Document:

fp0002704_ex10-1.htm

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of March 24, 2011, between ParkerVision, Inc., a Florida corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

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

 

ARTICLE I.

DEFINITIONS

 

1.1       Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

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

 

“Base Prospectus” means the final prospectus filed in the Registration Statement.

 

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

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” means the third Trading Day following the date hereof.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

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

 

  

  

  

 

convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock

 

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

 

“Per Share Purchase Price” equals $0.71, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

“Per Unit Purchase Price” equals $0.81, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

“Prospectus” means the Base Prospectus and any Prospectus Supplement.

 

“Prospectus Supplement” means any supplement to the Base Prospectus complying with Rules 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser at the Closing.

 

“Registration Statement” means the effective registration statement with Commission file No. 333-161903 which registers the sale of the Shares, the Warrants and the Warrant Shares to the Purchasers.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Securities” means the Units, Shares, the Warrants and the Warrant Shares.

 

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

 

“Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

 

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

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares  or Units purchased hereunder as specified below such Purchaser’s name on the signature 

 

  

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page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

“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 AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Warrants and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Company, with a mailing address of 59 Maiden Lane, Plaza Level, New York, New York 10038, and any successor transfer agent of the Company.

 

“Units” means a unit consisting of one Share and 0.3 Warrants.

 

“Warrants” means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall become exercisable six (6) months after the Closing Date, in the form of Exhibit A attached hereto.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1       Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $10,000,000 of Shares and/or Units, as elected on each Purchaser’s signature page hereto.  Each Purchaser shall deliver to the Company, via wire transfer or a certified check of immediately available funds, an amount equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser and the Company shall deliver to each Purchaser its respective Shares or Units as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Weinstein Smith LLP, 420 Lexington Avenue, Suite 2620, New York, New York 10170 or such other location as the parties shall mutually agree.

 

2.2        Deliveries.

 

(a)        Unless other arrangements have been made with such Purchaser, on or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

  

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(i)         this Agreement duly executed by the Company;

 

(ii)         a legal opinion of Graubard Miller LLP, counsel to the Company, in form and substance satisfactory to the Purchasers;

 

(iii)        a copy of the irrevocable instructions to the Company’s transfer agent instructing the transfer agent to deliver via The Depository Trust Company Deposit or Withdrawal at Custodian system Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price and/or Per Unit Purchase Price, as applicable, registered in the name of such Purchaser or such Purchaser’s broker;

 

(iv)        if the Purchaser is purchasing Units, a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 30% of such Purchaser’s Shares contained within the Units, with an exercise price equal to $0.88, subject to adjustment therein (such Warrant certificate may be delivered within three Trading Days of the Closing Date); and

 

(v)        the Base Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

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

 

(i)         this Agreement duly executed by such Purchaser; and

 

(ii)        such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company.

 

2.3       Closing Conditions.

 

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

 

(i)         each representation and warranty of the Purchasers shall be true and correct as of the date when made and as of the Closing Date as though originally made at that time (except for those representations and warranties that speak as of a specific date, which shall be true and correct as of such date);

 

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

 

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

 

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

 

  

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(i)         each representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing Date as though originally made at that time (except for those representations and warranties that speak as of a specific date, which shall be true and correct as of such date);

 

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

 

(iii)        the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement and such other items as may be agreed to with a particular Purchaser;

 

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

 

(v)        from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market, nor shall any such suspension have been threatened in writing, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

 

(vi)       the Shares shall be listed on the Company’s principal Trading Market;

 

(vii)      the Company shall have obtained all Required Approvals; and

 

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

 

(ix)       the aggregate Subscription Amount for all Purchasers hereunder shall be at least $3,000,000.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

  

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3.1       Representations and Warranties of the Company.  Except as specifically disclosed in the SEC Reports, the Company hereby makes the following representations and warranties set forth below to each Purchaser as of the date hereof and as of the Closing Date:

 

(a)        Organization and Qualification.  The Company’s only direct and indirect subsidiary is D2D, LLC (the “Subsidiary”), which has no operations or business.  The Company owns, directly or indirectly, all of the equity interests of the Subsidiary free and clear of any “Liens” (which for purposes of this Agreement shall mean a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction), and all the issued and outstanding equity interests of the Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  Each of the Company and the Subsidiary is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor the Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiary, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”), and no “Proceeding” (which for purposes of this Agreement shall mean any action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened) has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(b)        Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith other than in connection with the “Required Approvals” (as defined in subsection 3.1(d) below).  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

  

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(c)        No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or the Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or the Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or the Subsidiary is a party or by which any property or asset of the Company or the Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or the Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(d)        Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other “Person” (defined as an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind, including, without limitation, any Trading Market (as defined in subsection 3.1(e) below) in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) such filings as are required to be made under applicable Federal and state securities laws, (ii) a supplemental listing application with respect to the Shares to be filed with The Nasdaq Capital Market and (iii) a filing with the Financial Industry Regulatory Authority, Inc. (“FINRA”) (collectively, the “Required Approvals”).

 

(e)        Issuance of the Securities; Registration.  On or before the Closing Date, the Shares and the Warrants will be duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Warrant Shares, when issued in accordance with the terms of the Warrants, will be will be duly authorized, validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  On or before the Closing Date, the Company will have reserved from its duly authorized capital stock the maximum number of shares of Common Stock currently issuable pursuant to the Transaction Documents.  The issuance by the Company of the Securities has been registered under the Securities Act and all of the Securities are freely transferable and tradable by the Purchasers without restriction (other than any restrictions arising solely from an act or omission of a Purchaser).  The Securities are being issued pursuant to the Registration Statement.  The Registration Statement is effective and available for the issuance of the Securities thereunder and the Company has not received any notice that the SEC has issued or intends to issue a stop-order or other order with respect to the Registration Statement or the Prospectus or that the SEC 

 

  

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otherwise has (i) suspended or withdrawn the effectiveness of the Registration Statement or (ii) issued any order preventing or suspending the use of the Prospectus, in either case, either temporarily or permanently, or intends or has threatened in writing to do so.  The “Plan of Distribution of Shelf Securities” section included in the Registration Statement permits the issuance and sale of the Securities hereunder.  Following the issuance of Securities in accordance with the applicable Transaction Documents, the Shares will be tradable without further registration under the Securities Act on The Nasdaq Capital Market (the “Trading Market”). At the time the Registration Statement and any amendments thereto became effective, and as of the date hereof and the Closing Date, the Registration Statement and any amendments thereto each conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, each conformed and will conform in all material respects to the requirements of the 1933 Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The Company meets all of the requirements for the use of Form S-3 under the 1933 Act for the offering and sale of the Securities, and the SEC has not notified the Company of any objection to the use of the form of the Registration Statement pursuant to Rule 401(g)(1) under the 1933 Act.

 

(f)        Capitalization.  The capitalization of the Company is as set forth in the SEC Reports and the Prospectus Supplement.  The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the Registration Statement, including any amendments or supplements thereto, pursuant to the exercise of employee stock options under the Company’s stock option plans and pursuant to the conversion or exercise of securities exercisable, exchangeable or convertible into Common Stock (“Common Stock Equivalents”).  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents, except for preemptive rights granted pursuant to the stock purchase agreement, dated November 16, 2010, between the Company and purchasers identified therein.  Except as set forth in the Prospectus Supplement and as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or the Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the 

 

  

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Securities.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(g)        SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials filed prior to the date hereof, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiary as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(h)        Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports or the Prospectus Supplement, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or “Affiliate” (defined as any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act), except pursuant to existing Company stock option plans.  The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence 

  

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or development has occurred or exists with respect to the Company or the Subsidiary or their respective business, properties, operations, financial condition or prospects that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed one (1) Trading Day prior to the date that this representation is made.

 

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

 

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

 

(k)        Compliance.  Neither the Company nor the Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or the Subsidiary under), nor has the Company or the Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority, or (iii) is or has been in violation of any statute, rule 

 

  

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or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not reasonably be expected to result in a Material Adverse Effect.

 

(l)         Regulatory Permits.  The Company and the Subsidiary possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor the Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(m)       Title to Assets.  The Company and the Subsidiary have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiary and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiary, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiary and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiary are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiary are in compliance.

 

(n)        Intellectual Property.  The Company and the Subsidiary own, possess, or can acquire on reasonable terms, all Intellectual Property necessary for the conduct of their business as now conducted or as described in the Registration Statement, the Base Prospectus and the Prospectus Supplement to be conducted, except as such failure to own, possess, or acquire such rights would not result in a Material Adverse Change.  Except as set forth in the Registration Statement, the Base Prospectus and the Prospectus Supplement, (i) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any such Intellectual Property, except as such infringement, misappropriation or violation would not result in a Material Adverse Change; (ii) there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the Company’s or the Subsidiary’s rights in or to any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iii) the Intellectual Property owned by the Company and the Subsidiary and to the knowledge of the Company, the Intellectual Property licensed to the Company and the Subsidiary have not been adjudged invalid or unenforceable, in whole or in part, and there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iv) there is no pending or threatened action, suit, proceeding or claim by others that the Company or the Subsidiary infringe, misappropriate or otherwise violate any Intellectual Property or other proprietary rights of others, neither the Company nor the Subsidiary has received any written notice of such claim, and the Company is unaware of any other fact which would form a reasonable basis for any such claim; and (v) to the Company’s knowledge, no employee of the Company or the Subsidiary is in or has ever been in violation of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-

 

  

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competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or the Subsidiary or actions undertaken by the employee while employed with the Company or the Subsidiary, except as such violation would not result in a Material Adverse Change.  “Intellectual Property” shall mean all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property.

 

(o)        Insurance.  The Company and the Subsidiary are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiary are engaged, including, but not limited to, directors and officers insurance coverage.  Neither the Company nor the Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

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

 

(q)        Sarbanes-Oxley.  Each of the Company and the Subsidiary is in compliance with any and all requirements of the Sarbanes-Oxley Act of 2002 that are applicable to the Company and effective as of the date hereof, and any and all rules and regulations promulgated by the Commission thereunder that are applicable to the Company and effective as of the date hereof and as of the Closing Date.  Each of the Company and the Subsidiary maintain a system of internal accounting controls sufficient to provide reasonable assurance that:  (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiary have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiary and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying 

 

  

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officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiary as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiary that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiary.

 

(r)        Certain Fees.  Except as otherwise provided in this Agreement and as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company or the Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(s)        Trading Market Rules.  The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

(t)         Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

(u)        Registration Rights.  Other than with respect to the Company’s existing registration statements filed under the Securities Act, or as otherwise disclosed in the SEC Reports, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

(v)        Listing and Maintenance Requirements.  The Company’s Common Stock is registered pursuant to Section 12(b) of the Exchange Act.  Except as disclosed in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been quoted to the effect that the Company is not in compliance with the maintenance requirements of such Trading Market, and the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such maintenance requirements.

 

(w)       Application of Takeover Protections.  The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or 

 

  

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could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(x)        No Integrated Offering.  Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(y)        Solvency.  As of the date hereof and as of the Closing Date after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the Company’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.  The SEC Reports set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or the Subsidiary, or for which the Company or the Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor the Subsidiary is in default with respect to any Indebtedness.

 

(z)           Disclosure.  The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information, except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents.  The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in the Securities.  All of the disclosure 

 

  

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furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiary, their respective businesses and the transactions contemplated hereby, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

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

 

(bb)      Foreign Corrupt Practices.  Neither the Company nor the Subsidiary, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company or the Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or the Subsidiary (or made by any person acting on their behalf of which the Company is aware) which is  in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(cc)      Accountants.  The Company’s accountants are named in the Prospectus Supplement.  To the knowledge of the Company, such accountants, who the Company expects will express their opinion with respect to the financial statements to be included in the Company’s next Annual Report on Form 10-K, are a registered public accounting firm as required by the Securities Act.

 

(dd)      Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities.  The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

  

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(ee)      Acknowledgement Regarding Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(e) and 4.12 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction.  The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

 

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

 

(gg)      Approvals.  The issuance and quotation of the Shares on the Trading Market  requires no further approvals, including but not limited to, the approval of shareholders.

 

3.2       Representations and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

 

(a)        Organization; Authority.  Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.  Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms 

 

  

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hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)        Understandings or Arrangements.  Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)        Unit Purchaser Status.  At the time a Purchaser of Units was offered the Units, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be an institutional buyer as defined in the securities laws of the state in the United States in which such Purchaser resides.  Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

(d)        RESERVED.

 

(e)        Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.  Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

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

 

  

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1       Warrant Shares. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or any subsequent registration statement registering the sale or resale  of the Warrant Shares) is not effective or is not otherwise available for the sale of the Warrant Shares, the Company shall promptly notify the holders of the Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance with applicable federal and state securities laws).  The Company shall use best efforts to keep a registration statement (including the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the term of the Warrants.

 

4.2       Furnishing of Information. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.  As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities, including without limitation, under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule 144.

 

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

 

4.4       Securities Laws Disclosure; Publicity.  The Company shall (a) by 9:00 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby and (b) issue a Current Report on Form 8-K, and including the Transaction Documents as exhibits thereto, within the time required by the Exchange Act.  From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the 

 

  

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transactions contemplated by the Transaction Documents.  The Company and Hudson Securities, Inc. shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor Hudson Securities, Inc. shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of Hudson Securities, Inc., with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not, and shall take all reasonable action to cause Hudson Securities, Inc. not to, publicly disclose the name of any Purchaser or its investment adviser, or include the name of any Purchaser or its investment adviser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents (including signature pages thereto) with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

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

 

4.6       Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes or may constitute material non-public information, unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.  The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

4.7       Use of Proceeds.  The Company shall use the net proceeds from the sale of the Securities hereunder as set forth under “Use of Proceeds” in the Prospectus Supplement.

 

4.8       Indemnification of Purchasers.  Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, 

 

  

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claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any third party who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such third party or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of any Purchaser Party against the Company or others, and (y) any liabilities the Company may be subject to pursuant to law.

 

4.9       Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.

 

4.10     Listing of Common Stock.  The Company hereby agrees to use best efforts to maintain the listing of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall promptly secure the listing of all of the Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares and Warrant Shares, and will take such other action 

 

  

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as is necessary to cause all of the Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible.  The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

4.11     Equal Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.12     Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in this Agreement and otherwise provided to the Purchaser in connection with this transaction.  Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality to the Company or the Subsidiary after the issuance of the initial press release as described in Section 4.4.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

4.13     Subsequent Equity Sales.  From the date hereof until 30 days after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock 

 

  

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Equivalents, provided, that the Company may issue securities pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; and provided further, that to the extent the Company receives less than $10,000,000 of aggregate Subscription Amounts pursuant to this offering, it may sell additional securities for cash consideration equal to the difference between $10,000,000 and the aggregate Subscription Amounts received pursuant to this offering, so long as the terms of such subsequent sales are no more favorable to the investors than the terms of this offering to the Purchasers.

 

4.14     Delivery of Warrants After Closing.  The Company shall deliver, or cause to be delivered, the respective Warrant certificates purchased by each Purchaser of Units to such Purchaser within 3 Trading Days of the Closing Date.

 

4.15     Reduction of Subscription Amount.  If the Subscription Amount indicated on any Purchaser’s signature page hereto would result in the Purchaser or its investment adviser acquiring beneficial ownership in excess of 14.9% of the Company’s Common Stock immediately after the Closing (as calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder), then the Subscription Amount of the Purchaser shall automatically, without action by the Purchaser, be reduced to an amount such that the Purchaser’s (or the investment adviser’s) beneficial ownership would equal 14.9% of the Company’s Common Stock immediately after the Closing (as calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder).

 

4.16     Short Sales.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that, during the period commencing on the date hereof until and including April 7, 2011 (“Restricted Period”), neither such Purchaser nor any Affiliate acting on such Purchaser’s behalf or pursuant to any understanding or arrangement with a third party, shall knowingly execute a number of Short Sales of Common Stock during such period which exceeds the sum of the number of Shares issued to such Purchaser at the Closing and Warrant Shares issuable to such Purchaser pursuant to the Warrants (notwithstanding that such Warrants are not immediately exercisable and ignoring for such purposes and exercise limitations included therein).   The restriction hereunder shall not apply to, or be offset by, any Short Sales made prior to the commencement of the Restricted Period and outstanding during the Restricted Period nor shall it apply to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions during or after the Restricted Period.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenants set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.  This restriction only applies to Short Sales as strictly defined under this Agreement 

 

  

22

  

 

and any long sales or sales of Shares shall not be included in such restriction or offset a Purchasers allowed Short Sales hereunder.

 

ARTICLE V.

MISCELLANEOUS

 

5.1      Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before March 31, 2011; provided, however, that no such termination will affect the right of any party to sue for any breach by any other party (or parties).

 

5.2       Fees and Expenses.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

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

 

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

 

5.5       Amendments; Waivers. Prior to the Closing, no provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and all of the Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  Following the Closing, no provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least a majority in interest of the Shares and/or Warrant Shares held by all the Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  Notwithstanding the previous sentence, no modification, supplement 

 

  

23

  

 

or amendment of this Agreement that disproportionately affects the rights of any Purchaser shall be effective unless signed by such Purchaser.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.  Only Purchasers still holding either Shares or Warrants at the time a waiver, modification supplement or amendment is requested shall be entitled to give or provide such instrument; provided, that no waiver, modification, supplement or amendment shall be made to Section 4.8 without a written instrument signed by all the initial Purchasers and their successors and assigns.

 

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

 

5.7       Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger).  Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8       No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as set forth in Section 4.8.

 

5.9       Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.

 

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

 

  

24

  

 

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

 

5.12     Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

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

 

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

 

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

 

  

25

  

 

to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

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

 

5.17     Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.  For reasons of administrative convenience only, a Purchaser and its respective counsel may have chosen to communicate with the Company through Weinstein Smith LLP.  Weinstein Smith LLP does not represent any of the Purchasers and only represents Hudson Securities Inc., the placement agent for the offering.  The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.  It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.

 

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

 

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

 

  

26

  

 

amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

 (Signature Pages Follow)

 

  

27

  

 

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

 

	
PARKERVISION, INC.

	
Address for Notice:

 

	  
	  	
7915 Baymeadows Way, Suite 400

Jacksonville, Florida 32256

	  
	
By:                                                                          

	
Fax: (904) 731-0958

	  
	  	
Name

	  
	  	
Title:

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

 

	  
	
David Alan Miller, Esq.

Graubard Miller

405 Lexington Avenue, 19th Floor

New York, New York 10174

Fax:  (212) 818-8881

	  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

  

28

  

 

PURCHASER SIGNATURE PAGES TO PRKR SECURITIES PURCHASE AGREEMENT

 

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

 

Name of Purchaser:                                                                                                                                                                                      

 

Signature of Authorized Signatory of  Purchaser:                                                                                                                                       

 

Name of Authorized Signatory:                                                                                                                                                                       

 

Title of Authorized Signatory:                                                                                                                                                                          

 

Email Address of Authorized Signatory:                                                                                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                                                                      

 

Address for Notice to Purchaser:                                                                                                                                                                     

 

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

 

                                                                                                                                                                                                                      

 

DWAC Instructions for Delivery of Shares:                                                                                                                                                      

 

I am subscribing for /__/ Units at $0.81  or  /__/ Shares only at $0.71

 

Subscription Amount: $_________________

 

EIN/Taxpayer ID/SSN Numbers:

 

o  Notwithstanding anything contained in this Agreement to the contrary, by checking this box (i) the obligations of the above-signed to purchase the securities set forth in this Agreement to be purchased from the Company by the above-signed, and the obligations of the Company to sell such securities to the above-signed, shall be unconditional and all conditions to Closing shall be disregarded, (ii) the Closing shall occur on the third (3rd) Trading Day following the date of this Agreement and (iii) any condition to Closing contemplated by this Agreement (but prior to being disregarded by clause (i) above) that required delivery by the Company or the above-signed of any agreement, instrument, certificate or the like or purchase price (as applicable) shall no longer be a condition and shall instead be an unconditional obligation of the Company or the above-signed (as applicable) to deliver such agreement, instrument, certificate or the like or purchase price (as applicable) to such other party on the Closing Date.

 

[SIGNATURE PAGES CONTINUE]

 

  

  

  

 

EXHIBIT A

 

COMMON STOCK PURCHASE WARRANT

 

[Attached]Exhibit 10.49

Exhibit 10.49

***CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

AT&T MACHINE TO MACHINE WIRELESS COMMUNICATIONS AGREEMENT

		
	CUSTOMER

	AT&T

	Legal Name: PositiveID Corporation 

Business Name (if different): 

Type of Entity: Corporation 

(“Customer”)

	AT&T Mobility II, LLC on behalf of its Affiliates doing business as AT&T or AT&T Mobility (“Company”)

	CUSTOMER Address (For Official Notices)

	Company Address (For Official Notices)

	1690 South Congress Avenue

Suite 200

Delray Beach, Florida 33445

	AT&T 

Business Alliance Channel 

1277 Lenox Park Blvd, 6th Floor 

Atlanta, GA 30319

	CUSTOMER Contact

	Company Contact

	Name: Mary Ellen Harrison 

Title: VP 

Telephone: 561-805-8028 

Fax: 561-805-8001 

Email: meharrison@positiveidcorp.com

	Name: Steven Jones 

Title: Sales Director 

Telephone: 404-499-7423 

Fax: 

Email: steven.jones.2@att.com

	CUSTOMER Billing Address (if different from above)

	 

	 
	 

This Agreement consists of this Cover Page, the attached Agreement Terms and Conditions, the General Terms and Conditions found at www.att.com/cda in effect on the Effective Date hereof, and any Exhibits (collectively, this “Agreement”). This Agreement is effective as of the last signature date below (“Effective Date"). In the event of a conflict among terms, the order of priority shall be first, the Exhibits, next the Agreement Terms and Conditions, and lastly the General Terms and Conditions. This Agreement is not part of or subject to any AT&T Corporate Digital Advantage Agreement (“ACDA”) between the parties, and no discounts or rate plans in any ACDA shall apply to Services under this Agreement, nor shall Services or revenues under this Agreement apply to or retire any commitments under any ACDA.

                                                                                                                                                                                                                

CUSTOMER’S SIGNATURE BELOW ACKNOWLEDGES THAT CUSTOMER HAS READ AND UNDERSTANDS EACH OF THE PROVISIONS OF THIS AGREEMENT AND AGREES TO BE BOUND BY THEM.

							
	PositiveID Corporation

	 
	AT&T Mobility II. LLC

	 
	 
	 

	By:

	/s/ William J. Caragol
	 
	By:

	/s/ Michael Troiano
	 
	(Authorized Signature)

	 
	(Authorized Signature)

	Name:

	William Caragol

	 
	Name:   Michael Troiano

	 

	Title:

	President

	 
	Title:     Executive Director

	 

	Date:

	January 7, 2011

	 
	Date:     January 24, 2011

	 

1

AT&T CONFIDENTIAL AND PROPRIETARY

Use pursuant to Company instructions

AT&T MACHINE TO MACHINE WIRELESS COMMUNICATIONS AGREEMENT

TERMS AND CONDITIONS

SECTION 1.

Purchase and Sale of the Service.     Customer agrees to purchase from Company, and Company agrees to sell to Customer, wireless service (the “Service”) for use in Machine to Machine Communications on Company’s wireless Network as stated in the Exhibits hereto. The Service is provided to Customer for Customer’s use and not for resale. Customer may permit End Users to utilize the Service but shall remain responsible for the Service including all payment obligations. The Service (other than roaming service) is only available in the Area. Customer will comply with Company policies and procedures reasonably established by Company for providing the Service, and Company may from time to time modify these policies and procedures. 

SECTION 2.

Term.      This Agreement commences on the Effective Date set forth above and remains in effect for three years. This Agreement will automatically renew for successive one-year renewal terms unless either party provides the other with a notice of termination at least thirty days prior to the end of the then-current term. 

SECTION 3.

The Service 

3.1

Network Connections.      Customer must connect to the Company Network in order to receive the Service. Such connections may be obtained under this Agreement or pursuant to separate agreement between the parties. 

3.2

SIM Requirements.      Customer will only activate SIMS on a Service Plan for use with Approved Applications and Approved Devices. Company may impose a minimum or maximum number of SIMs that may be ordered at one time. Customer is only authorized to purchase SIMs directly from Company or through Company’s designee for use on the Network. Unless otherwise stated, an Approved Device, an Approved Application and a SIM are required for all Service Plans. Customer must not (i) insert the SIMs into Devices bearing a Company mark, or purchased from Company that have been packaged with a Company SIM; (ii) insert the SIMs into anything other than an Approved Device; (iii) sell SIMs separate from an Approved Device; (iv) sell or convey SIMs, separately or with Approved Devices, other than for use by the expected End User of that SIM and Device; or (v) program, reprogram, or tamper with the SIMs in any manner. 

3.3

Service Restrictions.      A number may not be associated with more than one SIM at the same time, unless otherwise approved by Company. Company may deny Service without liability to SIMs appearing on Company’s service deny lists for reasons including, but not limited to, cases where the SIM is stolen, has been used for fraudulent purposes, is not used in an Approved Device or with an Approved Application, or is defective. Company will notify Customer in such cases. 

3.4

Modification or Termination of Service.      If Customer desires to modify or terminate any Service or SIM, or change Service Plans, Customer must advise Company through use of AT&T’s service delivery platforms. Changes will become effective as determined by Company. 

3.5

Troubleshooting.      Company will provide to Customer, and not directly to End Users, network monitoring support, technical assistance support and trouble-shooting support. Customer will cooperate with Company in any troubleshooting of the Equipment or the Network as required to maintain the efficient operation of the Service.

2

AT&T CONFIDENTIAL AND PROPRIETARY

Use pursuant to Company instructions

3.6

Limitations on Roaming Service. 

3.6.1

COMPANY WILL PROVIDE THE SAME ACCESS TO ROAMING CAPABILITIES (INCLUDING “IN-AREA” ROAMING WHERE AVAILABLE) THAT IS MADE AVAILABLE BY COMPANY TO OTHER SIMILARLY SITUATED SUBSCRIBERS PROVIDED THAT EQUIPMENT WITH SIMILAR TECHNICAL CAPABILITIES AND PROGRAMMING IS USED BY CUSTOMER OR END USERS. THE AVAILABILITY OF ROAMING SERVICES, AND THE CHARGES FOR THOSE SERVICES, IS DEPENDENT IN PART ON THE TYPE OF EQUIPMENT USED BY CUSTOMER OR END USERS AND THE PROGRAMMING OF THAT EQUIPMENT. COMPANY MAKES NO WARRANTIES OR REPRESENTATIONS AS TO THE AVAILABILITY OR QUALITY OF ROAMING SERVICE PROVIDED BY OTHER WIRELESS CARRIERS, AND COMPANY WILL NOT BE LIABLE IN ANY CAPACITY FOR ANY ERRORS, OUTAGES, OR FAILURES OF ROAMING SERVICES PROVIDED BY OTHER WIRELESS CARRIERS. 

3.6.2

IF COMPANY, OR ANOTHER ENTITY WITH WHOM COMPANY HAS A ROAMING AGREEMENT, DISCOVERS OR SUSPECTS ABUSE OR FRAUD WITH RESPECT TO CERTAIN NUMBERS, THEN ROAMING PRIVILEGES MAY BE SUSPENDED WITH RESPECT TO SUCH NUMBERS. COMPANY WILL USE COMMERCIALLY REASONABLE EFFORTS TO PROVIDE CUSTOMER WITH PRIOR, OR PROMPT SUBSEQUENT, NOTIFICATION OF THE SUSPENSION OF THE ROAMING SERVICE. COMPANY WILL NOT BE LIABLE IN ANY CAPACITY TO CUSTOMER FOR THE UNAVAILABILITY OR SUSPENSION OF ROAMING SERVICE BY OTHER CARRIERS. 

3.6.3

TO THE EXTENT ACCESS TO ROAMING CAPABILITIES IS PROVIDED BY COMPANY TO CUSTOMER, IT IS DEEMED TO BE A “SERVICE” AS DEFINED IN SECTION 11, AND THE USE OF SUCH ROAMING BY CUSTOMER OR END USERS WILL BE GOVERNED BY THE PROVISIONS OF THIS AGREEMENT. 

3.7

PRIVACY.      THE NETWORK HAS MANY COMPLEX ELEMENTS AND IS NOT GUARANTEED AGAINST EAVESDROPPERS, HACKERS, DENIAL OF SERVICE ATTACKS, VIRUSES, OR INTERCEPTORS. CUSTOMER AGREES THAT COMPANY WILL NOT BE LIABLE TO CUSTOMER OR TO END USERS FOR ANY LACK OF PRIVACY OR SECURITY. 

SECTION 4:

End Users. 

4.1

Relationship of Parties and End Users.      Customer is solely responsible for all interactions with End Users with respect to the Service. The Parties agree that the relationship created by this Agreement is that of independent contracting parties and not that of dealer, agent, joint venture, joint employers or partnership. Customer may not identify itself as related to Company unless explicitly approved in writing by Company. Customer must refrain from any business practice or advertising that may be injurious to Company. Company is obligated only to Customer and not to End Users, who are not to be deemed third-party beneficiaries of this Agreement. Customer is solely responsible for all risks and expenses incurred in its provision of Service to End Users. 

4.2

Disclosures to End Users.      Customer must ensure that the following disclosures are made to End Users: 

[END USER] HAS NO CONTRACTUAL RELATIONSHIP WITH THE UNDERLYING WIRELESS SERVICE CARRIER AND [END USER] IS NOT A THIRD PARTY BENEFICIARY OF ANY AGREEMENT BETWEEN [CUSTOMER] AND UNDERLYING CARRIER. [END USER] UNDERSTANDS AND AGREES THAT THE UNDERLYING CARRIER HAS NO LIABILITY OF ANY KIND TO [END USER], WHETHER FOR BREACH OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY IN TORT OR OTHERWISE. [END USER] AGREES TO INDEMNIFY AND HOLD HARMLESS THE UNDERLYING WIRELESS SERVICE CARRIER AND ITS OFFICERS, EMPLOYEES, AND AGENTS AGAINST ANY AND ALL CLAIMS, INCLUDING WITHOUT LIMITATION CLAIMS FOR LIBEL, SLANDER, OR ANY

3

AT&T CONFIDENTIAL AND PROPRIETARY

Use pursuant to Company instructions

PROPERTY DAMAGE, PERSONAL INJURY OR DEATH, ARISING IN ANY WAY, DIRECTLY OR INDIRECTLY, IN CONNECTION WITH USE, FAILURE TO USE, OR INABILITY TO USE THE WIRELESS SERVICES EXCEPT WHERE THE CLAIMS RESULT FROM THE UNDERLYING CARRIER’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THIS INDEMNITY WILL SURVIVE THE TERMINATION OF THE AGREEMENT. [END USER] HAS NO PROPERTY RIGHT IN ANY NUMBER ASSIGNED TO IT, AND UNDERSTANDS THAT ANY SUCH NUMBER CAN BE CHANGED. [END USER] UNDERSTANDS THAT [CUSTOMER] AND THE UNDERLYING CARRIER CANNOT GUARANTEE THE SECURITY OF WIRELESS TRANSMISSIONS, AND WILL NOT BE LIABLE FOR ANY LACK OF SECURITY RELATING TO THE USE OF THE SERVICES. THE [END USER] MAY NOT RESELL THE SERVICE TO ANY OTHER PARTY. 

SECTION 5.

Rates 

5.1

Service Plans.      Customer will pay for Service at the rates set forth in the Service Plan(s) in the Exhibits hereto as selected by Customer. Customer may change to another available Service Plan in the Exhibits at any time provided it pays any applicable early cancellation or change fee. The change will normally be made within twenty-four business hours of Company’s receipt of the request from Customer and become effective on the first day of the following month’s billing cycle. Company may modify a Service Plan or charge at any time on thirty days advance written notice to Customer, provided that any modification not adverse to Customer may be made immediately effective upon written notice. 

5.2

Service Outages.      In the event of a total Service outage within an Area which is not caused by Customer or its End User and which lasts for a period of twenty-four hours or more, a credit allowance will be made at Customer’s request in the form of a pro rata adjustment of the fixed charges billed by Company to Customer with respect to the affected SIM(s). Periods of discontinuous outage may not be accumulated in determining if an outage has continued for at least twenty-four hours. In order to receive such credit, Customer must submit a written request to Company, stating the date and location of the outage, the SIMs affected, and such other information as Company may reasonably require. Such notice must be received by Company within ten business days following the last date of the period of outage. EXCEPT AS PROVIDED HEREIN, COMPANY WILL NOT INCUR ANY LIABILITY FOR SERVICE OUTAGES. 

SECTION 6.

Invoices, Payments, Disputed Charges, Billing Data 

6.1

Invoices and Billing Data.      Company will provide Customer a summary invoice for all charges on a monthly basis, normally within ten days after the cut-off date for each billing cycle. Different SIMs may be placed on different billing cycles. Customer must notify Company if Customer has not received an invoice within twenty days after the bill cycle cut-off date. Company will use reasonable efforts to provide electronic detailed billing data for all Service Plans loaded into a billing cycle. Billing data will be made available electronically to Customers using the service delivery platform, and in some cases through physical delivery as well at AT&T’s option. 

6.2

Payments.      Payment in full for each invoice is due at the location set forth in the invoice, in a form payable in U.S. currency, upon the due date set forth in the invoice or within thirty days after the billing data was received, whichever is later (“Due Date”). For purposes of payment, Customer may rely only on the invoice and other billing data received from Company, and may not rely on any other source including information drawn from any Company or Customer system. Depending on Customer’s payment history, Company may at its sole discretion require payment by certified check, money order, or wire transfer, if available. Payments are past due, and Customer will have committed an Event of Default, if not received by the Due Date. Time is of the essence with respect to payment of Company’s invoices. If a payment becomes past due, the account will accrue late fees and interest at the rate of one and one-half percent per month or the maximum lawful rate, whichever is less. Customer agrees not to place any condition or restrictive legend, such as “Paid in Full”, on any check or financial instrument used to make a payment. The parties agree that the negotiation of any such check or instrument so inscribed will not constitute an accord and satisfaction or novation.

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6.3

Disputed Charges.       If Customer disputes part of the monthly invoice, Customer is required to notify Company in writing and to submit appropriate documentation justifying such dispute to Company as soon as it is aware of the dispute, but in no event later than the thirty days after the invoice due date or such dispute is waived. Notwithstanding any such dispute, Customer agrees to pay the full amount of any such bill pending the resolution of such dispute. Company will respond to Customer’s written dispute within thirty days of receipt of such dispute. Company and Customer agree to use best efforts to resolve all disputes and Company agrees to promptly refund any amounts due upon dispute resolution. The notice requirements in this paragraph will not shorten the period within which actions must be filed as established by the applicable statute of limitations, but will constitute a condition precedent to any right of the aggrieved party to contest prior invoices or payments. This condition is designed to allow each party the opportunity to preserve important evidence in defense of a claim. 

SECTION 7.

Abusive or Fraudulent Use 

7.1

Generally.      Service to a SIM may be restricted or cancelled if there is a reasonable suspicion of abuse or fraudulent use. Company will provide prompt notice of the restriction or termination to Customer. Customer agrees to make good faith efforts to minimize abuse or fraudulent use, to promptly report to Company any such abuse or fraudulent use of which Customer becomes aware, and to cooperate in any investigation or prosecution initiated by Company. Customer also agrees to use its best efforts to disable any SIMs, or otherwise block access to the Service to any End User suspected of abuse or fraudulent. Abuse and fraudulent use of Service include, but are not limited to: (i) attempting or assisting another to access, alter, or interfere with the communications of and/or information about another wireless customer; (ii) tampering with or making an unauthorized connection to the Network; (iii) installing any amplifiers, enhancers, repeaters, or other devices that modify the radio frequencies used to provide the Service; (iv) Subscription Fraud; (v) using Service in such a manner so as to interfere unreasonably with the use of Service by one or more other wireless customers or End Users or to interfere unreasonably with Company’s ability to provide Service; (vi) using Service to convey obscene, salacious, or unlawful information; (vii) using Service without permission on a stolen or lost Device; (viii) Unauthorized Access; (ix) using the Service to provide voice over IP services; and (x) extensive use of the Service outside of the Area in such a manner as to unreasonably increase AT&T’s costs. 

7.2

Liability for Abuse or Fraudulent Usage.      Liability for charges and other costs or damages resulting from abuse or fraudulent use are as follows: 

7.2.1

Customer is solely liable for charges, costs or damages resulting from (i) Subscription Fraud, (ii) any theft of a Device, a User ID number, or password associated with the Service; (iii) any abuse or fraud facilitated by Customer, Customer’s employees, Customer’s agents or End Users, or (iv) any failure to give prompt notice of suspected abuse or fraudulent use based on information available to Customer. 

7.2.2

Customer has no liability for abuse or fraudulent use charges, costs or damages incurred after: i) Customer has taken any and all actions under its control to stop such abuse or fraudulent use; and ii) either four business hours after Customer has notified Company of such abuse or fraudulent use or four business hours after Company independently learns of such abuse or fraudulent use. 

7.2.3

Customer will not be liable for any charges relating to Unauthorized Access if Customer provides Company with clear and convincing evidence of the Unauthorized Access, such as: (i) call detail information for the End User’s account; and (ii) a statement by Customer that it has thoroughly investigated the alleged Unauthorized Access and that it will cooperate reasonably in obtaining affidavits or other required documentation required for any prosecution of the person fraudulently using the Service. Company reserves the right to modify this provision to require affidavits prior to issuing any credits if

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Customer does not comply with this Section. Such investigation by Customer should include contacting or attempting to contact a sufficient number of recipients of calls at issue of each End User so as to establish a reasonable basis for inferring that the remainder of such calls were the result of Unauthorized Access. 

SECTION 8

Limitation of Liability. 

8.1

Generally.      AT&T’S ENTIRE LIABILITY, AND CUSTOMER’S EXCLUSIVE REMEDY, FOR DAMAGES ARISING OUT OF MISTAKES, OMISSIONS, INTERRUPTIONS, DELAYS, ERRORS OR DEFECTS IN THE SERVICES, AND NOT CAUSED BY CUSTOMER’S OR END USER’S NEGLIGENCE, SHALL IN NO EVENT EXCEED THE SPECIFIED CREDITS UNDER THIS AGREEMENT, OR IF NO CREDITS ARE SPECIFIED, AN AMOUNT EQUIVALENT TO THE PROPORTIONATE CHARGE TO CUSTOMER FOR THE PERIOD OF SERVICE DURING WHICH SUCH MISTAKE, OMISSION, INTERRUPTION, DELAY, ERROR OR DEFECT IN THE SERVICES OCCURS AND CONTINUES. IN NO EVENT SHALL ANY OTHER LIABILITY ATTACH TO AT&T. 

8.2

Exclusions.      SECTION 8.1 WILL NOT APPLY TO: (i) BODILY INJURY, DEATH, OR DAMAGE TO REAL OR TANGIBLE PROPERTY DIRECTLY CAUSED BY AT&T’S NEGLIGENCE; (ii) BREACH OF OBLIGATIONS UNDER THE GENERAL TERMS AND CONDITIONS RELATING TO CONFIDENTIAL INFORMATION, PUBLICITY, OR TRADEMARKS; (iii) SETTLEMENT, DEFENSE OR PAYMENT OBLIGATIONS UNDER SECTION 9 (Third Party Claims); OR (iv) DAMAGES ARISING FROM AT&T’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. 

8.3.

Consequential Damages.      NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, RELIANCE, OR SPECIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS, ADVANTAGE, SAVINGS OR REVENUES, OR INCREASED COST OF OPERATIONS. 

8.4

Disclaimer of Liability.      AT&T WILL NOT BE LIABLE FOR ANY DAMAGES, EXCEPT TO THE EXTENT CAUSED BY AT&T’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, ARISING OUT OF OR RELATING TO: INTEROPERABILITY, ACCESS OR INTERCONNECTION OF THE SERVICES WITH APPLICATIONS, EQUIPMENT, SERVICES, CONTENT, OR NETWORKS PROVIDED BY CUSTOMER, END USERS OR THIRD PARTIES; SERVICE DEFECTS, SERVICE LEVELS, DELAYS, OR INTERRUPTIONS (EXCEPT FOR LIABILITY FOR SUCH EXPLICITLY SET FORTH IN THIS AGREEMENT); ANY INTERRUPTION OR ERROR IN ROUTING OR COMPLETING CALLS OR OTHER TRANSMISSIONS (INCLUDING 911 CALLS OR ANY SIMILAR EMERGENCY RESPONSE NUMBER); LOST OR ALTERED MESSAGES OR TRANSMISSIONS; OR UNAUTHORIZED ACCESS TO OR THEFT, ALTERATION, LOSS, OR DESTRUCTION OF CUSTOMER’S, ITS AFFILIATE’S, END USERS’, OR THIRD PARTIES’ APPLICATIONS, CONTENT, DATA PROGRAMS, CONFIDENTIAL INFORMATION, NETWORK, OR SYSTEMS. 

SECTION 9:

Third Party Claims 

9.1

AT&T’s Obligations.      AT&T agrees at its expense to defend or settle any third-party claim against Customer, its Affiliates, and its and their respective employees and directors, and to pay all compensatory Damages that a court may finally award against such parties to the extent the claim alleges that a Service provided to Customer under this Agreement infringes any patent, trademark, copyright, or trade secret, but not in circumstances where the claimed infringement arises out of or results from: (a) Customer’s, its Affiliate’s or a User’s content; (b) modifications to the Service by Customer, its Affiliates or third parties, or combinations of the Service with any services or products not provided by AT&T; (c) AT&T’s adherence to Customer’s or its Affiliate’s written requirements; or (d) use of the Service in violation of this Agreement. 

9.2

Customer’s Obligations.      Customer agrees at its expense to defend or settle any third-party (including End Users) claim against AT&T, AT&T’s Affiliates, and its and their respective employees, directors, subcontractors, and suppliers, and to pay all compensatory Damages that a court may finally

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award against such parties to the extent the claim: (a) arises out of Customer’s, its Affiliate’s, or an End User’s access to, or use of, the Services and the claim is not the responsibility of AT&T under Section 9.1; (b) alleges that a Service infringes any patent, trademark, copyright or trade secret, and falls within the exceptions in Section 9.1; or (c) alleges a breach by Customer, its Affiliates, or End Users of a software license agreement governing software provided in connection with the Services. 

9.3

Infringing Services.      Whenever AT&T is liable under Section 9.1, AT&T may at its option either procure the right for Customer to continue using, or may replace or modify, the alleged infringing Service so that the Service becomes noninfringing. 

9.4

Notice and Cooperation.      The party seeking defense or settlement of a third party claim under this Section 9 will notify the other party promptly upon learning of any claim for which defense or settlement may be sought, but failure to do so will have no effect except to the extent the other party is prejudiced thereby. The party seeking defense or settlement will allow the other party to control the defense and settlement of the claim and will reasonably cooperate with the defense; but the defending party will use counsel reasonably experienced in the subject matter at issue, and will not settle a claim without the consent of the party being defended, which consent will not be unreasonably withheld or delayed, except that no consent will be required where relief on the claim is limited to monetary damages that are paid by the defending party under this Section 

SECTION 10.

Default and Termination 

10.1

Default.      This Agreement may be terminated upon an Event of Default by either party if such Event of Default is not cured by the defaulting party within thirty days of receipt of notice of the Default; provided, however, that in the case of failure to pay invoices or in the case of a violation of Section 7 of this Agreement or the confidentiality or publicity provisions of the General Terms and Conditions, this Agreement may be terminated if such Event of Default is not cured within ten days of receipt of notice of the Default. 

10.2

Termination for Convenience.      Either party may terminate this Agreement at its convenience upon ninety days’ prior written notice to the other party. 

10.3

Assurance of Supply.      After the effective termination or expiration of this Agreement for any reason except for termination by Company due to a material breach by Customer, the parties agree to continue performing their respective obligations under the terms of this Agreement that exist as of the date of termination or expiration for the purpose of unwinding the business relationship between the parties for a period of ninety (90) days following such termination or expiration. 

SECTION 11.

Definitions 

11.1

Affiliate of a party means any entity that controls, is controlled by, or is under common control with, such party. 

11.2

Application(s) mean the software programs, applications or platforms that will be combined with the Service and used by Customer or End Users. 

11.3

Approved Application means an Application that has been tested and approved in writing by Company in accordance with this Agreement as set forth in the most current Approved Device list, an example of which is attached hereto as Exhibit C. 

11.4

Approved Device means a Device that has been certified and approved by Company as set forth in the most current Approved Device list, an example of which is attached hereto as Exhibit B. Company will provide Customer with the most current Approved Device list, which list will change from time-to-time.

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11.5

Area(s) means the areas within the United States where Company is licensed to provide the Service and is providing Service. The Area changes from time to time. 

11.6

Device means the equipment used by a Customer or an End User to originate or receive wireless transmissions on the Network, including any machine to machine communications unit, wireless telephone, wireless modem, SIM, and any accessories. 

11.7

End User means an individual or entity obtaining access to, benefiting from, or using Customer’s Service, including through Approved Applications and Approved Devices. 

11.8

Equipment means all equipment (other than equipment comprising portions of Company’s Network) necessary to enable Customer or its End Users to use or benefit from the Service, including but not limited to Customer’s network facilities, and any Device. 

11.9

Events of Default means the following: (i) the execution of any assignment for the benefit of creditors or the filing for relief by either party under any applicable bankruptcy, reorganization, moratorium, or similar debtor relief; (ii) the appointment of a receiver for Customer or Company or for substantially all of their respective assets or properties; (iii) either party’s failure to pay any sum owed to the other hereunder at the time such amount comes due; (iv) either party’s failure to perform or observe any other term, condition, or covenant to be performed by it under this Agreement; (v) an unauthorized assignment of this Agreement; or (vi) Customer’s failure to utilize Equipment compatible with Company’s Network or other network of Company, as determined by Company. 

11.10

Machine to Machine Communications means wireless communications made possible by the insertion of a SIM by Customer or its agent into an Approved Device for use with an Approved Application upon activation of the Service, for use by Customer or an End User. 

11.11

Network means those integrated mobile switching facilities, servers, cellsites, connections, billing systems and other related facilities used by Company to provide Service in an Area. 

11.12

Service means machine to machine data and SMS wireless telecommunications services for GSM communications, GPRS (General Packet Radio Services), EDGE, Universal Mobile Telephone Service (UMTS), or High Speed Packet Access (HSPA) Service. Service does not include voice unless separately agreed by the parties. 

11.13

Service Plan means the particular set of rates, terms and conditions as stated in the Exhibits to this Agreement upon which Company makes Service available to Customer, but does not include any short-term marketing promotions that may come with the plan. 

11.14

Subscriber Identity Module (“SIM”) means a specially programmed microchip that is inserted into a GSM Device which encrypts transmissions and identifies the user to the Network. 

11.15

Subscription Fraud means using or assisting another to use any scheme, false representation, or false credit device, or other fraudulent means or devices in connection with Service. 

11.16

Unauthorized Access means any unauthorized use of Service, which includes the practices generally referred to as “counterfeiting,” “cloning fraud,” or “tumbling fraud.”

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EXHIBITS AND SCHEDULES: 

Exhibit A - Enterprise On Demand (“EOD”) Service (if applicable) 

Exhibit B – Approved Devices 

Exhibit C – Approved Applications 

Exhibit D – Control Center Service (if applicable)

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EXHIBITS TO AT&T MACHINE TO MACHINE

WIRELESS COMMUNICATIONS AGREEMENT/ADDENDUM

EXHIBIT A – RESERVED FOR FUTURE USE

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EXHIBIT B – APPROVED DEVICES

Updatable by Company with advance notice.

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EXHIBIT C – APPROVED APPLICATIONS

Updatable on written notice by Company.

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EXHIBIT D --“AT&T CONTROL CENTER POWERED BY JASPER”

		
	1.

	The “AT&T Control Center powered by Jasper” (the “Control Center”) is a “software as a service” (“SaaS”) offering which provides Customer with a web-based interface providing the ability to manage rate plans, perform diagnostics, receive usage alerts, perform billing and maintenance, and order, activate, monitor and control the Services obtained from AT&T. The Control Center consists of the SaaS capability and the associated systems by which AT&T will make the Service and the Control Center available to Customer for its use. Service as defined in the Agreement includes the Control Center.

	 
	 

	2.

	Customer is responsible for providing all workstations, data services and network connectivity required for it to access and use the Control Center and its SaaS capability. Customer is also responsible for complying with the security, registration, access, and use requirements imposed by AT&T or Jasper for the use of the Control Center and SaaS.

	 
	 

	3.

	The Control Center is offered to Customer on a Total Service basis only. The features of Total Service are set forth in Schedules D-1 and D-2. The methods of providing such features and the scope and extent thereof shall be determined by AT&T in its sole discretion. The features described in Schedules D-1 and D-2 are provided on an AS-IS basis, and AT&T does not warrant or guarantee the availability or performance of the same.

	 
	 

	4.

	If used by Customer, AT&T’s Enterprise-On-Demand (“EOD”) ordering and activation system will be available for Customer’s use after the Control Center is put into active operation. Any pending EOD orders, or Services currently supported through EOD, will continue to be served through that system. Additionally, Customer will be subject to the pricing schedules in any current Agreement for wireless services as to any Services activated using the EOD system or otherwise placed into service, and not Pricing Schedule D-3. These other Services will be billed separately from Control Center services.

	 
	 

	5.

	Control Center services, and the associated SaaS, are provided to Customer by Jasper Wireless, Inc. through AT&T and are subject to Jasper’s “Terms of Use” (“ToU”) reprinted at http://www.jasperwireless.com/terms.html, as the same may be changed from time to time. The ToU is a separate, supplemental agreement between Jasper and Customer and Customer is solely responsible for compliance with its terms and conditions. By Customer assenting to the terms and conditions of this Exhibit D, it is also bound to the terms and conditions of the ToU, as if the terms and conditions of the ToU were fully set forth herein. The terms of the ToU are in addition to, and do not modify or amend, the terms of this Exhibit D and its associated Agreement.

	 
	 

	6.

	Provision of the Control Center to Customer is subject to and contingent upon continued availability of the Control Center from Jasper, as well as the terms and conditions of AT&T’s agreements and understandings with Jasper. AT&T may withdraw availability of the Control Center on six (6) months advance written notice. If AT&T withdraws the Control Center service, AT&T may at its option continue to provide AT&T wireless services to deployed devices and SIMs using alternative service delivery platforms, at the same prices, terms and conditions specified herein.

	 
	 

	7.

	There is no separate charge for the use of the Control Center Services set forth in this Exhibit D except as otherwise stated in the attached Pricing Schedule D-3. Prices for any additional services will be provided to Customer in advance. However, any Services activated using the Control Center will be subject to Pricing Schedules D-3 and not to the pricing schedules in any other Agreement or in any other Exhibit to this Agreement.

	 
	 

	8.

	Optional VPN Services. In addition to the provisions of Schedule D-4, the following applies if Customer elects to order the Optional VPN Service from AT&T for use with the Control Center.

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	As a condition to using the Optional VPN Service incidental to the Control Center, two AT&T-owned VPN routers will be provided and pre-configured by Jasper for AT&T to work with the Jasper data centers which support the Control Center and Customer will limit all use of the services using these routers for the Control Center. While the Optional VPN Service is being provided, these AT&T routers will only be used to facilitate use of the Control Center; will be managed remotely; will permit only AT&T or its vendor to have access to the root administration of these routers; and will be supported through their manufacturer at AT&T’s discretion. Prices for Optional VPN Services are as stated in Exhibit D-3. The routers and the services offered thereby are provided “AS IS” without any express or implied warranty, and AT&T disclaims all liability associated with their use. Customer is responsible for any liability, loss or theft of, to or relating the routers. At the conclusion of the term, unless Customer elects to extend the Control Center services, Customer will either return the AT&T routers in good condition and repair at its expense or promptly reimburse AT&T for their cost as determined by AT&T. Any use of the AT&T routers by Customer acknowledges agreement with these Optional VPN Service terms.

	 
	 

	9.

	Customer understands that the Control Center and associated SaaS is offered on an "as is" basis. AT&T makes no warranty, guarantee, or representation, express or implied, relating to the reliability, effectiveness, accuracy, completeness, performance, or operation of the Control Center and Saas, the associated Service, or of the equipment and services furnished to Customer for purposes of the Control Center, SaaS or Service, and specifically disclaims any warranty of merchantability or fitness for a particular purpose.

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SCHEDULE D-1 – CONTROL CENTER TOTAL SERVICE FEATURES

				
	 
	 
	 
	 

	1.

	Automated &
Real-Time Provisioning 

	Rules-driven Auto Provisioning 

	Custom provisioning automation per account 

	Real-time Provisioning 

	Prompt activation / deactivation 

	Bulk provisioning 

	UI, bulk file and API based provisioning 

	Overage Controls 

	Automated usage throttling 

	2.

	Flexible Rating
& Billing 

	Shared and Customer Rate Plans 

	Pre-paid, post-paid, session-based, pooling, pro-ration, tiered, etc. 

	Customer Selectable Plans 

	UI, bulk file and API based rate plan selection 

	Invoice Summary & Details 

	On-line invoices and details 

	3.

	Real-time
Diagnostics 

	Diagnostics Wizard 

	Self-guided wizard for troubleshooting, remedy recommendations 

	SIM Troubleshooting Spotlight 

	Diagnostics tool for SS7, GRX troubleshooting 

	Real-time Connection Status & History 

	Real-time and historical details of all device connections 

	4.

	Analytics &
Reporting 

	Alert Engine 

	Alerts for provisioning, usage, etc. 

	Provisioning 

	Provisioning status reports 

	Billing & Usage 

	MTD, historical usage reports, invoice-ready billing details 

	5.

	Business
Process
Automation &
API Suite 

	Standard-based APIs 

	Web services, documentation, sample code, test environment 

	Application UI Customization 

	Custom labels, field extensions, language, time zone 

	6.

	Performance Assurance 

	Operator Certification 

	Jasper-performed operator device certification 

	Design Best Practices 

	Knowledge base, sample code, reference designs 

	Performance Assurance Wizard 

	Self-guided device performance and certification wizard, remote execution 

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	7.

	Intelligent
Device Access 

	Connection Manager 

	Client code for dynamic, auto-switching wireless connections, network controlled 

	8.

	Application
Portal 

	Global, Dynamic UI 

	Multi-organizational support, 5 languages, multi-time zone, vertical customization 

	9.

	Global Service (optionally via
AT&T Roaming) 

	Single Implementation for Multiple Country Deployments 

	Single set of services and support. See Schedule D-3 

	Improved Availability of Roaming 

	Tethered probes, real-time monitoring of wireless, GRX, Connection Manager, etc. 

	10.

	Rate Plans 

	On-demand Rate Plans 

	Flexible rate plans (per Schedule D-3) 

	11.

	Portal
Professional 

	Account Branded Portal 

	Custom branding of Control Center for Accounts 

	Customer Portal 

	Self-service access to Control Center for Accounts’ Customers 

	12.

	Connection
Status Monitor 

	Connection Status Push API 

	Push APIs for real-time connection status of all SIMs 

	13.

	Solution
Engineering
Support 

	Solution Engineering 

	Support for solution design 

	14.

	Customer
Support 

	Maintenance, trouble tickets processing on 24x7x365 basis 

	See Schedule D-2 

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SCHEDULE D-2 -- SUPPORT SERVICE TERMS AND CONDITIONS

A. Total Support Service. Total Support includes email responses during AT&T business hours to Customer email inquiries arising in the day to day use of the Service as well as web access to AT&T’s knowledge base. Total Support also includes certain support services on a 24X7x365 basis as stated below. There is no separate charge for Total Support. AT&T will provide the following support services. 

B. Requests for Support. Customer may submit requests for AT&T to help address service issues encountered with the day to day use of the Service (“Requests for Support”), as described below. 

1.     Hours of Support Operation: Support via email requests or the Control Center is provided during the normal AT&T Hours of Support Operation (i.e., six am to six pm Pacific or Central European times, as applicable), excluding weekends and holidays. Telephone support services are provided 24 hours per day, 365 days per year. 

2.     Method of Contact: Support may be requested by Customer Contact(s) to AT&T Contact(s) during the applicable AT&T Hours of Support Operation via email at Support@cc.ATT-mail.com or through the Control Center. Support Requests may be made by telephone to the AT&T Customer Support Center at +1 800-372-0329 by Customer Contact(s) to AT&T Contact(s) after opening a support request in the Control Center. AT&T will assign a unique case number for all reported incidents. 

3.     Content: Requests for Support should include: 

·

Name and contact information of person reporting problem, the description of the problem and symptoms, including: Date/Time incident first observed; Exact location of issue, if applicable; ICCID number(s) of device(s) involved, type of device, make and model number, if applicable; and Device status in Control Center 

·

Steps taken to attempt to resolve problem 

·

Use of the AT&T incident reporting form if available 

4.     Designated Support Contacts: For security reasons, Customer must provide AT&T with an email address for service notifications (a distribution list is recommended) and a list of names and phone numbers of their employees who have been designated as support contacts to the AT&T Customer Support Center. Customer may designate up to 8 support contacts. The Customer may change the names and numbers from this list at any time with notice to AT&T. 

C. Problem Classification and Escalation 

1.     Definitions. 

·

A “Response” is an acknowledgment (phone or email) of a trouble ticket delivered by Customer to AT&T (a “Trouble Ticket”) or a notification (phone or email) from AT&T to Customer in those cases where AT&T discovers the Problem with the AT&T Service without contact from the Customer. AT&T will proactively escalate Problems with no response in accordance with the intervals of time listed in the escalation chart below. 

·

A “Problem” is a failure to provide the Control Center or the Service in accordance with this Agreement that is reproducible by AT&T and classified per the three severity levels described below. 

A “Severity 1 Problem” is a Problem that causes a complete outage of the Service where no terminals can connect to the Service to transmit or receive data or a complete outage of the Control Center where no Customer users can access or use the Control Center. 

A “Severity 2 Problem” is a Problem that causes a significant failure or degradation in performance of the Service or the Control Center. 

A “Severity 3 Problem” is a Problem that causes a minor failure or degradation in performance of the Service or the Control Center.

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2.     Response Time Targets. Upon receipt by a AT&T support contact of a Request for Support from Customer via telephone, (response time targets not applicable to requests made via email or through the Control Center) AT&T will use commercially reasonable efforts to provide a Response to the situation (the “Problem”) within the time frames outlined below:

Severity 1 Problem Response within fifteen (15) minutes 

Severity 2 Problem Response within thirty (30) minutes 

Severity 3 Problem Response within one (1) business day 

3.     Escalation Procedures: If AT&T does not respond to a Request for Support within the time frames described above, Customer may contact AT&T escalation contacts below.

				
	Escalation Level

	Severity 1

	Severity 2

	Severity 3

	First level review
of trouble ticket 

	15 minutes 

	1 hour

	24 hours

	Support
Engineer 

	15 minutes 

	1 hour

	24 hours

	Manager 

	2 hours

	4 hours

	48 hours

	Vice President 

	4 hours

	8 hours

	96 hours

	Update
Frequency 

	Every 30 minutes, if requested or as otherwise agreed 

	Every hour during business hours if requested or as otherwise agreed 

	Every business day if requested or as otherwise agreed 

4.     Customer Assistance: The Customer employee who contacted AT&T must be available during the resolution interval to explain and/or describe the problem if the AT&T staff deems it necessary. Timely resolution of the problem may require the Customer to provide supporting evidence of the Problem. 

D.    Contacts 

Customer and AT&T shall exchange and keep current lists of the appropriate contact people within each organization. During the Term, Customers may escalate issues through the following AT&T escalation contacts and vice versa:

			
	Contact

	Phone Number

	Email

	Customer Support Center 

	+1 408-328-5250 

+44 (0) 20 711-78513 

	Support@cc.ATT-mail..com 

	Director Customer Support 

	+1 408-328-5202 

	Support_escalations@cc.ATT-mail.com

	Vice President, Operations 

	+1 408-328-5218 

	Operations_escalations@cc.ATT-mail.com

Customer Contacts (To be completed by Customer):

				
	Contact / Title 

	Name

	Phone

	Email

	VP Health ID 

	Mary Ellen Harrison 

	561-805-8028 

	meharrison@positiveIDcorp.com 

	Accounting 

	Stephanie Posada 

	561-805-8027

	sposada@positiveidcorp.com 

	Finance 

	Prakash Patel 

	561-805-8048

	ppatel@postiiveidcorp.com 

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SCHEDULE D-3 -- CONTROL CENTER PRICES AND SERVICE PLANS

I.

Service Plans. For each active Control Center SIM, Customer may select any of the Service Plans listed below in this Schedule D-3. If a Service Plan requires a term commitment, the fee for early cancellation of Service on that plan will be specified in the Service Plan description. All fees are due within 30 days of date of invoice. 

II.

Usage Charges 

A.

Data Usage. Data usage charges will apply to data transmissions, text messages, downloadables, alerts, and any other information sent through the Network and associated with the Device. Those charges are set forth in the applicable Service Plan. Unless stated otherwise, all data will be calculated and billed in kilobytes. Usage for each session will be rounded up to the next kilobyte and the charge for each billing period will be rounded up to the nearest cent. One megabyte equals 1024 kilobytes. One kilobyte equals 1024 bytes. Customer understands that the use of compression solutions may or may not impact the amount of kilobytes for which it is billed. 

B.

Dropped Transmissions. Data transmissions may be involuntarily interrupted (“dropped”) for a variety of reasons beyond the control of Company. Dropped transmissions will be billed as any other transmission. In addition, Company may try to re-send a dropped transmission, which will result in additional charges. If Customer has a problem with dropped transmissions, Customer should call the Company support service line. If Company believes a credit is appropriate, it may reduce the charges accordingly. 

C.

Roaming. Roaming charges apply when a Device is used outside of the Company Network. Roaming rates and availability are set forth below in the Rate Plan descriptions.. Lagging data records will be applied the day they are received by Company and not the date used. 

D.

International Roaming. Company reserves the right at any time to restrict international data roaming to certain countries as it sees fit. Customer acknowledges that some countries cannot be blocked from international data roaming. International data roaming rates and availability are set forth below in the Rate Plan description.. Lagging data records will be applied the day they are received by Company and not the date used. 

III.

Features. Feature charges (if any) will be billed on a monthly basis for any billing cycle during which the feature is activated or deactivated. Company may limit the number of features and promotions that can be assigned to a SIM. 

IV.

Control Center Discount Program 

A.

Eligibility. In order to receive a Control Center Discount (if any), Customer must meet its commitments, including any Minimum Revenue or unit volume commitment. Control Center SIMs and revenues are not eligible for any other discounts

19

AT&T CONFIDENTIAL AND PROPRIETARY

Use pursuant to Company instructions

***CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

B.

Amount of Discount. Customer is entitled to receive the Control Center discounts (if any) listed immediately below:

		
	EOD Service Plan

Total Monthly Service Revenue exceeds: 

	Service Discount 

	***

	***

	***

	***

	***

	***

	***

	***

	***

	***

	***

	***

	***

	***

	***

	***

C.

Modification of Control Center Discount Program. Company may modify the Control Center Discount Program at any time in accordance with the requirements of Section 19.9; provided that any modification not adverse to Customer may be made effective immediately upon notice to Customer and will not give Customer the right to terminate this Agreement. 

V.

Minimum Subscriber Obligation (“MSO”) for Control Center Services. 

Customer agrees to an MSO of *** subscribers to be active in the Control Center by March 31, 2012. 

An MSO of *** subscribers will be maintained for Control Center services for monthly billing cycles between March 31, 2012 through March 31, 2013, measured at the end of each monthly billing cycle. 

An MSO of *** subscribers will be maintained for Control Center services for monthly billing cycles between March 31, 2013 through March 31, 2014 measured at the end of each monthly billing cycle. 

For monthly billing cycles between March 31, 2012 and March 31, 2014, in any billing cycle where Customer’s subscriber count at the end of the monthly billing cycle does not equal or exceed the applicable MSO for that monthly billing cycle, Customer will be charged *** MRC for each SIM in use on the 35K plan and *** for each SIM in use on the 1M plan in that monthly billing cycle. 

The MRC charge may be applied in the bill for the affected monthly billing cycle, or may be applied as an adjustment in a subsequent billing cycle. . 

VI.

Activation and Other Processes. 

Customer will follow the processes established by Company from time-to-time to activate, terminate or otherwise modify Service or, if applicable, to purchase Devices. Any order for Service and/or Devices that Customer’s authorized representative submits to Company will be binding upon Customer pursuant to the terms and conditions of this Agreement. Company may reasonably rely on the authority of any person who executes an order on Customer’s behalf.

20

AT&T CONFIDENTIAL AND PROPRIETARY

Use pursuant to Company instructions

***CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

VII.

Control Center Service Plan(s) 

The following Service Plan(s) apply for Control Center SIMs. (Control Center SIMs have an ICCID of xx310650xxxxxxxxxxxx).

Control Center Service Plan for Resale

						
	Monthly

Recurring

Charge

	Included

KB

	Data Usage

Overage

/ KB

	International Roaming

/ KB

	Domestic / 

SMS

	Pooling

	***

	35

	***

	***

	***

	Yes

	***

	1024

	***

	***

	***

	Yes

Notes: 

A.

Company’s domestic data network for purposes of this offer includes U.S. areas owned and operated by Company and some limited U.S. areas owned and/or operated by other carriers. The End-User’s principal residence must be within an eligible Company wireless area. If *** or more of the data usage in any three month period is used off the Company owned and operated domestic data network, Company reserves the right, at its option, with prior written notice, to terminate the Service or move the End User to another data plan for which the End User may otherwise qualify. 

B.

While Customer is in good standing, Customer may elect to factory test SIM Card(s) prior to deployment without charge for the first 20kb of US Domestic data usage. The Customer must then promptly deactivate the SIM Card (change it to another SIM state that does not pass data) or the SIM Card will remain activated and subject to all applicable charges. Free factory testing is not available for SMS-only applications. AT&T reserves the right to activate devices that have passed out of testing and distribution and are being commercially used by customer. 

C.

SIM charge: There will be a one-time SIM charge of *** per IMSI invoiced to Customer on the first invoice following shipment of the IMSI. 

D.

A one-time activation fee of *** per SIM applies to all activations, regardless of the rate plan. No termination fee or plan change fee applies to activations under the rate plan(s), unless specified in the individual plan description. 

E.

The charge for MO Messages while roaming internationally, including in Canada, is *** per Message. The charge for MT Messages while roaming internationally, including in Canada, is *** per Message. 

F.

Plans above are net prices, with no further discounting available unless provided in Section IV. 

21

AT&T CONFIDENTIAL AND PROPRIETARY

Use pursuant to Company instructions

***CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION. 

II. Additional Charges (applied as indicated)

				
	Service

	Frequency

	Cost Per

	Description

	Account Setup Charge 

	One time

per account 

	***

	Creation and configuration of AT&T Control Center account. 

Includes up to 3 hours of online training. 

	Dynamic IP

	 
	 

	 

	 

	 
	 

	 

	Custom Dynamic APN Set Up 

	One time

Per APN 

	***

	Creation of custom APN – dynamic private IP addressing. 

Requires VPN. 

	Static IP Option

	 
	 

	 

	Custom Static IP APN Set Up 

	One time

Per APN 

	***

	Creation of custom APN – static private IP addressing. 

Requires VPN. 

	SMPP Bind 

	One time per SMPP Bind 

	***

	Set up cost for SMPP Bind to provide for SMS connectivity. Includes connectivity to redundant SMSC gateways, 

Requires VPN. 

	 

	 
	 

	 

	CPE VPN setup - Table Top Routers 

	One time

per VPN 

	***

	VPN set up that includes two (2) Cisco 861 table top routers configured with redundant VPN tunnels. See Schedule D-4 for additional details. 

	Monthly

per VPN 

	***

	Monthly rate for VPN monitoring and management. 

	CPE VPN setup -Rack Mount Routers 

	One time

per VPN 

	***

	VPN set up that includes two (2) Cisco 1811 rack mountable routers configured with redundant VPN tunnels. See Schedule D-4 for additional details. 

	Monthly

per VPN 

	***

	Monthly rate for VPN monitoring and management. 

	COAM (Customer Owned and Maintained) VPN Set Up 

	One Time

per VPN 

	***

	Customer Owned and Maintained VPN implementation. Must be Cisco model 861 or 1811 configured with redundant VPN tunnels. 

Must be configured with AT&T supplied configuration and allow remote management and monitoring. 

Includes 10 hours of set up time. Additional time billable at hourly rate of ***. 

Customer must supply and maintain hardware. 

See Schedule D-4 for additional details. 

	Monthly

per VPN 

	***

	Monthly rate for VPN monitoring and management. 

At minimum, each Control Center account MUST include: 

1)  Account Setup 

2)  Dynamic or Static APN 

3)  CPE or COAM VPN 

22

AT&T CONFIDENTIAL AND PROPRIETARY

Use pursuant to Company instructions

Schedule D-4 – VPN Service Terms

		
	1.

	CPE (Customer Premises Equipment) VPN Services Terms. The following applies if Customer elects to order the Optional VPN Service from AT&T for use with the Control Center. As a condition to using the Optional VPN Service incidental to the Control Center, two AT&T-owned VPN routers will be provided and pre-configured by Jasper for AT&T to work with the Jasper data centers which support the Control Center and Customer will limit all use of the services using these routers for the Control Center. While the Optional VPN Service is being provided, these AT&T routers will only be used to facilitate use of the Control Center; will be managed remotely; will permit only AT&T or its vendor to have access to the root administration of these routers; and will be supported through their manufacturer at AT&T’s discretion.

	 
	 

	 
	Prices for Optional VPN Services are as stated in Exhibit D-3. The routers and the services offered thereby are provided “AS IS” without any express or implied warranty, and AT&T disclaims all liability associated with their use. Customer is responsible for any liability, loss or theft of, to or relating the routers. At the conclusion of the term, unless Customer elects to extend the Control Center services, Customer will either return the AT&T routers in good condition and repair at its expense or promptly reimburse AT&T for their cost as determined by AT&T.

	 
	 

	 
	Any use of the AT&T routers by Customer acknowledges agreement with these VPN Service terms.

	 
	 

	2.

	COAM (Customer Owned and Maintained) VPN Service Terms. As a condition to the optional COAM VPN service provided by AT&T to facilitate the use of the Jasper Services by Customer, Customer will supply two VPN routers to work with AT&T’s data centers, in either supported model:

	 
	- Cisco 861 (tabletop)

	 
	- Cisco 1811 (rack mountable)

	 
	 

	 
	Routers will be configured according to AT&T specification for connection to the ATT Control Center Services. Routers may need to be shipped to AT&T location for configuration. If shipping is required, Customer will pay reasonable shipping and handling costs. 

	 
	 

	 
	Customer will limit all use, and access of these routers to facilitate the use of the ATT Control Center Services by Customer. Unless Customer - incorporates these routers into its system facilities (that is, provides appropriate space, power and connectivity, assigns address space and points to a new route) solely for use with the Jasper Services within 60 days of Effective date, then AT&T reserves the right to withdraw support for the optional COAM VPN service.

	 
	 

	 
	During the term, Customer will manage these routers; will have sole access to the root administration of these routers consistent with AT&T specification and will provide support for these routers. Customer is responsible for maintaining software updates, configuration, and availability of the routers and associated network, including network monitoring on the router. AT&T disclaims all liability associated with the router use. Customer is responsible for any loss or theft of routers or information from routers.

	 
	 

	 
	If SMPP traffic is desired, Customer must implement a VPN for SMPP encrypted traffic.

	 
	 

	 
	Any use of the routers by Customer for access to ATT Control Center Services, acknowledges agreement with these supplemental COAM VPN service terms.

23

AT&T CONFIDENTIAL AND PROPRIETARY

Use pursuant to Company instructions

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