, estimated tax, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether
disputed or not, including such item for which Liability arises
from the application of Treasury Regulation 1.1502-6, as a
transferee or successor-in-interest, by contract or otherwise, and
any Liability assumed or arising as a result of being, having been,
or ceasing to be a member of any affiliated group (as defined in
Section 1504(a) of the Internal revenue Service Code) (or being
included or required to be included in any Tax Return relating
thereto) or as a result of any Tax indemnity, Tax sharing, Tax
allocation or similar Contract.

 

“Third
Party” shall mean any
Person that is not a Party to this Agreement or an Affiliate of a
Party to this Agreement.

 

“Transaction
Documents” mean this
Agreement and all schedules, exhibits and appendices attached to
hereto and thereto.

 

ARTICLE II

PURCHASE AND SALE OF SHARES

 

2.1. Purchase
of Shares. Upon the terms and subject to the conditions
herein set forth, the Company hereby agrees to sell and deliver to
the Purchasers, and the Purchasers hereby agree to purchase and
acquire from the Company, up to 1,166,667 shares (the “Shares”) of Common Stock at the
purchase price of Twelve U.S. Dollars ($12.00) per share, for an
aggregate purchase price of Nineteen Million Dollars ($14,000,000)
(the “Purchase
Price”).

 

2.2. Closing.
The purchase and sale of the
Shares shall take place remotely via the exchange of
documents and signatures, at 10:00 a.m. EST, on or about December
28, 2017, or at such other time and place as the Company and the
Purchasers mutually agree upon in writing (which time and place are
designated as the “Closing” and such date is
designated as the “Closing
Date”).

 

ARTICLE III

CLOSING DELIVERABLES AND CLOSING
CONDITIONS

 

3.1. Closing
Deliveries by the Company.

 

At
Closing, the Company shall deliver or cause to be delivered to the
Purchasers:

 

-4-

 

 

(a) duly issued
certificate evidencing the number of Shares sold in exchange for
the Purchase Price paid at the closing registered in the name of
the Purchaser;

 

(b) At Closing,
executed counterparts of the Transaction Documents to which the
Company is a party;

 

(c) a certificate of a
duly authorized officer of the Company certifying as to the matters
set forth in Section 6.1(a).

 

3.2. Closing
Deliveries by the Purchasers.

 

At the
Closing, each Purchaser shall deliver to the Company:

 

(a) the Purchase Price
by wire transfer in immediately available funds in US dollars to
the bank account designated by the Company and provided in
Exhibit 2 attached
hereto;

 

(b) executed
counterparts of the Transaction Documents to which such Purchaser
is a party (including but not limited to the Investor Questionnaire
attached as Exhibit
3 to this Agreement); and

 

(c) if the Purchaser is
an entity, a certificate of a duly authorized officer of such
Purchaser certifying as to the matters set forth in
Section 7.1.

 

3.3. Conditions to Obligations of the
Company.

 

The
obligations of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment
or written waiver, at or prior to the Closing, of each of the
following conditions:

 

(a) Representations and Warranties. The
representations and warranties of each Purchaser shall be true and
correct in all material respects as of each date when made and as
of the Closing Date, as though made at that time (except for
representations and warranties that speak as of a specific date),
and each Purchaser shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by each Purchaser at or prior to the Closing
Date.

 

(b) No Order. No Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any
Law or Order (whether temporary, preliminary or permanent) that has
the effect of making the transactions contemplated by the
Transaction Documents illegal or otherwise restraining or
prohibiting the consummation of such transactions; and

 

(c) Qualifications. All authorizations,
approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are
required in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement shall be obtained and effective
as of the Closing.

 

3.4. Conditions to Obligations of the
Purchasers.

 

 The
obligations of the Purchasers to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment
or written waiver, at or prior to the Closing, of each of the
following conditions:

 

-5-

 

 

(a) Representations and Warranties.
The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of
Closing Date as though made at such time (except for
representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.

 

(b) No Order. No Governmental
Authority shall have enacted, issued, promulgated, enforced or
entered any Law or Governmental Order (whether temporary,
preliminary or permanent) that has the effect of making the
transactions contemplated by the Transaction Documents illegal or
otherwise restraining or prohibiting the consummation of such
transactions;

 

(c) No Material Adverse Change.
There shall not have occurred prior to the Closing any event or
transaction reasonably likely to have a Material Adverse Effect or
above taken as a whole.

 

ARTICLE IV

[Intentionally omitted]

 

 

ARTICLE V

TERMINATION

 

5.1. Termination.

 

This
Agreement may be terminated at any time prior to the
Closing:

 

(a) by either the
Purchasers or the Company in the event that any Order restraining,
enjoining or otherwise prohibiting the transactions contemplated by
this Agreement shall have become final and
non-appealable;

 

(b) by the Company if
the Purchasers shall have breached any of its representations,
warranties, covenants or agreements contained in this Agreement
which would give rise to the failure of a condition set forth in
Article VII, which breach cannot be or has not been cured
within 30 days after the giving of written notice by the
Company to the Purchasers specifying such breach,

 

(c) by the Purchasers
if the Company shall have breached any of its representations,
warranties, covenants or agreements contained in this Agreement
which would give rise to the failure of a condition set forth in
Article VI, which breach cannot be or has not been cured
within 30 days after the giving of written notice by the
Purchaser to the Company specifying such breach; or

 

(d) by the mutual
written consent of the Company and the Purchasers.

 

5.2 Effect
of Termination. In the event of termination of this
Agreement under this Section 5.2, this Agreement shall forthwith
become void and there shall be no liability on the part of any
party hereto except that nothing herein shall relieve any party
hereto from liability for any willful breach of any provision of
this Agreement.

 

-6-

 

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The
Company represents and warrants to the Purchasers, as of the date
of this Agreement and as of the Closing Date, except as set forth
in the SEC Filings, as follows:

 

6.1. Organization;
Capitalization; Subsidiaries.

 

(a) The
Company is a Delaware corporation duly organized, validly existing
and in good standing under the laws of Delaware and has full
corporate power and authority to own, use and operate its assets
and to conduct its business as and where it is being
conducted.

 

(b) Exhibit 1 hereto sets forth all
of the subsidiaries of the Company and their respective ownership
of corporate interests in the Company as of the date hereof and as
of the Closing Date. Except for employee stock options granted in
the normal course of business, there are no other securities,
options, warrants, calls, rights, commitments or agreements of any
character to which the Company is bound to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any of its corporate interests or
obligating the Company to sell, transfer, deliver, assign, convey
or purchase or cause to be sold, transferred, delivered, assigned,
conveyed or purchased any corporate interests in the
Company.

 

6.2. Authorization.
The Company has full power and authority to enter into this
Agreement to which it is a party and to consummate the transactions
contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by Board of
Directors’ action on the part of the Company. This Agreement
has been duly executed and delivered by the Company. This Agreement
constitutes, and upon the execution and delivery thereof by the
Company, will constitute, a legal, valid and binding obligation of
the Company, as applicable, enforceable against the Company, as
applicable, in accordance with their respective terms, except as
the enforceability thereof may be limited by the Permitted
Exceptions.

 

6.3. Valid
Issuance of the Shares. The Shares to be issued to the
Purchasers pursuant to this Agreement have been or will be upon
issuance duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable.

 

6.4. DISCLAIMER
OF FREEDOM TO OPERATE. THE COMPANY SPECIFICALLY DISLAIMS,
AND NEITHER MAKES ANY WARRANTY, EXPRESS OR IMPLIED, OR
NON-INFRINGMENT, OR MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE OR USE, NOR WARRANTS THE ABILITY TO PROCEED WITH THE
RESEARCH, DEVELOPMENT AND/OR COMMERCIAL PRODUCTION OF A NEW PRODUCT
OR PROCESS WITHOUT A RISK OF INFRINGING THE INTELLECTUAL PROPERTY
(IP) RIGHTS OF ANY THIRD PARTIES.

 

6.5. Litigation;
Legal Matters. There is no Action pending or, to the
Knowledge of the Company, threatened, whether at law or in equity,
or before or by any Governmental Authority, nor any Order of any
Governmental Authority which would have a Material Adverse Effect
(without regard to the availability of insurance), and the Company
has no Knowledge of any valid basis for any such
Action.

 

-7-

 

 

6.6. Compliance
with Laws. The Company is in compliance, and has complied,
in all material respects with all Laws and Orders in respect of the
ownership, operation, use or possession of its assets and/or the
conduct of its business. None of the ownership, operation, use or
possession of its assets or the conduct of the Company’s
business conflicts with the rights of any other Person or violates,
or with or without the giving of notice or passage of time, or
both, will violate, conflict with or result in a default, right to
accelerate or loss of rights under, any terms or provisions of any
Lien, Contract or any Law or Order to which the Company is a party
or by which any of its assets or the Company’s business may
be bound or affected. The Company has not received any written
notice, order, complaint or other written communication from any
Governmental Authority that the Company is not in compliance in all
material respects with any such Laws and Orders with respect to the
assets and/or the conduct of the Company’s
business.

 

6.7. Taxes.
 

 

(a) The Company has
filed all federal, state, local and other tax returns which it has
been required to file which relate to or might in any way affect
its assets and/or its business.  Each such return is true and
accurate in all material respects.  The Company has timely
paid all taxes due with respect to the taxable periods covered by
such tax returns and all other taxes (whether or not shown on any
tax return). There are no Liens with respect to taxes on any of its
assets (other than statutory Liens for current taxes not yet due
and payable).

 

(b) There are no
pending or, to the Knowledge of the Company, threatened audits,
investigations, disputes, notices of deficiency, claims or other
Actions for or relating to any taxes of the Company which would
reasonably be expected to result in any Liens on its assets or
result in any material liability of the Company for any
tax.

 

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS

 

Each
Purchaser represents and warrants to the Company as of the date of
this Agreement and as of the Closing Date as follows:

 

7.1. Organization
and Qualification. Each Purchaser, if not an individual
person, is an entity duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its formation and
has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being
conducted.

 

7.2. Authorization.
Each Purchaser has full corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part
of such Purchaser. This Agreement has been duly executed and
delivered by such Purchaser. This Agreement constitutes, and upon
the execution and delivery thereof by such Purchaser, a legal,
valid and binding obligation, as applicable, enforceable against
each Purchaser in accordance with its terms. Such Purchaser has
corporate power and authority to enter into this Agreement to which
it is a party and to consummate the transactions contemplated
hereby.

 

-8-

 

 

7.3. No
Contravention. Neither the execution, delivery and
performance of this Agreement by a Purchaser, nor the consummation
of the transactions contemplated hereby or thereby, will (a)
violate or conflict with, any provision of the governing documents
of such Purchaser, (b) violate or conflict with any Law or Order to
which such Purchaser is bound or subject, or (c) any Contract or
Permit to which such Purchaser is a party or by which Party or such
Purchaser may be bound or affected, other than, in cases of clauses
(a) through (c), such violations or conflicts which not reasonably
be expected to have a Material Adverse Effect.

 

7.4.         No
Registration of the Shares. The Purchaser acknowledges that
it is aware that (i) the Shares are restricted shares and have not
been registered under the Securities Act and that the Shares cannot
be and will not be sold unless they are subsequently registered
under the Securities Act or an exemption from such registration is
available, (ii) the Shares have not been registered or qualified
under any applicable state law regulating securities and therefore
the Shares cannot and will not be sold unless it is subsequently
registered or qualified under any such act or an exemption
therefrom is available, (iii) neither the Company, nor any
representative of the Company has made any representation,
warranty, or covenant whatsoever as to whether any exemption from
the Securities Act, including, without limitation, any exemption
for limited sales in routine brokers’ transactions pursuant
to Rule 144 under the Securities Act is, or will become, available,
(iv) neither the Company, nor any Representative of the Company has
made any representation, warranty, or covenant whatsoever as to
whether any exemption from any applicable state law is, or will
become, available, and (v) therefore, the Purchaser must agree to
bear the economic risk of investment for an indefinite period of
time.

 

7.5. Sophistication.
Each Purchaser represents and warrants that it (i) is an
“accredited investor” as that term is defined in Rule
501(a) under Regulation D promulgated pursuant to the Securities
Act; or (ii) has such knowledge and experience in financial and
business matters as to be able to protect its own interests in
connection with an investment in the Shares. Each Purchaser further
represents and warrants that (x) it is capable of evaluating the
merits and risk of such investment, (y) that it has not been
organized for the purpose of acquiring Shares and (z) that it is
being represented in this transaction by an attorney who is fully
familiar with the securities laws affecting this
transaction.

 

7.6. Intent.
Each Purchaser is purchasing the Shares solely for investment
purposes, for the Purchaser’s own account, and not with a
view towards the distribution or dissemination thereof. Each
Purchaser has no present arrangement to sell the Shares to or
through any person or entity. Each Purchaser understands that the
Shares must be held indefinitely unless such Shares are resold
pursuant to a registration statement under the Securities Act or an
exemption from registration is available.

 

7.7. No
Obligation to Register Shares. Each Purchaser understands
that the Company is under no obligation to register the Shares
under the Securities Act, or to assist such Purchaser in complying
with the Securities Act or the securities laws of any state of the
United States or of any foreign jurisdiction other than as
expressly provided herein.

 

7.8. Investment
Experience. Each Purchaser, or such Purchaser’s
professional advisors, have such knowledge and experience in
finance, securities, taxation, investments and other business
matters as to evaluate investments of the kind described in this
Agreement. By reason of the business and financial experience of
such Purchaser or his or her professional advisors (who are not
affiliated with or compensated in any way by the Company or any of
its affiliates or selling agents), such Purchaser can protect his
or her own interests in connection with the transactions described
in this Agreement. Each Purchaser is able to afford the loss of
his, her or its entire investment in the Shares.

 

-9-

 

 

7.9. Independent
Investigation. Each Purchaser, in making the decision to
purchase the Shares, has relied upon an independent investigation
of the Company and has not relied upon any information or
representations made by any third parties or upon any oral or
written representations or assurances from the Company, its
officers, directors or employees or any other representatives or
agents of the Company, other than as set forth in this Agreement
and the exhibits and schedules attached hereto. Each Purchaser is
familiar with the business, operations and financial condition of
the Company and has had an opportunity to ask questions of, and
receive answers from, the Company’s officers and directors
concerning the Company and the terms and conditions of the offering
of the Shares and has had full access to such other information
concerning the Company as such Purchaser has
requested.

 

7.10. Not
a Broker-Dealer. Each Purchaser is neither a registered
representative under the Financial Industry Regulatory Authority
(“FINRA”), a member of FINRA or associated or
Affiliated (as defined below) with any member of FINRA, nor a
broker-dealer registered with the SEC under the Exchange Act of
1934, as amended (“Exchange Act”) or engaged in a
business that would require it to be so registered, nor is it an
Affiliate of a broker-dealer or any Person engaged in a business
that would require it to be registered as a broker-dealer. In the
event such Purchaser is a member of FINRA, or associated or
Affiliated with a member of FINRA, such Purchaser agrees, if
requested by FINRA, to sign a lock-up, the form of which shall be
satisfactory to FINRA with respect to the Securities.
“Affiliate” means, with respect to any specified
Person: (i) if such Person is an individual, the spouse of that
Person and, if deceased or disabled, his heirs, executors, or legal
representatives, if applicable, or any trusts for the benefit of
such individual or such individual’s spouse and/or lineal
descendants, or (ii) otherwise, another Person that directly, or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person
specified. As used in this definition, “control” shall
mean the possession, directly or indirectly, of the power to cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities or by contract or other
written instrument. “Person” shall mean an individual,
entity, corporation, partnership, association, limited liability
company, limited liability partnership, joint-stock company, trust
or unincorporated organization.

 

7.11. Not
an Underwriter. Each Purchaser is not an underwriter of the
Securities, nor is it an Affiliate of an underwriter of the
Securities.

 

7.12. No
Advice from Company. Each Purchaser acknowledges that he,
she or it has had the opportunity to review this Agreement, the
exhibits hereto (including the risk factors relating to the Company
attached hereto) and the transactions contemplated by this
Agreement with such Purchaser’s own legal counsel and
investment and tax advisors. Except for any statements or
representations of the Company made in this Agreement, each
Purchaser is relying solely on its counsel and advisors and not on
any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction. Each
Purchaser has consulted, to the extent deemed appropriate by such
Purchaser, with such Purchaser’s own advisers as to the
financial, tax, legal and related matters concerning an investment
in the Securities and on that basis believes that its investment in
the Securities is suitable and appropriate for such
Purchaser.

 

7.13. Reliance
on Representations and Warranties. Each Purchaser
understands that the Shares are being offered and sold to such
Purchaser in reliance on exemptions contained in specific
provisions of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of such Purchaser set forth in this Agreement in
order to determine the applicability of the exemptions contained in
such provisions.  

 

-10-

 

 

7.14.           Regulation
S Exemption. To the extent that the Shares are being offered
and sold to a Purchaser in reliance on an exemption from the
registration requirements of United States federal and state
securities laws under Regulation S promulgated under the Securities
Act (each, a “Reg. S
Purchaser”), such Purchaser represents, warrants and
agrees that:

 

(a) The Purchaser is
not a U.S. Person and is not an affiliate (as defined in Rule
501(b) under the Securities Act) of the Company and is not
acquiring the Shares for the account or benefit of a U.S. Person. A
“U.S. Person”
means any one of the following:

 

(i) any natural person
resident in the United States of America;

 

(ii) any
partnership, limited liability company, corporation or other entity
organized or incorporated under the laws of the United States of
America;

 

(iii) any
estate of which any executor or administrator is a U.S.
Person;

 

(iv) any
trust of which any trustee is a U.S. Person;

 

(v) any agency or
branch of a foreign entity located in the United States of
America;

 

(vi) any
non-discretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;

 

 

(vii) any
discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated
or (if an individual) resident in the United States of America;
and

 

(viii) any
partnership, company, corporation or other entity if:

 

(1)           organized
or incorporated under the laws of any foreign jurisdiction;
and

 

(2)           formed
by a U.S. person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is
organized or incorporated, and owned, by accredited
investors (as defined
in Rule 501(a) under the Securities Act) who are not natural
persons, estates or trusts.

 

(b) At the time of the
origination of contact concerning this Agreement and the date of
the execution and delivery of this Agreement, the Purchaser was
outside of the United States.

 

(c) The Purchaser will
not, during the period commencing on the date of issuance of the
Shares and ending on the six-month anniversary of such date, or
such shorter period as may be permitted by Regulation S or other
applicable securities law (the “Restricted Period”), offer, sell,
pledge or otherwise transfer the Shares in the United States, or to
a U.S. Person for the account or for the benefit of a U.S. Person,
or otherwise in a manner that is not in compliance with Regulation
S.

 

(d) The Purchaser will,
after expiration of the Restricted Period, offer, sell, pledge or
otherwise transfer the Shares only pursuant to registration under
the Securities Act or an available exemption therefrom and in
accordance with all applicable state and foreign securities
laws.

 

-11-

 

 

(e) The Purchaser was
not in the United States engaged in, and prior to the expiration of
the Restricted Period will not engage in, any short selling of or
any hedging transaction with respect to the Shares, including
without limitation, any put, call or other option transaction,
option writing or equity swap.

 

(f) Neither the
Purchaser nor or any person acting on his behalf has engaged, nor
will engage, in any directed selling efforts to a U.S. Person with
respect to the Shares and the Purchaser and any person acting on
his or her behalf have complied and will comply with the
“offering restrictions” requirements of Regulation S
under the Securities Act.

 

(g) The transactions
contemplated by this Agreement have not been pre-arranged with a
Purchaser located in the United States or with a U.S. Person, and
are not part of a plan or scheme to evade the registration
requirements of the Securities Act.

 

(h) Neither the
Purchaser nor any person acting on its behalf has undertaken or
carried out any activity for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the
market in the United States, its territories or possessions, for
any of the Shares. The Purchaser agrees not to cause any
advertisement of the Shares to be published in any newspaper or
periodical or posted in any public place and not to issue any
circular relating to the Shares, except such advertisements that
include the statements required by Regulation S under the
Securities Act, and only offshore and not in the U.S. or its
territories, and only in compliance with any local applicable
securities laws.

 

7.15. Review
of Investor Questionnaire. Each Purchaser has carefully
reviewed and completed the Investor Questionnaire annexed hereto as
Exhibit
3.

 

7.16. No
Advertisements. Each Purchaser is not subscribing for the
Shares as a result of or subsequent to any advertisement, article,
notice or other communication published in any newspaper, magazine,
or similar media or broadcast over television or radio or via the
Internet, or presented at any seminar or meeting, and is not aware
of any public advertisement or general solicitation in respect of
the Company or its securities.

 

7.17. Legend.
Each Purchaser acknowledges and agrees that the Shares shall bear a
restricted legend (the “Legend”), in the form and
substance as set forth in Article VIII hereof, prohibiting the
offer, sale, pledge or transfer of the securities, except (i)
pursuant to an effective registration statement filed under the
Securities Act, (ii) pursuant to an exemption from registration
provided by Rule 144 under the Securities Act (if available), or
(iii) pursuant to any other exemption from the registration
requirements of the Securities Act, and in each case in accordance
with any applicable securities laws of any state or any other
jurisdiction.

 

7.18. Economic
Considerations. Each Purchaser is not relying on the
Company, or its affiliates or agents with respect to economic
considerations involved in this investment. Each Purchaser has
relied solely on his, her or its own advisors.

 

7.19. Compliance
with Laws. Any resale of the Shares in any jurisdiction
outside of the United States will be made in compliance with the
securities laws of such jurisdiction. Each Purchaser will not offer
to sell or sell the Shares in any jurisdiction unless such
Purchaser obtains all required consents, if any. Each Purchaser
acknowledges that such Purchaser is familiar with Rule 144
(“Rule 144”) under the Securities Act, and has been
advised that Rule 144 permits resales only under certain
circumstances. Each Purchaser understands that to the extent that
Rule 144 is not available, such Purchaser will be unable to sell
any Securities without either registration under the Securities Act
or the existence of another exemption from such registration
requirement.

 

-12-

 

 

7.20. Foreign
Investors. If a Purchaser is not a United States person (as
defined by Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended), the Purchaser hereby represents that it has
satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the
Shares or any use of this Agreement, including (i) the legal
requirements within its jurisdiction for the purchase of the
Shares, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to
be obtained, and (iv) the income tax and other tax consequences, if
any, that may be relevant to the purchase, holding, redemption,
sale, or transfer of the Shares. Such Purchaser’s
subscription and payment for and continued beneficial ownership of
the Shares will not violate any applicable securities or other laws
of the Purchaser’s jurisdiction.

 

7.21. Investment
Commitment. Each Purchaser's overall commitment to
investments which are not readily marketable is not
disproportionate to such Purchaser's net worth, and an investment
in the Shares will not cause such overall commitment to become
excessive.

 

7.22. Receipt
of Information. Each Purchaser has received all documents,
records, books and other information pertaining to such
Purchaser’s investment in the Company that has been requested
by the Purchaser.

 

7.23. Residence.
If the Purchaser is an individual, then the Purchaser resides in
the state or province identified in the address of the Purchaser
set forth on Exhibit
3; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of
the Purchaser in which its principal place of business is
identified in the address or addresses of the Purchaser set forth
on Exhibit
3.

 

7.24. No
Reliance. Other than as set forth herein, each Purchaser is
not relying upon any other information, representation or warranty
by the Company or any officer, director, stockholder, agent or
representative of the Company in determining to invest in the
Shares. Each Purchaser has consulted, to the extent deemed
appropriate by such Purchaser, with such Purchaser’s own
advisers as to the financial, tax, legal and related matters
concerning an investment in the Shares and on that basis believes
that its investment in the Shares is suitable and appropriate for
the Purchaser.

 

7.25. No
Governmental Review. Each Purchaser is aware that no federal
or state agency has (i) made any finding or determination as to the
fairness of this investment, (ii) made any recommendation or
endorsement of the Shares or the Company, or (iii) guaranteed or
insured any investment in the Shares or any investment made by the
Company.

 

7.26. Potential
Loss of Investment; Risk Factors. Each Purchaser understands
that an investment in the Shares is a speculative investment which
involves a high degree of risk and the potential loss of his or her
entire investment. Each Purchaser has considered carefully and
understands the risks associated with an investment in the Shares
set forth in the SEC Filings.

 

7.27.  Anti
Money Laundering Law Compliance. Each Purchaser, its
Affiliates and each of their respective officers, directors,
supervisors, managers, agents, and employees, has not violated, its
purchase of the Shares will not violate, and it has instituted and
maintains policies and procedures designed to ensure continued
compliance with the anti-money laundering laws, regulations or
government guidance regarding anti-money laundering, and
international anti-money laundering principals or procedures of the
United States, Hong Kong, People’s Republic of China and any
related or similar statutes, rules, regulations or guidelines,
issued, administered or enforced by any governmental agency
(collectively, the “Anti Money Laundering
Laws”), and no Proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Purchaser with respect to the Anti Money Laundering Laws is
pending or, to the best knowledge of the Purchaser,
threatened.

 

 

-13-

 

 

ARTICLE VIII

LEGENDS, ETC.

 

8.1. Legend.
Each certificate representing the Shares shall be endorsed with the
following legends, in addition to any other legend required to be
placed thereon by applicable federal or state securities
laws:

 

Investment
pursuant to Regulation D:

 

“THESE
SECURITIES ARE BEING OFFERED TO INVESTORS WITHOUT REGISTRATION WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT IN RELIANCE UPON REGULATION D PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES
ACT”). TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT
PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT
BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.”

 

Investment pursuant to Regulation
S:

 

“THESE
SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (“THE SECURITIES ACT”)) AND WITHOUT
REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S
PROMULGATED UNDER THE SECURITIES ACT. TRANSFER OF THESE SECURITIES
IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE
EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.”

 

8.2. The
Purchasers’ Compliance. Nothing in this Article VIII
shall affect in any way each Purchaser’s obligations and
agreement to comply with all applicable securities laws upon resale
of the Shares.

 

8.3. Company’s
Refusal to Register Transfer of Shares. The Company shall
refuse to register any transfer of the Shares not made (i) pursuant
to an effective registration statement filed under the Securities
Act, or (ii) pursuant to an available exemption from the
registration requirements of the Securities Act.

 

ARTICLE IX

OTHER AGREEMENTS

 

9.1. Further
Assurances. In the event that at any time after the Closing
Date any further action is reasonably necessary to carry out the
purposes of this Agreement, each of the parties will take such
further action (including the execution and delivery of such
further instruments and documents) as the other parties reasonably
may request, at the sole cost and expense of the requesting
party(ies) (unless otherwise specified herein or unless such
requesting party(ies) is entitled to indemnification therefor under
ARTICLE X in which
case, the costs and expense will be borne by the parties as set
forth in ARTICLE
X).

 

-14-

 

 

9.2. Confidentiality.
Each Purchaser shall, and shall cause their respective Affiliates
to: (a) treat and hold in strict confidence any confidential or
proprietary information relating to the information obtained from
such Purchaser’s due diligence on the Company
(“Confidential
Information”), and will not use for any purpose, nor
directly or indirectly disclose, distribute, publish, disseminate
or otherwise make available to any third party any of the
Confidential Information without the Company’s prior written
consent; (b) in the event that any of them becomes legally
compelled to disclose any Confidential Information, to provide the
Company with prompt written notice of such requirement so that the
Company or an Affiliate thereof may seek a protective order or
other remedy or waive compliance with this Section 9.2; (c) in
the event that such protective order or other remedy is not
obtained, or the Company waives compliance with this
Section 9.2, to furnish only that portion of such Confidential
Information which is legally required to be provided as advised in
writing by outside counsel and to exercise their commercially
reasonable efforts to obtain assurances that confidential treatment
will be accorded such Confidential Information; (d) to the extent
permitted by applicable Law, to promptly furnish (prior to, at, or
as soon as practicable following, the Closing) to the Company any
and all copies (in whatever form or medium) of all such
Confidential Information and to destroy any and all additional
copies of such Confidential Information and any analyses,
compilations, studies or other documents prepared, in whole or in
part, on the basis thereof; provided, however, that Confidential
Information shall not include any information which, at the time of
disclosure, is generally available publicly and was not disclosed
in breach of this Agreement by such Purchaser or their respective
Affiliates. Each Purchaser agrees and acknowledge that remedies at
law for any breach of its obligations under this Section 9.2
are inadequate and that in addition thereto the Company (or an
Affiliate thereof) shall be entitled to seek equitable relief,
including injunction and specific performance, in the event of any
such breach.

 

9.3. Publicity.
None of the parties hereto shall, and each party shall cause their
respective Representatives not to, disclose, make or issue, any
statement or announcement concerning this Agreement or the
transactions contemplated hereby (including the terms, conditions,
status or other facts with respect thereto) to any third parties
(other than its Representatives who need to know such information
in connection with carrying out or facilitating the transactions
contemplated hereby) without the prior written consent of the other
parties hereto (such consent not to be unreasonably withheld,
delayed or conditioned), except (i) as required by applicable Law
after conferring with the other parties concerning the timing and
content of such required disclosure, and (ii) in the case of the
Company, as may be required of the Company by applicable Law
(including any Securities and Exchange Commission rules) or stock
exchange’s requirement.

 

9.4. Litigation
Support. Following the Closing, in the event that and for so
long as any party is actively contesting or defending against any
third party or Governmental Authority Action in connection with any
fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act
or transaction involving the transactions contemplated herein, the
other parties will (i) reasonably cooperate with the contesting or
defending party and its counsel in the contest or defense, (ii)
make available its personnel at reasonable times and upon
reasonable notice and (iii) provide (A) such testimony and (B)
access to its non-privileged books and records as may be reasonably
requested in connection with the contest or defense, at the sole
cost and expense of the contesting or defending party (unless such
contesting or defending party is entitled to indemnification
therefor under ARTICLE
X in which case, the costs and expense will be borne by the
parties as set forth in ARTICLE X).

 

9.5.  Registration
Statement. The Company shall prepare and file a registration
statement with the SEC on Form S-1 or equivalent form covering the
registration of the Shares as soon as practicable, and to cause
such registration statement to be declared effective by the
SEC.

 

-15-

 

 

9.6. Piggyback
Registration Rights. The Company agrees that if, after the
date hereof, the Board shall authorize the filing of a registration
statement under the Securities Act (other than a registration
statement (i) filed in connection with an offering of securities to
employees or directors of the Company pursuant to any employee
stock option or other benefit plan, (ii) filed on Form S-4 or S-8
or any successor to such forms, (iii) for an exchange offer or
offering of securities solely to the Company’s existing
security holders, (iv) for a dividend reinvestment plan, or (v)
solely in connection with a merger, share capital exchange, asset
acquisition, share purchase, reorganization, amalgamation,
subsequent liquidation, or other similar business transaction that
results in all of the Company’s shareholders having the right
to exchange their common stock for cash, securities or other
property of a non-capital raising bona fide business transaction)
in connection with the proposed offer of any of its securities by
it or any corporation with which it may combine or merge subsequent
to the Offering, the Company shall: (A) promptly notify each
Purchaser that such registration statement will be filed and that
the Shares purchased pursuant to this Agreement and then held by
such Purchaser (hereinafter the “Registrable
Securities”) will be included in such registration
statement at such Purchaser’s request; (B) cause such
registration statement to cover all of such Registrable Securities
issued to such Purchaser for which such Purchaser requests
inclusion; (C) use reasonable best efforts to cause such
registration statement to become effective as soon as practicable;
and (D) take all other reasonable action necessary under any
Federal or state law or regulation of any governmental authority to
permit all such Registrable Securities that have been issued to
such Purchasers to be sold or otherwise disposed of, and will
maintain such compliance with each such Federal and state law and
regulation of any governmental authority for the period necessary
for such Purchasers to promptly effect the proposed sale or other
disposition, but no later than the date that, assuming compliance
with all of the requirements of Rule 144 promulgated under the
Securities Act, the Purchaser would be entitled to sell all the
Registrable Securities pursuant to Rule 144 without limitation. If
the Purchaser desires to include in such registration statement all
or any part of the Registrable Securities held by him/her/it,
he/she/it shall, within twenty (20) days after the above-described
notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the
Registrable Securities by such Purchaser. If a Purchaser decides
not to include all of his/her/its Registrable Securities in any
registration statement thereafter filed by the Company, such
Purchaser shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement
or registration statements as may be filed by the Company with
respect to offerings of its securities, all upon the terms and
conditions set forth herein. As used in this Section 9.6, the term
“Shares” refers to the purchased Shares, all securities
received in replacement of or in connection with the Shares
pursuant to stock dividends or splits, all securities received in
replacement of the Shares in a recapitalization, merger,
reorganization, exchange or the like, and all new, substituted or
additional securities or other properties to which such Purchaser
is entitled by reason of such Purchaser’s ownership of the
Shares. Notwithstanding the foregoing, Purchasers holding
Registrable Securities proposing to distribute their securities
through a registration statement that involves an underwritten
offering shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
underwritten offering, and satisfy such other, customary terms and
conditions as the underwriter or underwriters may reasonably
impose. Additionally, the Company shall not be required to include
any of a Purchaser’s Registrable Securities in such
underwriting unless such Purchaser accepts the terms of the
underwriting as agreed upon between the Company and its
underwriter(s), and then only in such quantity as the underwriter
or underwriters in their sole discretion determine will not
jeopardize the success of the offering by the Company. If the
underwriters determine that less than all of the Registrable
Securities requested to be registered can be included in such
offering, then the Registrable Securities that are included in such
offering shall be allocated among the selling Purchasers in
proportion (as nearly as practicable to) the number of Registrable
Securities owned by each such Purchaser or in such other
proportions as shall mutually be agreed to by all such selling
Purchasers.

 

-16-

 

 

ARTICLE
X

INDEMNIFICATION

 

10.1. Survival.
All
representations and warranties of the Company and the Purchasers
contained in this Agreement (including all schedules and exhibit
hereto and all certificates, documents, instruments and
undertakings furnished pursuant to this Agreement) shall survive
the Closing through and until the second anniversary of the Closing
Date; provided however that the representations and warranties
contained in Sections 6.1 (Organization; Capitalization;
Subsidiaries), 6.2 (Authorization), 6.1 (Organization), and 6.2
(Authorization) such representations and warranties collectively,
the “Special
Reps”) will survive
indefinitely (in each case, the date until each such representation
and warranty shall survive is herein referred to as the
“Survival
Date”). If
written notice of a claim for breach of any representation or
warranty has been given on or before the applicable Survival Date
for such representation or warranty, then the relevant
representations and warranties shall survive as to such claim,
until the claim has been finally resolved. All covenants,
obligations and agreements of the parties contained in this
Agreement (including all schedules and exhibits hereto and all
certificates, documents, instruments and undertakings furnished
pursuant to this Agreement), including any indemnification
obligations, shall survive the Closing indefinitely and continue
until fully performed in accordance with their terms.

 

10.2. Indemnification by the Company. Except
as otherwise limited by this ARTICLE X, the Company shall
indemnify, defend and hold harmless each of the Purchasers, and
their respective Affiliates, any assignee or successor thereof, and
each officer, director, manager, employee, agent and Representative
of each of the foregoing (collectively, “the Purchaser Indemnified
Parties”) from and against, and pay or reimburse the
Purchaser Indemnified Parties for, any and all losses, Actions,
Orders, Liabilities, damages, diminution in value, taxes, interest,
penalties, Liens, amounts paid in settlement, costs and expenses
(including reasonable expenses of investigation and court costs and
reasonable attorneys’ fees and expenses), (any of the
foregoing, a “Loss”)
suffered or incurred by, or imposed upon, any Purchaser Indemnified
Party arising in whole or in part out of or resulting directly or
indirectly from:

 

(a) any breach of any
representation, covenant, obligation or warranty of the Company in
this Agreement;

 

(b) enforcing the
Purchaser Indemnified Parties’ indemnification rights
provided for hereunder.

 

10.3. Indemnification by the Purchasers.
Except as otherwise limited by this ARTICLE X, the Purchasers shall
indemnify, defend and hold harmless the Company, its respective
Affiliates and each officer, manager, employee, agent and
Representative of each of the foregoing (collectively, the
“the
Company Indemnified Parties”) from and against, and
pay or reimburse the Company Indemnified Parties for, any and all
Losses, suffered or incurred by, or imposed upon, any the Company
Indemnified Party arising in whole or in part out of or resulting
directly or indirectly from:

 

(a) any breach of any
representation, covenant, obligation or warranty of the Purchasers
in this Agreement;

 

(b) any and all
Transfer Taxes as defined in Section 11.1; and

 

(c) enforcing the
Company Indemnified Parties’ indemnification rights provided
for hereunder.

 

-17-

 

 

10.4. Indemnification
Procedures.

 

(a) For the purposes of
this Agreement, (i) the term “Indemnitee”
shall refer to the Person or Persons indemnified, or entitled, or
claiming to be entitled, to be indemnified, pursuant to the
provisions of Section 10.2 or 10.3, as the case may be, and
(ii) the term “Indemnitor”
shall refer to the Person or Persons having the obligation to
indemnify pursuant to such provisions.

 

(b) In the case of any
claim for indemnification under this Agreement arising from a claim
of a Third Party (including any Governmental Authority), an
Indemnitee must give prompt written notice and, subject to the
following sentence, in no case later than thirty (30) days after
the Indemnitee’s receipt of notice of such claim, to the
Purchasers or the Company of any claim of which such Indemnitee has
knowledge and as to which it may request indemnification hereunder.
The failure to give such notice will not, however, relieve an
Indemnitor of its indemnification obligations except to the extent
that the Indemnitor is actually harmed thereby. The Indemnitor will
have the right to defend and to direct the defense against any such
claim in its name and at its expense, and with counsel selected by
the Indemnitor unless (i) the Indemnitor fails to acknowledge fully
its obligations to the Indemnitee within fifteen (15) days after
receiving notice of such Third Party claim or contests, in whole or
in part, its indemnification obligations therefor, (ii) if the
Indemnitor is a Purchaser, the applicable Third Party claimant is a
Governmental Authority or a then-current customer of a Purchaser,
or any of its respective Affiliates, (iii) if the Indemnitor is a
Purchaser, an adverse judgment with respect to the claim will
establish a precedent materially adverse to the continuing business
interests of the Purchaser or any of their respective Affiliates,
(iv) there is a conflict of interest between the Indemnitee and the
Indemnitor in the conduct of such defense, (v) the applicable Third
Party alleges claims of fraud, willful misconduct or intentional
misrepresentation, or (vi) such claim is criminal in nature, could
reasonably be expected to lead to criminal proceedings, or seeks an
injunction or other equitable relief against the Indemnitee. If the
Indemnitor elects, and is entitled, to compromise or defend such
claim, it will within fifteen (15) days (or sooner, if the nature
of the claim so requires) notify the Indemnitee of its intent to do
so, and the Indemnitee will, at the request and expense of the
Indemnitor, cooperate in the defense of such claim. If the
Indemnitor elects not to, or is not entitled under this Section
10.4(b) to, compromise or defend such claim, fails to notify the
Indemnitee of its election as herein provided or refuses to
acknowledge or contests its obligation to indemnify under this
Agreement, the Indemnitee may pay, compromise or defend such claim.
Notwithstanding anything to the contrary contained herein, the
Indemnitor will have no indemnification obligations with respect to
any such claim which has been or will be settled by the Indemnitee
without the prior written consent of the Indemnitor (which consent
will not be unreasonably withheld, delayed or conditioned);
provided, however, that notwithstanding the foregoing, the
Indemnitee will not be required to refrain from paying any claim
which has matured by a court judgment or decree, unless an appeal
is duly taken therefrom and exercise thereof has been stayed, nor
will it be required to refrain from paying any claim where the
delay in paying such claim would result in the foreclosure of a
Lien upon any of the property or assets then held by the Indemnitee
or where any delay in payment would cause the Indemnitee material
economic loss. The Indemnitor’s right to direct the defense
will include the right to compromise or enter into an agreement
settling any claim by a Third Party; provided that no such
compromise or settlement will obligate the Indemnitee to agree to
any settlement that requires the taking or restriction of any
action (including the payment of money and competition
restrictions) by the Indemnitee (other than the delivery of a
release for such claim and customary confidentiality obligations),
except with the prior written consent of the Indemnitee (such
consent to be withheld, conditioned or delayed only for a good
faith reason). Notwithstanding the Indemnitor’s right to
compromise or settle in accordance with the immediately preceding
sentence, the Indemnitor may not settle or compromise any claim
over the objection of the Indemnitee; provided, however, that
consent by the Indemnitee to settlement or compromise will not be
unreasonably withheld, delayed or conditioned. The Indemnitee will
have the right to participate in the defense of any claim with
counsel selected by it subject to the Indemnitor’s right to
direct the defense. The fees and disbursements of such counsel will
be at the expense of the Indemnitee; provided, however, that, in
the case of any claim which seeks injunctive or other equitable
relief against the Indemnitee, the fees and disbursements of such
counsel will be at the expense of the Indemnitor.

 

-18-

 

 

(c) Any indemnification
claim that does not arise from a Third Party claim must be asserted
by a written notice to the Purchasers or the Company. The recipient
of such notice will have a period of thirty (30) days after receipt
of such notice within which to respond thereto. If the recipient
does not respond within such thirty (30) days, the recipient will
be deemed to have accepted responsibility for the Losses set forth
in such notice and will have no further right to contest the
validity of such notice. If the recipient responds within such
thirty (30) days after the receipt of the notice and rejects such
claim in whole or in part, the party delivering will be free to
pursue such remedies as may be available to it under this Agreement
or applicable Law.

 

10.5. Limitations
on Indemnification.

 

(a) No
Indemnitor shall be liable for an indemnification claim made under
Section 10.2(a) or Section 10.3(a) as the case may be: (i) for
which a claim for indemnification is not asserted hereunder on or
before the applicable Survival Date, (ii) to the extent Losses
incurred by the Purchaser Indemnified Parties in the aggregate
under Section 10.2(a) or by the Company Indemnified Parties in the
aggregate under Section 10.3(a), as applicable, exceed an amount
equal the sum of $1,000,000 (the “Indemnification
Cap”); and (iii) unless and until the Losses of the
Purchaser Indemnified Parties collectively, or of the Company
Indemnified Parties collectively, as applicable, exceed an
aggregate amount equal to $500,000 (the “Basket”), in
which case the applicable Indemnitor(s) shall be obligated to the
Indemnitee(s) for the amount of such Losses of the Indemnitee(s)
that exceed the Basket; provided, however, that the Basket and the
Indemnification Cap shall not apply to (i) indemnification claims
to the extent amounts are actually paid under insurance policies
maintained by the Indemnitor (or any of its Affiliates) and (y)
indemnification claims based, in whole or in part, on fraud,
willful misconduct or intentional misrepresentation.
  

 

(b) The
Basket and the Indemnification Cap shall apply only to
indemnification claims made under Section 10.2(a) or Section
10.3(a) and shall not affect or apply to any other indemnification
claim made pursuant to this Agreement, including those asserted
under any other clause of Section 10.2 or Section
10.3.

 

10.6. General
Indemnification Provisions.

 

(a) The amount of any
Losses suffered or incurred by any Indemnitee shall be reduced by
the amount of any insurance proceeds or other cash receipts paid to
the Indemnitee or any Affiliate thereof as a reimbursement with
respect to such Losses (and no right of subrogation shall accrue to
any insurer hereunder, except to the extent that such waiver of
subrogation would prejudice any applicable insurance coverage),
including any indemnification received by the Indemnitee or such
Affiliate from an unrelated party with respect to such Losses, net
of the costs of collection and any related anticipated future
increases in insurance premiums resulting from such Loss or
insurance payment.

 

(b) No investigation by
the Purchasers or Knowledge of the Purchasers of a breach of a
representation or warranty of the Company shall affect the
representations and warranties of the Company or the recourse
available to the Purchasers under any provision of this Agreement
(including ARTICLE
X) with respect thereto.

 

(c)  Notwithstanding
anything in this Agreement to the contrary, for purposes of
application of the indemnification provisions of this ARTICLE X, the amount of any
Loss arising from the breach of any representation, warranty,
covenant, obligation or agreement contained in this Agreement shall
be the entire amount of any Loss actually incurred by the
respective Indemnitee as a result of such breach and not just that
portion of the Loss that exceeds the relevant level of materiality,
if any.

 

-19-

 

 

(d) Except to the
extent otherwise provided in Section 10.7 below, any
indemnification obligation of an Indemnitor under this ARTICLE X will be paid in cash
within three (3) Business Days after the determination of such
obligation in accordance with Section 10.4.

 

ARTICLE XI

TAX
MATTERS

 

11.1. Transfer
Taxes. All Taxes imposed in connection with the issuance of
the Shares to the Purchasers (the “Transfer
Taxes”), whether such Taxes are assessed initially
against the Purchasers or any Affiliate of the Purchasers or the
Company or any Affiliate thereof, shall be borne and paid by the
Purchasers.

 

ARTICLE XII

GENERAL
PROVISIONS

 

12.1. Expenses,
Taxes, Etc. Except as otherwise expressly provided in this
Agreement, each party will pay all fees and expenses incurred by it
in connection with the negotiation, execution, delivery of, and the
performance under, this Agreement and the consummation of the
transactions contemplated hereby.

 

12.2. Notices. Any notice, request,
instruction or other document to be given hereunder by a party
hereto shall be in writing and shall be deemed to have been given,
(i) when received if given in person or by courier or a courier
service, (ii) on the date of transmission if sent by facsimile or
email (with affirmative confirmation of receipt, and provided, that
the party providing notice shall within two (2) business days
provide notice by another method under this Section 12.2) or (iii)
five (5) business days after being deposited in the U.S. mail,
certified or registered mail, postage prepaid:

 

	

If to the Company, to:

Andy
Chan

19925
Stevens Creek Blvd., Ste 100

Cupertino, CA
95014

Email:
andy.chan@cellbiomedgroup.com

 

 

 

 

	

with a copy (which will not constitute notice) to:

Ellenoff Grossman
Schole LLP

1345
Avenue of the Americas,

New
York, NY 10105

Attn:
Sarah Williams, Esq

Email:
swilliams@egsllp.com

 

 

 

 

	

If to the Purchasers, to:

their
respective addresses as set forth on Annex A attached
hereto.

	

with a copy (which will not constitute notice) to:

[Name]

[Company]

[Address]

Email:

 

 

or to
such other individual or address as a party hereto may designate
for itself by notice given as herein provided.

 

-20-

 

 

12.3. Interpretation.
The headings and subheadings of this Agreement are for reference
and convenience purposes only and in no way modify, interpret or
construe the meaning of specific provisions of the Agreement. In
this Agreement, unless the context otherwise requires: (i) whenever
required by the context, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns, pronouns and verbs shall include the
plural and vice versa; (ii) reference to any Person includes such
Person’s successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such Person
in any other capacity; (iii) any accounting term used and not
otherwise defined in this Agreement has the meaning assigned to
such term in accordance with GAAP; (iv) “including”
(and with correlative meaning “include”) means
including without limiting the generality of any description
preceding or succeeding such term and shall be deemed in each case
to be followed by the words “without limitation”; (v)
the words “herein,” “hereto,” and
“hereby” and other words of similar import in this
Agreement shall be deemed in each case to refer to this Agreement
as a whole and not to any particular Section or other subdivision
of this Agreement; (vi) the word “if” and other words
of similar import when used herein shall be deemed in each case to
be followed by the phrase “and only if”; (vii) the term
“or” means “and/or”; (viii) reference to
any Law means such Law as amended, modified, codified or reenacted,
in whole or in part, and in effect from time to time, including
rules and regulations promulgated thereunder; (ix) any agreement,
instrument, insurance policy, Law or Order defined or referred to
herein or in any agreement or instrument that is referred to herein
means such agreement, instrument, insurance policy, Law or Order as
from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in
the case of statutes, regulations, rules or orders) by succession
of comparable successor statutes, regulations, rules or orders and
references to all attachments thereto and instruments incorporated
therein; and (x) except as otherwise indicated, all references in
this Agreement to the words “Section,”
“Schedule” and “Exhibit” are intended to
refer to Sections, Schedules and exhibits to this
Agreement.

 

12.4. Conflict
Between Agreements. In the event of any inconsistency,
conflict or ambiguity as to the rights and obligations of the
parties under this Agreement, the terms of this Agreement shall
control and supersede any such inconsistency, conflict or
ambiguity.

 

12.5. Severability.
In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality, and enforceability of the
remaining provisions will not in any way be affected or impaired.
Any illegal or unenforceable term will be deemed to be void and of
no force and effect only to the minimum extent necessary to bring
such term within the provisions of applicable Law and such term, as
so modified, and the balance of this Agreement will then be fully
enforceable. The parties will substitute for any invalid, illegal
or unenforceable provision a suitable and equitable provision that
carries out, so far as may be valid, legal and enforceable, the
intent and purpose of such invalid, illegal or unenforceable
provision.

 

12.6. No
Third-Party Beneficiaries. Except for the indemnification
rights of the Purchaser Indemnified Parties and the Company
Indemnified Parties set forth herein, this Agreement is for the
sole benefit of the parties hereto and their successors and
permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any Person, other than the parties
hereto and such successors and assigns, any legal or equitable
rights hereunder.

 

 

-21-

 

 

12.7. Amendment;
Waiver. This Agreement may not be amended or modified except
by an instrument in writing signed by each of the parties hereto.
Neither the failure nor any delay by any party in exercising any
right, power or privilege under this Agreement will operate as a
waiver of such right, power or privilege, and single or partial
exercise of any such right, power or privilege will preclude any
other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. To the maximum
extent permitted by applicable Law, (i) no Action or right arising
out of this Agreement can be discharged by one party, in whole or
in part, by a waiver or renunciation of the Action or right unless
in a writing signed by the party against which such waiver or
renunciation is charged; (ii) no waiver that may be given by a
party will be applicable except in the specific instance for which
it is given; (iii) no extension of time granted by any party for
the performance of any obligation or act by any other party will be
deemed to be an extension of time for the performance of any other
obligation or act hereunder; and (iv) no notice to or demand
on one party will be deemed to be a waiver of any obligation of
such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided
in this Agreement or the documents referred to in this
Agreement.

 

12.8. Remedies.
Except as specifically set forth in this Agreement, any party
having any rights under any provision of this Agreement will have
all rights and remedies set forth in this Agreement and all rights
and remedies which such party may have been granted at any time
under any other contract or agreement and all of the rights which
such party may have under any applicable Law. Except as
specifically set forth in this Agreement, any such party will be
entitled to (a) enforce such rights specifically, without posting a
bond or other security, (b) to recover damages by reason of a
breach of any provision of this Agreement and (c) to exercise all
other rights granted by applicable Law. The exercise of any remedy
by a party will not preclude the exercise of any other remedy by
such party.

 

12.9. Mutual
Drafting. The parties acknowledge and agree that: (a) this
Agreement is the result of negotiations between the parties and
will not be deemed or construed as having been drafted by any one
party, (b) each party and its counsel have reviewed and negotiated
the terms and provisions of this Agreement (including any exhibits
attached hereto) and the other Transactional Documents and have
contributed to their revision, (c) the rule of construction to the
effect that any ambiguities are resolved against the drafting party
will not be employed in the interpretation of this Agreement, (d)
neither the drafting history nor the negotiating history of this
Agreement or the other Transactional Documents may be used or
referred to in connection with the construction or interpretation
thereof, and (e) the terms and provisions of this Agreement will be
construed fairly as to all parties hereto and not in favor of or
against any party, regardless of which party was generally
responsible for the preparation of this Agreement.

 

12.10. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without giving
effect to its choice of law principles).

 

12.11. Consent to Jurisdiction; Waivers. For
purposes of any Action arising out of or in connection with this
Agreement or any transaction contemplated hereby, each of the
parties hereto (a) irrevocably submits to the exclusive
jurisdiction and venue of any state or federal court located within
New York County, State of New York, (b) agrees that service of any
process, summons, notice or document by U.S. registered mail to
such party’s respective address set forth in Section 12.2
shall be effective service of process for any Action with respect
to any matters to which it has submitted to jurisdiction in this
Section 12.11, and (c) waives and covenants not to assert or plead,
by way of motion, as a defense or otherwise, in any such Action,
any claim that it is not subject personally to the jurisdiction of
such court, that the Action is brought in an inconvenient forum,
that the venue of the Action is improper or that this Agreement or
the subject matter hereof may not be enforced in or by such court,
and hereby agrees not to challenge such jurisdiction or venue by
reason of any offsets or counterclaims in any such
Action.

 

-22-

 

 

12.12. WAIVER
OF TRIAL BY JURY. THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, THE RIGHT ANY PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY IN CONNECTION WITH SUCH
AGREEMENTS.

 

12.13. Counterparts.
This Agreement may be executed in one or more counterparts, and by
the different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement. A
photocopy, faxed, scanned and/or emailed copy of this Agreement or
Transactional Documents or any signature page to this Agreement or
any Transactional Documents, shall have the same validity and
enforceability as an originally signed copy.

 

12.14. Entire
Agreement. This Agreement (including the exhibits and
Schedules hereto, which are hereby incorporated herein by reference
and deemed part of this Agreement), together with Transactional
Documents constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, with respect to
the subject matter hereof.

 

 

[Remainder of Page Intentionally Left Blank; Signatures Appear on
Following Page]

 

 

-23-

 

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

 

	
 

	
 the
Company :
 

CELLULAR BIOMEDICINE GROUP, INC.

 

By: /s/ Tony (Bizuo) Liu

Name:
Tony (Bizuo) Liu

Title:
Chief Executive Officer

 

 

 

[Purchasers signature page follows]

 

 

 

 

	
 

	
 the
Purchasers:
 

 

Maplebrook
Limited

 

By: /s/ Britta Pfister

Name:
Britta Pfister

Title: Corporate
Director

 

 

Windsor
Capital Limited

By: /s/ Ming Li

Name:
Ming Li

Title:
Director

 

 

 

 

 

 

ANNEX A

 

 

	

Name of Purchaser

	

Number of Shares

	

Price per Share

	

Total Purchase Price

	

Maplebrook
Ltd.

	

666,667

	

$12.00

	

$8,000,000

	

Windsor
Capital Ltd.

	

500,000

	

$12.00

	

$6,000,000

	
 

	
 

	
 

	
 

	

Total

	

1,166,667

	
 

	

$14,000,000

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