Document:

ex104-phunware2020invest

                                                                    EXECUTION COPY                                   NOTE PURCHASE AGREEMENT                  NOTE PURCHASE AGREEMENT (the “Agreement”), dated as of July 14, 2020, by           and  among Phunware,  Inc.,  a  Delaware  corporation  with  offices  located  at  7800  Shoal  Creek           Blvd, Suite 230-S, Austin, Texas 78757 (the “Company”) and the investor signatory hereto (the           “Investor”).                  WHEREAS:                  A.    Concurrently  herewith,  the  Company and the  Investor  have  entered  into  that           certain  Securities  Purchase  Agreement,  dated July 14,  2020,  pursuant  to  which,  among  other           things, the Investor shall acquire a senior secured convertible note (the “Series B Note”) of the           Company (the “Securities Purchase Agreement”).  Capitalized terms not defined herein shall           have the meaning as set forth in the Securities Purchase Agreement.                  B.    The  Company  and  the  Investor are executing  and  delivering  this  Agreement  in           reliance  upon  the  exemption  from  securities  registration  afforded  by  Section  4(a)(2)  of  the           Securities  Act  of  1933,  as  amended  (the  “1933  Act”),  as  promulgated  by  the  United  States           Securities and Exchange Commission (the “SEC”) under the 1933 Act.                  C.    The  Investor has  authorized the issuance of a new secured promissory  Investor           Note in substantially the form attached hereto as Exhibit A, pursuant to the terms set forth herein           (collectively, the “Investor Note”).                  D.    The Investor wishes to purchase the Series B Note from the Company pursuant to           the  Securities  Purchase  Agreement  and  to  issue  the  Investor  Note  in  full  satisfaction  of  the           purchase price of the Series B Note (the “Series B Purchase Price”), and the Company wishes           to (x) sell the Series B Note to the Investor, (y) acquire the Investor Note in full satisfaction of           the Series B Purchase Price and (z) pledge the Investor Note to the Investor as collateral for its           obligations under the Series B Note.                  E.    The  Investor  Note  will be  secured  by  a  first  priority  security  interest  in  certain           Eligible  Assets  (as  defined  in  the  Investor  Note)  (collectively,  the  “Collateral”)  held  in  the           collateral account of the Investor described in the Investor Note (the “Collateral Account”).                  F.    Concurrently herewith,  each of the Company and the  Investor are entering into           that certain Master Netting Agreement, in substantially the form attached hereto as Exhibit B           (the  “Master  Netting  Agreement”), to  provide further  clarification  of the  parties’ rights (but           not, in the case of Investor only, its obligation) to Net (as defined below) certain Obligations (as           defined in the Netting Agreement) arising under and across this Agreement, the Investor Note,           the  Series  B  Notes  and  the  Securities  Purchase  Agreement (collectively,  the  “Underlying           Agreements”)  and  to  treat the  Master  Netting  Agreement, this  Agreement  and  the other           Underlying  Agreements  as  a  single  agreement  for  the  purposes  set  forth  herein  and this           Agreement and the Securities Purchase Agreement each as a “securities contract” (11 U.S.C. §           741), or other similar agreements.                  NOW, THEREFORE, the Company and the Investor hereby agree as follows:    Error! Unknown document property name. 

 

                           1.    PURCHASE AND SALE OF INVESTOR NOTE.                        (a)   Investor Note.  Subject to the satisfaction (or waiver) of the conditions set           forth in Sections 5 and 6 below, the Investor agrees to issue and sell to the Company, and the           Company  agrees  to  purchase  from  the  Investor  on  the  Closing  Date  (as  defined  below),  such           aggregate principal amount of Investor Note as is set forth on the signature page of the Investor           attached hereto in full satisfaction of the Series B Purchase Price under the Securities Purchase           Agreement (the “Closing”).                        (b)   Closing.   The  Closing  of  the  purchase  of  the  Investor  Note  by  the           Company shall occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York,           NY  10178.  The  date  and  time  of  the  Closing  (the  “Closing  Date”)  shall  be  10:00  a.m.,  New           York time, on the first (1st) Business Day on which the conditions to the Closing set forth in           Sections 5 and 6 below are satisfied or waived (or such other date or time as is mutually agreed           to by the Company and the Investor).  As used herein “Business Day” means any day other than           Saturday, Sunday or other day on which commercial banks in The City of New York, New York           are  authorized  or  required  by  law  to  remain  closed; provided, however,  for  clarification,           commercial banks shall not be deemed to be authorized or required by law to remain closed due           to “stay at home”, “shelter-in-place”, “non-essential employee”  or any other similar orders or           restrictions or the closure of any physical branch locations at the direction of any governmental           authority  so  long  as  the  electronic  funds  transfer  systems  (including  for  wire  transfers)  of           commercial banks in The City of New York, New York generally are open for use by customers           on such day.                        (c)   Delivery  of  Investor  Note  in  Satisfaction  of  Series  B  Purchase  Price;           Securities Contract; Netting Safe Harbor.  On the Closing Date, the Investor shall duly execute           the  Investor  Note, registered in  the name of the Company, in  full  satisfaction of the Series  B           Purchase  Price  pursuant  to  the  Securities  Purchase  Agreement, and, in  accordance  with  the           instructions of the Company in the Flow of Funds Letter (as defined in the Securities Purchase           Agreement), the Investor shall maintain physical possession of the Investor Note as Collateral (as           defined  in the Series  B  Note) securing the Series  B  Note.  For  the  avoidance  of  doubt,  the           Investor  Note  is  deemed  simultaneously  delivered  (x)  by  the  Investor  to  the  Company  at  the           Closing hereunder and (y) delivered by the Company to the Investor at the Closing (as defined in           the Securities Purchase Agreement) under the Securities Purchase Agreement, as Collateral for           the Series B Note purchased by the Investor thereunder.  Other than the issuance of the Series B           Note to the Investor pursuant to the Securities Purchase Agreement, the Company shall not be           required to pay any additional consideration for the issuance of the Investor Note hereunder.  The           Company hereby acknowledges and agrees that the rights and obligations of the Investor under           the Master Netting Agreement, hereunder and under the other Underlying Agreements and the           rights  and  obligations  of  the  Company under  the  Master  Netting  Agreement, hereunder and           under  the  other  Underlying  Agreements arise  in  a  single  integrated  transaction  and  constitute           related and interdependent obligations within such transaction.  The Company and the Investor           hereby acknowledge and agree that this Agreement and the Securities Purchase Agreement each           is a “securities contract” as defined in 11 U.S.C. § 741 and that Investor shall have all rights in           respect of the Master Netting Agreement, this Agreement and the other Underlying Agreements           as are set forth in 11 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including, without limitation, all           rights of credit, deduction, setoff, offset, recoupment, and netting (collectively, “Netting”) as are                                                 - 2 -  Error! Unknown document property name. 

 

                     available  under  the  Master  Netting  Agreement,  this  Agreement and  the  other  Underlying           Agreements, and all Netting provisions of the Series B Note, the Master Netting Agreement and           the  Investor  Note,  including  without  limitation  the  provisions  set  forth  in  Section  7  of  the           Investor  Note,  are  hereby  incorporated  in  this  Agreement  and  made  a  part  hereof  as  if  such           provisions were set forth herein.                  2.    COMPANY’S REPRESENTATIONS AND WARRANTIES.                        The Company represents and warrants, as of the date hereof and as of the Closing           Date in which the Company is purchasing the Investor Note hereunder, that:                         (a)   Organization  and  Qualification.   Each  of  the  Company  and  each  of  its           Subsidiaries are entities duly organized and validly existing and in good standing under the laws           of the jurisdiction in which they are formed, and have the requisite power and authority to own           their properties and to carry on their business as now being conducted and as presently proposed           to be conducted.  Each of the Company and each of its Subsidiaries is duly qualified as a foreign           entity  to  do  business  and  is  in  good  standing  in  every jurisdiction  in  which  its  ownership  of           property or the nature of the business conducted by it makes such qualification necessary, except           to the extent that the failure to be so qualified or be in good standing would not reasonably be           expected to have a Material Adverse Effect.                        (b)   Authorization;  Enforcement;  Validity.   The  Company  has  the  requisite           power and authority to enter into and perform its obligations under this Agreement and the other           Transaction Documents, to  issue  the  Securities  in  accordance  with  the  terms thereof  and to           acquire the Investor Note in accordance with the terms hereof.  The execution and delivery of           this Agreement and the other Transaction Documents by the Company, and the consummation           by the Company of the transactions contemplated hereby and thereby have been duly authorized           by  the  Company’s  board  of  directors  and  (other  than  the  filing  with  the  SEC  of  one  or  more           Registration  Statements  in  accordance  with  the  requirements  of  the  Registration  Rights           Agreement,  a  Form  D  with  the  SEC  and  any  other  filings  as  may  be  required  by  any  state           securities  agencies)  no  further  filing,  consent  or  authorization  is  required  by  the  Company,  it           board of directors or stockholders or other governing body.  This Agreement has been, and the           other Transaction Documents to which it is a party will be prior to the Closing, duly executed           and delivered by the Company, and each constitutes the legal, valid and binding obligations of           the Company, enforceable against the Company in accordance with its respective terms, except           as such enforceability may be limited by general principles of equity or applicable bankruptcy,           insolvency,  reorganization,  moratorium,  liquidation  or  similar  laws  relating  to,  or  affecting           generally, the enforcement of applicable creditors’ rights and remedies and except as rights to           indemnification and to contribution may be limited by federal or state securities law.                        (c)   No Conflicts.  The execution, delivery and performance of the Transaction           Documents by the Company and its Subsidiaries and the consummation by the Company and its           Subsidiaries of the transactions contemplated hereby and thereby will not (i) result in a violation           of the Certificate of Incorporation (including, without limitation, any certificate of designation           contained  therein), Bylaws,  certificate  of  formation,  memorandum  of  association,  articles  of           association, bylaws or other organizational documents of the Company or any of its Subsidiaries,           or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict                                                  - 3 -  Error! Unknown document property name. 

 

                     with,  or  constitute  a  default  (or  an  event  which  with  notice  or  lapse  of  time  or  both  would           become a default) in any respect under, or give to others any rights of termination, amendment,           acceleration or cancellation of, any agreement, indenture or instrument to which the Company or           any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order,           judgment or decree (including, without limitation, foreign, federal and state securities laws and           regulations  and  the  rules  and  regulations  of  the Principal  Market and  including  all  applicable           foreign, federal and state laws, rules and regulations) applicable to the Company or any of its           Subsidiaries  or by  which  any  property  or  asset  of  the  Company or  any  of  its  Subsidiaries is           bound  or  affected, and,  solely  with  respect  to  clauses  (ii)  and  (iii),  which  violation,  conflict,           breach or default, individually or in the aggregate, would have a Material Adverse Effect.                        (d)   Consents.  Neither the Company nor any Subsidiary is required to obtain           any consent from, authorization or order of, or make any filing or registration with (other than           the  filing  with  the  SEC  of  one  or  more  Registration  Statements  in  accordance  with  the           requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings           as may be required by any state securities agencies), any Governmental Entity (as defined below)           or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver           or  perform  any  of  its  respective  obligations  under  or  contemplated  by  the  Transaction           Documents,  in  each  case,  in  accordance  with  the  terms  hereof  or  thereof.   All  consents,           authorizations, orders, filings and registrations which the Company or any Subsidiary is required           to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior           to the Closing Date, and the Company is not aware of any facts or circumstances which might           prevent the Company from obtaining or effecting any of the registration, application or filings           contemplated  by  the  Transaction  Documents.   The  Company  is  not  in  violation  of  the           requirements of the Principal Market and has no knowledge of any facts or circumstances which           could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.                        (e)   No Sale or Distribution.  The Company is acquiring the Investor Note for           its own account and not with a view towards, or for resale in connection with, the public sale or           distribution  thereof.  The  Company  does  not presently  have  any  agreement  or  understanding,           directly  or  indirectly,  with  any  Person  (as  defined  in  the  Securities  Purchase  Agreement)  to           distribute any of the Investor Note.                        (f)   Sophisticated  Investor.  The  Company  is  a  sophisticated  investor  (as           described  in  Rule  506(b)(2)(ii)  of  Regulation  D),  and  has  such  knowledge  and  experience  in           business  and  financial  matters  that  it  is  capable  of  evaluating  the  merits  and  risks  of  an           investment in the Investor Note.                        (g)   Reliance  on  Exemptions.   The  Company  understands  that  the  Investor           Note  is  being  offered  and  sold  to  it  in  reliance  on  specific  exemptions  from  the  registration           requirements of United States federal and state securities laws and that the Investor is relying in           part upon the truth and accuracy of, and the Company’s compliance with, the representations,           warranties, agreements, acknowledgments and understandings of the Company set forth herein in           order  to  determine  the  availability  of  such  exemptions  and  the  eligibility  of  the  Company  to           acquire the Investor Note.                                                  - 4 -  Error! Unknown document property name. 

 

                                 (h)   Information.  The Company and its advisors, if any, have been furnished           with all materials relating to the business, finances and operations of the Investor and materials           relating to the offer and sale of the Investor Note that have been requested by the Company.  The           Company  and  its  advisors,  if  any,  have  been  afforded  the  opportunity  to  ask  questions  of  the           Investor.   Neither  such  inquiries  nor  any  other  due  diligence  investigations  conducted  by  the           Company  or  its  advisors,  if  any, or  its  representatives  shall  modify,  amend  or  affect  the           Company’s right to rely on the Investor’s representations and warranties contained herein.  The           Company  understands  that  its  investment  in  the Investor  Note  involves  a  high  degree  of  risk.            The Company has sought such accounting, legal and tax advice as it has considered necessary to           make an informed investment decision with respect to its acquisition of the Investor Note.                        (i)   No  Governmental  Review.   The  Company  understands  that  no  United           States federal or state agency or any other government or governmental agency has passed on or           made any recommendation or endorsement of the Investor Note or the fairness or suitability of           the investment in the Investor Note nor have such authorities passed upon or endorsed the merits           of the offering of the Investor Note.                        (j)   Transfer or Resale.  The Company understands that: (i) the Investor Note           has not been and is not being registered under the 1933 Act or any state securities laws, and may           not be offered for sale, sold, assigned or transferred without the consent of the Investor (and any           Prohibited Transfer (as defined in the Investor Note) shall be subject to certain recoupment rights           and netting against the Series B Note to be issued to the Investor concurrently with the Closing           hereunder) and (ii) neither the Investor nor any other Person is under any obligation to register           the Investor Note under the 1933 Act or any state securities laws or to comply with the terms and           conditions of any exemption thereunder.                        (k)   Legends.  The  Company  understands  that  the  certificates  or  other           instruments representing the Investor Note shall bear any legend as required by the “blue sky”           laws of any state and a restrictive legend in substantially the following form (and a stop-transfer           order may be placed against transfer of such stock certificates):                  THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT                 OF  1933,  AS  AMENDED  (THE  “ACT”),  OR  THE  APPLICABLE  STATE                 SECURITIES  LAWS,  AND  MAY  NOT  BE  OFFERED  OR  SOLD  IN  THE                 ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE                 ACT AND SUCH STATE SECURITIES LAWS, OR AN EXEMPTION FROM                 REGISTRATION  THEREUNDER,  IN  EACH  CASE,  TO  THE  EXTENT                 APPLICABLE HERETO.                  3.    REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.                        The Investor represents and warrants to the Company as of the date hereof and as           of the Closing Date as follows:                        (a)   Authorization;  Enforcement;  Validity.   The  Investor  has  the  requisite           corporate power and authority to enter into and perform its obligations under this Agreement and           the  Investor  Note  and  each  of  the  other  agreements  entered  into  by  the  parties  hereto  in                                                  - 5 -  Error! Unknown document property name. 

 

                     connection  with  the  transactions  contemplated  by  this  Agreement  (collectively,  the           “Transaction Documents”) and to issue the Investor Note in accordance with the terms hereof           and thereof.  The execution and delivery of the Transaction Documents by the Investor and the           consummation by the Investor of the transactions contemplated hereby and thereby, including,           without limitation, the issuance of the Investor Note has been duly authorized by the Investor’s           board of directors, investment manager or other governing body and no further filing, consent, or           authorization is required by the Investor.  This Agreement and the other Transaction Documents           have  been  duly  executed  and  delivered  by  the  Investor,  and  constitute  the  legal,  valid  and           binding  obligations  of  the  Investor,  enforceable  against  the  Investor  in  accordance  with  their           respective terms, except as such enforceability may be limited by general principles of equity or           applicable  bankruptcy, insolvency,  reorganization,  moratorium,  liquidation  or  similar  laws           relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.                        (b)   Issuance  of  Investor  Note.   The  issuance  of  the  Investor  Note  is  duly           authorized and upon issuance in accordance with the terms of the Transaction Documents shall           be free from all taxes, liens and charges with respect to the issue thereof.  Assuming the accuracy           of each of the representations and warranties set forth in Section 2 of this Agreement, the offer           and issuance by the Investor of the Investor Note is exempt from registration under the 1933 Act.                        (c)   No Conflicts.  The execution, delivery and performance of the Transaction           Documents  by  the  Investor  and  the  consummation  by  the  Investor  of  the  transactions           contemplated  hereby  and thereby  (including,  without  limitation,  the  issuance  of  the  Investor           Note) will not (i) result in a violation of the Investor’s organizational documents or (ii) conflict           with,  or  constitute  a  default  (or  an  event  which  with  notice  or  lapse  of  time  or  both  would           become a default) in any respect under, or give to others any rights of termination, amendment,           acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a           party,  or  (iii) result  in  a  violation  of  any  law,  rule,  regulation,  order,  judgment  or  decree           (including foreign, federal and state securities laws and regulations) applicable to the Investor or           by which any property or asset of the Investor is bound or affected, except, in the case of clause           (ii) and (iii) above, for such violations, conflicts, breaches, defaults, losses, terminations of rights           thereof, or accelerations  which, in  the aggregate, would not  reasonably  be expected to  have  a           Material  Adverse  Effect  (as  defined  below).   “Material  Adverse  Effect”  means  any  material           adverse  effect  on  (i)  the  business,  properties,  assets,  liabilities,  operations  (including  results           thereof) or condition (financial or otherwise) of the Investor, (ii) the transactions contemplated           hereby  or  in  any  of  the  other  Transaction  Documents  or  (iii)  the  authority  or  ability  of  the           Investor to perform any of its obligations under any of the Transaction Documents.                        (d)   Consents.  The  Investor  is  not  required  to  obtain  any  consent,           authorization  or  order  of,  or  make  any  filing  or  registration  with,  any  government,  court,           regulatory, self-regulatory, administrative agency or commission or other governmental agency,           authority or instrumentality, domestic or foreign, of competent jurisdiction (a “Governmental           Authority”)  or  any  other  Person  in  order  for  it  to  execute,  deliver  or  perform  any  of  its           obligations  under  or  contemplated  by  the  Transaction  Documents,  in  each  case  in  accordance           with  the  terms  hereof  or  thereof.   The  Investor  is unaware  of  any  facts  or  circumstances  that           might  prevent  the  Investor  from  obtaining  or  effecting  any  of  the  registration,  application  or           filings pursuant to the preceding sentence.                                                  - 6 -  Error! Unknown document property name. 

 

                                 (e)   No  General  Solicitation.   The  Investor  has  not  engaged  in  any  form  of           general solicitation or general advertising (within the meaning of Regulation D) in connection           with the offer or sale of the Investor Note.                        (f)   No Integrated Offering.  Neither the Investor nor any Person acting on its           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 require registration of the issuance of the           Investor Note under the 1933 Act, whether through integration with prior offerings or otherwise.            Neither the Investor nor any Person acting on their behalf will take any action or steps referred to           in the preceding sentence that would require registration of the issuance of any of the Investor           Note under the 1933 Act.                        (g)   Sufficient  Collateral.  As of the Closing Date the accounts described on           Schedule  I  to  the  Investor  Note,  which  Collateral  secures  the  Investor  Note  in  accordance           therewith, contains at least the Series B Purchase Price of Eligible Assets as of the Closing Date.                        (h)   Full  Recourse.   The  Investor  Note  is  a  full  recourse  obligation  of  the           Investor.                  4.    COVENANTS.                        (a)   Reasonable Best Efforts.  Each party shall use its reasonable best efforts           timely to satisfy each of the conditions to be satisfied by it as provided in Sections 5 and 6 of this           Agreement.                        (b)   Fees.  The  Company  shall  be  responsible  for  the  payment  of  any           placement agent’s fees, financial advisory fees, legal expenses or broker’s commissions relating           to or arising out of the transactions contemplated hereby.  The Company shall pay, and hold the           Investor harmless against, any liability, loss or expense (including, without limitation, reasonable           attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any           such  payment.   Except  as  otherwise  set  forth  in  the  Transaction  Documents  or  the  Securities           Purchase  Agreement,  each  party  to  this  Agreement  shall  bear  its  own  expenses  in  connection           with the sale of the Investor Note to the Company.                        (c)   Taxes.  The Company will pay, and save and hold the Investor harmless           from any and all liabilities (including interest and penalties) with respect to, or resulting from           any delay or failure in paying, stamp and other taxes (other than income taxes), if any, which           may be payable or determined to be payable on the execution and delivery or acquisition of the           Investor Note.                                                  - 7 -  Error! Unknown document property name. 

 

                           5.    CONDITIONS  TO  THE  INVESTOR’S  OBLIGATION  TO  SELL.  The           obligation of the Investor hereunder to issue and sell the Investor Note to the Company at the           Closing  is  subject  to  the  satisfaction,  at  or  before  the  Closing  Date,  of  each  of  the  following           conditions, provided that these conditions are for the Investor’s sole benefit and may be waived           by the Investor at any time in its sole discretion by providing the Company with prior written           notice thereof:                        (a)   The Company shall have executed each of the Transaction Documents to           which it is a party and delivered the same to the Investor.                        (b)   All  conditions  to  the  Investor’s closing of the transactions  contemplated           by  the  Securities  Purchase  Agreement  shall  have  been  satisfied  (except  for  such  conditions           waived by the Investor) and the Investor Note is being issued hereunder in full satisfaction of the           Series B Purchase Price.                        (c)   The  representations  and  warranties  of  the  Company  shall  be  true  and           correct in all material respects as of the date when made and as of the Closing Date as though           made  at  that  time  (except  for  representations  and  warranties  that  speak  as  of  a  specific  date,           which  shall  be  true  and  correct  as  of  such  specified  date),  and  the  Company  shall  have           performed, satisfied and complied in  all material  respects  with  the  covenants,  agreements  and           conditions  required  by  this  Agreement  to  be  performed,  satisfied  or  complied  with  by  the           Company at or prior to the Closing Date.                  6.    CONDITIONS  TO  THE  COMPANY’S  OBLIGATION  TO  PURCHASE.             The  obligation  of  the  Company  hereunder  to  purchase  the  Investor  Note at  the  Closing  in           satisfaction, in full, of the Series B Purchase Price is subject to the satisfaction, at or before the           Closing  Date,  of  each  of  the  following  conditions,  provided  that  these conditions  are  for  the           Company’s sole benefit and may be waived by the Company at any time in its sole discretion by           providing the Investor with prior written notice thereof:                        (a)   The Investor shall have (A) duly executed and delivered to the Company           each of the Transaction Documents and (B) duly executed the Investor Note.                        (b)   All conditions to the Company’s closing of the transactions contemplated           by  the  Securities  Purchase  Agreement  shall  have  been  satisfied  (except  for  such  conditions           waived by the Company) and the Investor Note is being issued hereunder in full satisfaction of           the Series B Purchase Price.                        (c)   The representations and warranties of the Investor shall be true and correct           in all material respects as of the date when made and as of the Closing Date as though made at           that time (except for representations and warranties that speak as of a specific date, which shall           be true and correct as of such specified date), and the Investor shall have performed, satisfied and           complied in all material respects with the covenants, agreements and conditions required by this           Agreement to be performed, satisfied or complied with by the Investor at or prior to the Closing           Date.                        (d)   The  Investor  shall  have  obtained  all  governmental,  regulatory  or  third           party consents and approvals, if any, necessary for the sale of the Investor Note.                                                 - 8 -  Error! Unknown document property name. 

 

                           7.    TERMINATION.                          In the event that the Closing shall not have occurred on or prior to the termination           of the Securities Purchase Agreement, this Agreement shall automatically terminate.                            8.    MISCELLANEOUS.                        (a)   Governing  Law;  Jurisdiction;  Jury  Trial.  All  questions  concerning  the           construction, validity, enforcement and interpretation of this Agreement shall be governed by the           internal laws of the State of New York, without giving effect to any choice of law or conflict of           law provision or rule (whether of the State of New York or any other jurisdictions) that would           cause the application of the laws of any jurisdictions other than the State 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, 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 brought in an inconvenient forum or that the venue of such suit, action or           proceeding is improper. Each party hereby irrevocably waives personal service of process and           consents to process being served in any such suit, action or proceeding by mailing a copy thereof           to  such  party  at  the  address  for  such  notices  to  it  under this  Agreement  and  agrees  that  such           service  shall  constitute  good  and  sufficient  service  of  process  and  notice  thereof.   Nothing           contained herein shall be deemed to limit in any way any right to serve process in any manner           permitted  by  law.   EACH  PARTY  HEREBY  IRREVOCABLY  WAIVES  ANY  RIGHT  IT           MAY  HAVE  TO,  AND  AGREES  NOT  TO  REQUEST,  A  JURY  TRIAL  FOR  THE           ADJUDICATION  OF  ANY  DISPUTE  HEREUNDER  OR  IN  CONNECTION  WITH  OR           ARISING  OUT  OF  THIS  AGREEMENT  OR  ANY  TRANSACTION  CONTEMPLATED           HEREBY.                         (b)   Counterparts. This Agreement may be executed in two or more identical           counterparts,  all  of  which  shall  be  considered  one  and  the  same  agreement  and  shall  become           effective when counterparts have been signed by each party and delivered to the other party. In           the event that any signature is delivered by facsimile transmission or by an e-mail which contains           a portable document format (.pdf) file of an executed signature page, such signature page 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 signature page were an original thereof.                         (c)   Headings; Gender. The headings of this Agreement are for convenience of           reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the           context  clearly  indicates  otherwise,  each  pronoun  herein  shall  be  deemed  to  include  the           masculine,  feminine,  neuter,  singular  and  plural  forms  thereof.  The  terms  “including,”           “includes,” “include” and words of like import shall be construed broadly as if followed by the           words “without limitation.”  The terms “herein,” “hereunder,” “hereof” and words of like import           refer to this entire Agreement instead of just the provision in which they are found.                         (d)   Severability.   If  any  provision  of  this  Agreement  shall  be  invalid  or           unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity                                                  - 9 -  Error! Unknown document property name. 

 

                     or  enforceability  of  the  remainder  of  this  Agreement  in  that  jurisdiction  or  the  validity  or           enforceability of any provision of this Agreement in any other jurisdiction.                         (e)   Entire Agreement; Amendments. This Agreement, the Securities Purchase           Agreement, the other Transaction Documents (as defined herein) and the Transaction Documents           (as defined in the Securities Purchase Agreement) and the schedules and exhibits attached hereto           and thereto and the instruments referenced herein and therein supersede all other prior oral or           written  agreements  between  the  Investors,  the  Company,  its  Subsidiaries,  their  affiliates  and           Persons acting on their behalf solely with respect to the matters contained herein and therein, and           this  Agreement,  the  other  Transaction  Documents  (as  defined  herein)  and  the  Transaction           Documents  (as  defined  in  the  Securities  Purchase  Agreement),  the  schedules  and  exhibits           attached hereto and thereto and the instruments referenced herein and therein contain the entire           understanding  of  the  parties  solely  with  respect  to  the  matters  covered  herein  and  therein;           provided, however, nothing contained in this Agreement or any other Transaction Document or           the Transaction Documents (as defined in the Securities Purchase Agreement) shall (or shall be           deemed to) (i) have any effect on any agreements the Investor has entered into with the Company           or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by           the Investor in the Company or (ii) waive, alter, modify or amend in any respect any obligations           of the Company or any of its Subsidiaries, or any rights of or benefits to the Investor or any other           Person, in any agreement entered into prior to the date hereof between or among the Company           and/or any of its Subsidiaries and the Investor and all such agreements shall continue in full force           and  effect.  Except  as  specifically  set  forth  herein  or  therein,  neither  the  Company  nor  the           Investor  makes  any  representation,  warranty,  covenant  or  undertaking  with  respect  to  such           matters. For clarification purposes, the Recitals are part of this Agreement.  No provision of this           Agreement  may  be  amended  or  waived  other  than  by  an  instrument  in  writing  signed  by  the           Company and the Investor.                         (f)   Notices.  Any notices, consents, waivers or other communications required           or permitted to be given under the terms of this Agreement shall be governed by the provisions           of Section 9(f) of the Securities Purchase Agreement.                         (g)   Successors and Assigns.  This Agreement shall be binding upon and inure           to the benefit of the parties and their respective successors and assigns. No party may assign this           Agreement or any rights or obligations hereunder without the prior written consent of the other           party.                         (h)   No Third Party Beneficiaries.  This Agreement is intended for the benefit           of  the  parties  hereto  and  their  respective  permitted  successors  and  assigns,  and  is  not  for  the           benefit of, nor may any provision hereof be enforced by, any other Person.                         (i)   Survival.  The representations, warranties, agreements and covenants shall           survive  each  Closing.  The  Investor  shall  be  responsible  only  for  its  own  representations,           warranties, agreements and covenants hereunder.                         (j)   Further Assurances.  Each party shall do and perform, or cause to be done           and  performed,  all  such  further  acts  and  things,  and  shall  execute  and  deliver  all  such  other           agreements, certificates, instruments and documents, as any other party may reasonably request                                                 - 10 -  Error! Unknown document property name. 

 

                     in  order  to  carry  out  the  intent  and  accomplish  the  purposes  of  this  Agreement  and  the           consummation of the transactions contemplated hereby.                         (k)   Construction.  The language used in this Agreement will be deemed to be           the  language  chosen  by  the  parties  to  express  their  mutual  intent,  and  no  rules  of  strict           construction will be applied against any party.                                         [Signature Page Follows]                                                 - 11 -  Error! Unknown document property name. 

 

                                      IN WITNESS WHEREOF, the Investor and the Company have caused their respective           signature page to this Note Purchase Agreement to be duly executed as of the date first written           above.                                                            COMPANY:                                                                                              PHUNWARE, INC.                                                 By:                                                                                 Name:                                                     Title:                                                                   Error! Unknown document property name. 

 

                           IN WITNESS WHEREOF, the Investor and the Company have caused their respective           signature page to this Note Purchase Agreement to be duly executed as of the date first written           above.                                                            INVESTORS:                                                                                              ALTO OPPORTUNITY MASTER FUND, SPC -                                               SEGREGATED MASTER PORTFOLIO B                                                                                                By:                                                                                 Name:                                                    Title:                                                 Aggregate  Principal  Amount  of  Investor  Note:                                                                                                                                             __________________________________                 Error! Unknown document property name.ex105-phunware2020invest

                                                                                                   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,           AS  AMENDED  (THE  “ACT”),  OR  THE  APPLICABLE  STATE  SECURITIES  LAWS,           AND  MAY  NOT  BE  OFFERED  OR  SOLD  IN  THE  ABSENCE  OF  AN  EFFECTIVE           REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE              SECURITIES           LAWS,  OR  AN  EXEMPTION  FROM  REGISTRATION  THEREUNDER,  IN  EACH           CASE, TO THE EXTENT APPLICABLE HERETO.                                    SECURED PROMISSORY NOTE                                                                        New York, New York           $16,000,000                                                              July __, 2020                  FOR  VALUE  RECEIVED,  Alto  Opportunity  Master  Fund,  SPC - Segregated  Master           Portfolio B (the “Investor”) hereby promises to pay to Phunware, Inc., a Delaware corporation           (the “Company”), on the date set forth below, (i) the principal amount of Sixteen Million Dollars           ($16,000,000) and (ii) interest on the unpaid principal balance hereof at the rate set forth herein           (collectively, the “Obligations”).  This Promissory Note (this “Note”) has been issued pursuant to           the Note Purchase Agreement, dated as of July 14, 2020 (the “Subscription Date”), by and among           the Company and the Investor (as amended, modified, supplemented, extended,  renewed, restated           or replaced from time to time, the “Note Purchase Agreement”) as payment of the purchase price           of that certain Series B Senior Secured Convertible Note of the Company, with an initial aggregate           principal  amount  of  $17,280,000 (as  such  note  may  be  amended,  modified,  supplemented,           extended, renewed, restated or replaced from time to time in accordance with the terms thereof,           the “Series B Note”), issued pursuant to that certain Securities Purchase Agreement, dated as of           July 14, 2020 by and among the Company and the investors party thereto (as amended, modified,           supplemented,  extended,   renewed,  restated  or  replaced  from  time  to  time,  the  “Securities           Purchase Agreement”).  Capitalized terms not defined herein shall have the meaning as set forth           in  the  Series B Note.   NEITHER  THIS  NOTE  NOR  ANY  INTEREST  HEREIN  MAY  BE           PLEDGED,  ASSIGNED  OR  OTHERWISE  TRANSFERRED,  WHETHER  BY  THE           COMPANY,  OPERATION  OF   LAW,  COURT  ORDER  OR  OTHERWISE,  WITHOUT  THE           EXPRESS  PRIOR  WRITTEN  CONSENT  OF  THE  INVESTOR.  ANY  SUCH  PURPORTED           ASSIGNMENT OR TRANSFER WITHOUT SUCH CONSENT SHALL BE NULL AND VOID.                    1.    Payment  of  Principal.   The  principal  amount  of  this  Note  (the  “Principal”),           together with all unpaid interest accrued thereon and any other Obligations payable hereunder,           shall be due and payable in full upon the fortieth (40th) anniversary of the Scheduled Series B Note           Maturity Date (as defined below) (the “Maturity Date”); provided, that the Maturity Date shall           be automatically extended by one (1) calendar day for each calendar day after December 31, 2021           (the “Scheduled Series B Note Maturity Date”), if any, that all, or any part, of the Series B Note           remains outstanding.                  2.    Payment of Interest.  The unpaid Principal balance due hereunder shall bear interest           (the “Interest”) at an annual rate equal to 1.17% (the “Interest Rate”).  Subject to Sections 3 and           7 below, Interest shall be payable and due upon the Maturity Date.   All interest shall be computed      Error! Unknown document property name. 

 

         on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days           (including the first day but excluding the last day) elapsed.                  3.    Prepayment Prior to the Maturity Date.                          (a)   Optional Prepayment.  The Investor may, at its option at any time on or after                 the date hereof, prepay, in whole or in part, without premium or penalty, the Obligations                 under this Note (each, an “Optional Prepayment”).                         (b)   Mandatory  Prepayment.   Upon  any  Mandatory  Prepayment  Event  (as                 defined below), the Investor shall promptly prepay such aggregate outstanding Principal of                 this Note equal to the applicable Mandatory Prepayment Amount (as defined below) with                 respect to such Mandatory Prepayment Event (each, a “Mandatory Prepayment”, and                 together with each Optional Prepayment, each a “Prepayment”).                        (c)   Mechanics of Prepayments.  All Prepayments hereunder shall be made in                 cash, by wire transfer, in U.S. dollars and immediately available funds, in accordance with                 the wire instructions delivered to the Investor by the Company on or prior to such date of                 such Prepayment.  At the option of the Company, prepayments may be made directly to                 the Company or to such other Persons as the Company may direct in its wire instructions.                        (d)   Cancellation  of  Interest  upon  Prepayment.   Notwithstanding  anything                 herein to the contrary, upon any Prepayment prior to the Maturity Date (including, without                 limitation, any Mandatory Prepayment), the aggregate cash amount in such Prepayment                 shall be applied entirely to and against any outstanding Principal under this Note, and any                 accrued and unpaid Interest with respect to the Principal prepaid shall be automatically                 cancelled as of the date of such prepayment.                          (d)   Definitions.  For the purpose of this Note, the following definitions shall                 apply:                              (i)   “Eligible Resale Date” means the earlier of (x) the thirtieth (30th)                       Trading Day after the first date on which the resale by the Buyers (as defined in the                       Securities Purchase Agreement) of all the Registrable Securities (as defined in the                       Registration Rights  Agreement) pursuant  to  one or more registration statements                       filed with the SEC has been declared effective by the SEC (and each prospectus                       contained therein is available for use on such date) or (y) the thirtieth (30th) Trading                       Day after the first date on which all of the Registrable Securities are eligible to be                       resold  by  the  Buyers  pursuant  to  Rule  144  (or, if  a  Current  Public  Information                       Failure  (as  defined  in  the  Registration  Rights  Agreement)  has  occurred  and  is                       continuing, such later date after which the Company has cured such Current Public                       Information Failure).                                (ii)  “Forced Mandatory Prepayment Eligible Amount” means, as of                       any given Forced Mandatory Prepayment Notice Date (as defined below), the lesser                       of  (A)  such  aggregate  amount  of  Principal  outstanding  hereunder  and  (B)  such                       aggregate amount of Principal hereunder that, together with the Unrestricted Note                       Amount (as defined in the Series B Note) as of such applicable Forced Mandatory                                              2  Error! Unknown document property name. 

 

                     Prepayment Notice Date would not exceed the lesser of (x) $5 million and (y) 10%                       of the quotient of (I) the sum of the Market Capitalization (as defined in the Series                       B  Notes) for  each  Trading  Day  during  the  thirty  (30) consecutive Trading  Day                       period ending on, and including, the Trading Day immediately prior to such Forced                       Mandatory Prepayment Notice Date, divided by (II) thirty (30).                              (iii) “Mandatory  Prepayment  Amount” means,  as  applicable,  any                       Mandatory  Prepayment  Conversion  Amount  (as  defined  below)  or  the  Forced                       Mandatory Prepayment Amount (as defined below).                              (iv)  “Mandatory  Prepayment  Event”  means,  as  applicable,  (i)  with                       respect to any Restricted Principal of the Series B Note designated to be converted                       in  a  Conversion  Notice (such  aggregate  amount  of  Principal  then  outstanding                       hereunder equal to such Restricted Principal of the Series B Note designated to be                       converted  in  such  Conversion  Notice,  each,  a  “Mandatory  Prepayment                       Conversion Amount”), both (A) the Company’s receipt of such Conversion Notice                       thereunder executed by the Investor in which all, or any part, of the principal of the                       Series B Note  to  be  converted  includes  any  Restricted  Principal  and  (B)  the                       Investor’s receipt from the Company of written confirmation that the Company’s                       transfer  agent  (the  “Transfer  Agent”)  has  been  irrevocably  instructed  by  the                       Company to deliver to the Investor (or its designee) the shares of Common Stock                       to be issued pursuant to such Conversion Notice in accordance with Section 3(c) of                       the Series B Note (in each case, as adjusted, if applicable, to reflect the withdrawal                       of any Conversion Notice, in whole or in part, by the Investor, whether pursuant to                       Section 3(c)(ii) of the Series B Note or otherwise), or (ii) at  any time after the                       Eligible Resale Date, so long as (v) the Market Capitalization (as defined in the                       Series B Notes) on each Trading Day during the thirty (30) consecutive Trading                       Day period ending on, and including, the Trading Day immediately prior to such                       applicable Mandatory Prepayment Date is at least $40 million, (w) the Available                       Shelf Capacity (as defined in the Series B Notes) on each Trading Day during the                       thirty (30) consecutive Trading Day period ending on, and including, the Trading                       Day immediately prior to such applicable Mandatory Prepayment Date is at least                       300%  of  the sum  of  (I)  the Unrestricted  Note  Amount as  of  each  such  date  of                       determination  and  (II)  the  aggregate  Forced  Mandatory  Prepayment  Amount                       pursuant  to  which  this  determination  is  being  made, (x)  no  Equity  Conditions                       Failure (as defined in the Series A Note or Series B Note) exists at any time during                       such applicable Forced Mandatory Prepayment Eligibility Period, (y) as of such                       date of determination, the quotient of (A) the sum of the VWAP of the Common                       Stock for each Trading Day during the twenty (20) consecutive Trading Day period                       ending as  of  the  Trading  Day  immediately  prior  to such  applicable Mandatory                       Prepayment Date, divided by (y) twenty (20) is greater than $1.30 (as adjusted for                       stock  splits,  stock  dividends,  stock combinations  recapitalizations  and  similar                       events) (the failure of the Company to satisfy this clause (y) as of the Mandatory                       Prepayment Date, if any, a “Minimum Price Failure”) and (z) no Event of Default                       (as defined in the Series A or Series B Note) has occurred prior to such Forced                       Mandatory  Prepayment  Eligibility  Period (regardless  of  whether  such  Event  of                       Default has been cured or the Holder has submitted an Event of Default Redemption                                              3  Error! Unknown document property name. 

 

                     Notice with respect thereto) (collectively, the “Forced Mandatory Prepayment                       Eligibility Conditions”), the Company shall have the right, by delivery of written                       notice to the Investor (each, a “Forced Mandatory Prepayment Notice”, and each                       such date, a “Forced Mandatory Prepayment Notice Date”) to require this Note                       to be prepaid (each, a “Forced Mandatory Prepayment”), in whole or in part, as                       of the tenth (10th) Trading Day after the applicable Forced Mandatory Prepayment                       Notice Date (or such other date as mutually agreed upon by the Investor and the                       Company,  each  a  “Forced  Mandatory  Prepayment  Date”,  and  such  period                       commencing on the applicable Forced Mandatory Prepayment Notice Date through                       and  including  such  Forced  Mandatory  Prepayment  Date,  each  a  “Forced                       Mandatory Prepayment Eligibility Period”), but the aggregate amount of such                       Forced  Mandatory  Prepayment  shall in  no  event exceed the  Forced  Mandatory                       Prepayment  Eligible  Amount (as  defined above) as  of  such Forced  Mandatory                       Prepayment  Notice  Date  (such  portion  of  the  applicable Forced Mandatory                       Prepayment Eligible Amount subject to such Forced Mandatory Prepayment, each                       a “Forced Mandatory Prepayment Amount”).  Notwithstanding the foregoing,                       (A)  the  Company  shall  not  be  permitted  to  effect  more  than  one  (1)  Forced                       Mandatory Prepayment in any thirty (30) Trading Day period (with the first Forced                       Mandatory Prepayment Notice Date eligible to be delivered to the Investor by no                       earlier than [      , 2020]1), (B) if at any time on or prior to such applicable Forced                       Mandatory  Prepayment  Date  any  Forced  Mandatory  Prepayment  Eligibility                       Condition fails to be satisfied in full, the Company shall deliver prompt written                       notice to the Investor and, unless the Investor waives such failure to satisfy such                       Forced  Mandatory  Prepayment  Eligibility  Condition,  such  Forced  Mandatory                       Prepayment Notice shall be null and void and no Forced Mandatory Prepayment                       shall occur hereunder with respect thereto and (C) the Investor (or its designee)                       shall not commence a Deposit/Withdrawal at Custodian with respect to such shares                       of Common Stock to be issued upon conversion of Restricted Principal unless and                       until the Investor shall have either (x) delivered the Mandatory Prepayment Amount                       to the Company or (y) delivered irrevocable instructions to the Investor’s bank,                       broker or other financial institution to wire the Mandatory Prepayment Amount to                       the Company from an account with at least an amount of cash or other Eligible                       Assets  (as  defined  below)  equal  to  the  Mandatory  Prepayment  Amount).                        Notwithstanding anything herein to the contrary, no Forced Mandatory Prepayment                       Notice may be delivered hereunder (and no Forced Mandatory Prepayment shall                       occur hereunder) at any time on or after March 31, 2021 (or such other date as the                       Investor and the Company may agree in writing).                              (v)   “Remaining Investor Note Principal Amount” means, as of any                       time of determination, the aggregate amount of Principal outstanding hereunder as                       of such time of determination.                                                1 Insert thirtieth (30th) Trading Day anniversary of the Closing Date                                              4  Error! Unknown document property name. 

 

                           (vi)  “Underlying Agreements” means, collectively, the Note Purchase                       Agreement,  the  Investor  Note,  the  Series  B  Notes  and  the  Securities  Purchase                       Agreement.                              (vii) “Unpaid  Amounts”  means,  as  of  any  date  of  determination,  the                       Obligations  owed  by  one  Party  to  the  other  under  such applicable Underlying                       Agreements that have not been paid as of the date of determination, whether or not                       such amounts are then due and payable and without regard to the fair market value                       of the Series B Note or the Investor Note at such time, as applicable.                    4.    Defaults.                        (a)   the Investor shall be deemed in default hereunder upon the occurrence of                 any of the following (a “Default”):                               (i)   Failure to Pay Principal or Interest.  The failure of the Investor to                       pay, when due, all or any part of any Principal  or Interest  required to  be made                       hereunder; or                              (ii)  Bankruptcy,  etc.   The  Investor  shall  have  entered  against  it  by  a                       court having jurisdiction thereof a decree or order for relief in respect to the Investor                       in an involuntary case under any applicable bankruptcy, insolvency or other similar                       law now or hereafter in effect, or a receiver, liquidator, assignee, custodian, trustee,                       sequestrator or other similar official shall be appointed for the Investor or for any                       substantial part of the Investor’s property, or the winding up or liquidation of the                       Investor’s  affairs  shall  have  been  ordered;  or  the  Investor  shall  commence  a                       voluntary case under any applicable bankruptcy, insolvency or other similar law                       now or hereafter in effect; or the Investor shall consent to the entry of an order for                       such relief in an involuntary case under any such law, or any such involuntary case                       shall commence, and not be dismissed within sixty (60) days; or the Investor shall                       consent  to  the  appointment  of  or  taking  possession  by  a  receiver,  liquidator,                       assignee, custodian, trustee, sequestrator or other similar official for the Investor or                       for any substantial part of the Investor’s property, or make any general assignment                       for the benefit of creditors.                        (b)   Consequence of Default.  Upon the occurrence of a Default, the outstanding                 Obligations hereunder shall, at the option of the Company, as evidenced by the delivery                 (or deemed delivery in accordance with this Section 4(c)) of written notice to the Investor,                 become immediately due and payable (each, an “Investor Note Acceleration”); provided,                 that any amount outstanding hereunder shall be subject to automatic Default Netting upon                 any  Investor  Note  Acceleration.  Notwithstanding  the  foregoing,  if  there  shall  occur  a                 Default under Section 4(a)(ii) above, the entire outstanding Obligations hereunder, shall                 automatically become immediately due and payable without any action on the part of the                 Company and the Company shall be deemed to have delivered a notice to the Investor                 electing an Investor Note Acceleration for the entire amount outstanding under this Note.                  Upon  the  payment,  in  full,  of  the  Remaining  Investor  Note  Principal  Amount  to  the                 Company  following  an  Investor  Note  Acceleration,  all  accrued  and  unpaid  Interest  (as                                              5  Error! Unknown document property name. 

 

               defined  in  the  Investor  Note)  then  outstanding  under  the  Investor  Note  shall  be                 automatically cancelled as of the date of such payment in full and, thereafter, the Investor                 Note shall be deemed to be paid in full and shall be null and void.  Upon the occurrence of                 a Default, the Company shall also have all the rights and remedies of a secured party on                 default under Article 9 of the Uniform Commercial Code of the State of New York with                 respect to the Collateral (as hereinafter defined).                  5.    Representations  and  Warranties  of  the  Investor.   The  Investor  represents  and           warrants  to  the Company as  follows as  of the date hereof: (a) the  Investor has  the power and           authority to execute, deliver and perform all obligations in accordance herewith; (b) the execution,           delivery and performance by the Investor of this Note are within the Investor's legal powers, and           do not contravene any law or any contractual restriction binding on or affecting the Investor; (c) no           authorization or approval or other action by, and no notice to or filing with, any governmental           authority or regulatory body is required for the due execution, delivery and performance by the           Investor  of  this  Note;  (d) this  Note  constitutes  the legal,  valid  and  binding  obligation  of  the           Investor,  enforceable  against  the  Investor  in  accordance  with  its  terms,  except  to  the  extent           enforceability is limited by bankruptcy, insolvency, fraudulent conveyance, moratorium and other           laws for the protection of creditors generally and by general equitable principles; and (e) there is           no pending or, to the Investor's knowledge, threatened action or proceeding affecting the Investor           before any governmental agency or arbitrator with respect to the transactions contemplated by this           Note  or  which  may  materially  adversely  affect  the  property,  assets  or  condition  (financial  or           otherwise) of the Investor.                  6.    Security.                          (a)   Grant of Security Interest.  As security for the due and prompt payment and                 performance  of  all  payment  obligations  under  this  Note  and  any  modifications,                 replacements and extensions hereof (collectively, “Secured Obligations”), the Investor                 hereby pledges and grants a security interest to the Company in all of the Investor’s right,                 title, and interest in and to, initially at least $16,000,000, in the aggregate, (i) in cash, (ii)                 cash equivalents, (iii) any Group of Ten (“G10”) currency and any notes or other securities                 issued by any G10 country and (iv) any securities of a special purpose acquisition company                 (each, a “SPAC”) that are redeemable for cash held in escrow by such SPAC  (with a                 deemed fair market value, for purposes hereof, equal to the amount of cash held in such                 escrow  for  redemption  of  such  applicable  security  of  such  SPAC) (collectively, the                 “Eligible Assets”), in each case, held by the Investor in the bank or brokerage accounts                 described on Schedule I attached hereto (the “Collateral”, and such account or accounts,                 as  applicable,  collectively,  the  “Collateral  Account”),  subject  to  reduction  upon  any                 reduction,  offset  or  cancellation  of  this  Note.   So  long  as  any  Restricted  Principal  (as                 defined in the Series B Note) remains outstanding under the Series B Note, the Investor                 shall  keep  Collateral  in  the  Collateral  Account  with  a  fair  market  value  of  at  least  the                 amount of Restricted Principal then outstanding.                          (b)   Change  in  Collateral  Account.   The  Investor  may,  with at  least  five  (5)                 Trading Days’ notice to the Company, move the Collateral from an account or accounts of                 the Investor to a new account or accounts (the “New Collateral Account”) at a financial                 institution  selected  by  the  Investor,  (but  if  such  financial institution  is  not  listed  as  a                                              6  Error! Unknown document property name. 

 

               permitted financial institution on Schedule II attached hereto, subject to the consent of the                 Company, not to be unreasonably withheld), and upon such move, such New Collateral                 Account shall be the Collateral Account for all purposes hereunder.                  7.    Netting Rights.                        (a)   Securities Contract.  The Company and the Investor hereby acknowledge                 and agree that the Securities Purchase Agreement and the Note Purchase Agreement each                 is a “securities contract” as defined in 11 U.S.C. § 741 and that Investor shall have all rights                 in  respect  of  the  Investor  Note,  the  Series B Note, the  Master  Netting  Agreement, the                 Securities Purchase Agreement and the Note Purchase Agreement as are set forth in 11                 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including, without limitation, all rights of credit,                 deduction, setoff, offset, recoupment, and netting (collectively, “Netting” or “Net”) as are                 available under this Note, the Series B Note and the Master Netting Agreement.                        (b)   Event of Default Netting.  Notwithstanding anything herein to the contrary,                 at any time on or after the occurrence of any Event of Default under the Series B Note                 (regardless of whether the Investor delivers an Event of Default Redemption Notice (as                 defined  in  the  Series  B Note)  to  the  Company  or  such  Event  of  Default  is subsequent                 cured), the Investor may, at its sole discretion, by written notice to the Company, Net (each,                 an “Event of Default Netting”) all, or any part, of the outstanding obligations under the                 Series B Note (and/or other Unpaid Amounts (as elected by the Investor in such written                 notice)) by the cancellation of such portion of the outstanding obligations under the Series                 B Note (and/or other Unpaid Amounts (as elected by the Investor in such written notice))                 as set forth in such written notice in exchange for the surrender and concurrent cancellation                 of an equal amount of Principal then outstanding hereunder (each, an “Event of Default                 Netting Principal Amount”).  Upon any Event of Default Netting, any accrued and unpaid                 Interest then outstanding hereunder with respect to such Event of Default Netting Principal                 Amount being satisfied in such Event of Default Netting shall be automatically cancelled                 as  of  the  date  of  such  Event  of  Default  Netting and,  thereafter,  such Event  of  Default                 Netting  Principal  Amount of this  Note (together  with  any  accrued  and  unpaid  Interest                 thereon then outstanding hereunder) shall be deemed to be paid in full.  Each Event of                 Default Netting shall be effective upon the date the Investor delivers notice to the Company                 of the Investor’s election to effect such Event of Default Netting.                        (c)   Automatic Netting at Redemption Date.  Notwithstanding anything herein                 to the contrary, with respect to any redemption of all, or any part, of the Series B Note,                 solely to the extent such portion of the Conversion Amount (as defined in the Series B                 Note) subject to such redemption includes Restricted Principal (as defined in the Series B                 Note) (such aggregate amount of Restricted Principal, each, a “Redemption Restricted                 Amount”), on the applicable Redemption Date (as defined in the Series B Note), such                 portion of the outstanding obligations under the Series B Note equal to such Redemption                 Restricted  Amount shall  automatically  Net (each, a  “Redemption  Netting”) by  the                 cancellation of the Redemption Restricted Amount of the outstanding obligations under the                 Series B Note in exchange for the surrender and concurrent cancellation of such portion of                 this  Note with  an  amount  of  aggregate  Principal  outstanding hereunder equal  to  such                 Redemption Restricted Amount (each a “Redemption Netting Principal Amount”) and                                              7  Error! Unknown document property name. 

 

               any  related  Restricted  OID  (as  defined  in  the  Series  B  Note)  shall  be  automatically                 cancelled in connection therewith.  Upon any Redemption Netting, any accrued and unpaid                 Interest  then  outstanding hereunder with  respect  to  such  Redemption  Netting  Principal                 Amount being cancelled in such Redemption Netting shall be automatically cancelled as                 of the date of such Redemption Netting and, thereafter, such Redemption Netting Principal                 Amount  of this  Note (together  with  any  accrued  and  unpaid  Interest  thereon  then                 outstanding hereunder) shall be deemed to be paid in full.  For the avoidance of doubt, if                 prior to the date of the applicable Redemption Netting all, or any portion, of a Redemption                 Restricted Amount becomes Unrestricted Principal (as defined in the Series B Note) or,                 with  respect  to  an  Installment  Amount  (as  defined  in  the  Series  B  Note),  subject  to  a                 Deferral (as defined in the Series B Note) or a waiver of an Equity Conditions Failure or                 such other event occurs whereafter such portion of the Redemption Restricted Amount is                 not required to be redeemed on the Redemption Date in accordance with the terms of the                 Series B Note (as amended, modified or waived on or prior to such date)(each a “Reversed                 Redemption  Restricted  Amount”),  solely  with  respect  to  such  Redemption  Date,  no                 Redemption  Netting  shall  occur  with  respect  to  such  Reversed  Redemption  Restricted                 Amount and any related Restricted OID shall not be cancelled in connection therewith.                        (d)   Automatic  Netting  Upon  any Bankruptcy  Event  of  Default.                  Notwithstanding anything herein to the contrary, upon any Bankruptcy Event of Default                 under the Series B Note, the Remaining Principal Amount as of such time of determination,                 such portion of the outstanding obligations under the Series B Note equal to the Remaining                 Investor Note Principal Amount shall automatically Net by the cancellation of such portion                 of the outstanding obligations under the Series B Note in exchange for the surrender and                 concurrent cancellation of this Note in its entirety (each, a “Bankruptcy Event of Default                 Netting”) and any related Restricted OID shall be cancelled in connection therewith.  For                 the avoidance of doubt, upon any Bankruptcy Event of Default Netting, all accrued and                 unpaid Interest then outstanding hereunder shall be automatically cancelled as of the date                 of such Bankruptcy Event of Default Netting and, thereafter, this Note shall be deemed to                 be paid in full and shall be null and void.  Each Bankruptcy Event of Default Netting shall                 be effective upon the date of the earliest occurrence of a Bankruptcy Event (as defined in                 the Series B Note) under the Series B Note.                        (e)   Automatic Netting Upon Prohibited Transfers of the Note.  Notwithstanding                 anything herein to the contrary, if for any reason, this Note or any interest herein is pledged,                 assigned or transferred to any Person other than the Company without the prior written                 consent of the Investor, whether by contract, operation of law, court order or otherwise                 (each, a “Prohibited Transfer”), such portion of the outstanding obligations under the                 Series B Note equal to 75% of the remaining Restricted Principal (as defined in the Series                 B Note) (together with any related Restricted OID with respect thereto) then outstanding                 under the Series B Note (with the remaining 25% of the Restricted Principal (together with                 any  related  Restricted  OID  with  respect  thereto) of  the  Series  B  Note  automatically                 becoming Unrestricted Principal (as defined in the Series B Note) thereunder) in exchange                 for the surrender and concurrent cancellation of the entire Investor Note.  For the avoidance                 of doubt, upon any Prohibited Transfer, all accrued and unpaid Interest then outstanding                 hereunder shall be automatically cancelled as of the date of such Prohibited Transfer and,                 thereafter, this Note shall be deemed to be paid in full and shall be null and void.                                              8  Error! Unknown document property name. 

 

                     (f)   Automatic Default  Netting.  Notwithstanding  anything  herein  to  the                 contrary, upon the occurrence of any Investor Note Acceleration (as defined in this Note),                 such portion of the outstanding obligations under the Series B Note equal to the Remaining                 Investor  Note  Principal  Amount (excluding  the  any  Forced  Mandatory  Prepayment                 Amount (unless the Company elects in writing to effect a Default Netting with respect                 thereto)) shall  automatically  Net  by  the  cancellation  of  such  portion  of  the Restricted                 Principal under the Series B Note (together with any related Restricted OID with respect                 thereto) in exchange for the surrender and concurrent cancellation of the entire Investor                 Note (each,  a  “Default  Netting”, and  together  with  the Bankruptcy  Event  of  Default                 Netting, Redemption  Netting and  Event  of  Default  Netting,  collectively,  the  “Netting                 Events”).  Each Default Netting shall occur on the date of such Investor Note Acceleration.                  For the avoidance of doubt, upon any Default Netting, all accrued and unpaid Interest then                 outstanding hereunder shall  be  automatically  cancelled  as  of  the  date  of  such  Default                 Netting.                        (g)   Netting  Events;  Single  Integrated  Transaction.   The  Company  hereby                 acknowledges and agrees that (i) the Netting Events shall be consummated at such times                 as  required  hereunder through  any  means  permissible  under  applicable  law,  including                 without limitation, set-off and Netting and (ii) the Obligations of the Investor hereunder                 and  the  obligations  of  the  Company  under  the  Series B Note issued  pursuant  to  the                 Securities Purchase Agreement arise in a single integrated transaction and constitute related                 and interdependent obligations within such transaction.                  8.    Miscellaneous.                        (a)   Full Recourse.  The parties hereby acknowledge and agree that this Note is                 a full recourse obligation of the Investor.                        (b)   No  Oral  Waivers  or  Modifications.   No  provision  of  this  Note  may  be                 waived or modified orally, but only in a writing signed by the Company and the Investor.                        (c)   Governing Law.  This Note shall be construed and enforced in accordance                 with,  and  all  questions  concerning  the  construction,  validity,  interpretation  and                 performance of this Note shall be governed by, the internal laws of the State of New York,                 without giving effect to any choice of law or conflict of law provision or rule (whether of                 the State of New York or any other jurisdictions) that would cause the application of the                 laws  of  any  jurisdictions  other  than  the  State  of  New  York.  Each  party  hereto  hereby                 irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in                 the Borough of Manhattan in the City of New York, New York, for the adjudication of any                 dispute hereunder or in connection herewith or with any transaction contemplated hereby                 or discussed herein, 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 brought in an inconvenient forum or that                 the venue of such suit, action or proceeding is improper.  Nothing contained herein shall                 be deemed to limit in any way any right to serve process in any manner permitted by law.                  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY                 HAVE  TO,  AND  AGREES  NOT  TO  REQUEST,  A  JURY  TRIAL  FOR  THE                                              9  Error! Unknown document property name. 

 

               ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR                 ARISING  OUT  OF  THIS  NOTE  OR  ANY  TRANSACTION  CONTEMPLATED                 HEREBY.                        (d)   No  Severability.   If  any  provision  of  this  Note  is  prohibited  by  law  or                 otherwise determined to be invalid or unenforceable by a court of competent jurisdiction                 or other similar authority (a “Severability Event”), this entire Note shall be automatically                 terminated and shall thereafter be null and void  and all remaining payment obligations                 hereunder of the Investor to the Company shall be automatically cancelled, ab initio.                        (e)   Currency.  Principal and interest due hereunder shall be payable in lawful                 money of the United States of America and shall be payable to the Company at the address                 of the Company, or at such other address as may be specified in a written notice to the                 Investor given by the Company.  The Company has provided the Investor with wire transfer                 instructions  pursuant  to  which  payments  may  be  made  under  this  Note  and  such  wire                 transfer instruction shall be valid for the entire period of this Note.                        (f)   Weekend; Holidays. If any payment on this Note shall become due on a                 Saturday, Sunday or a bank or legal holiday in the State of New York, such payment shall                 be made on the next succeeding business day in the State of New York.                        (g)   Usury.  If  interest payable under this Note is in excess of the maximum                 permitted  by  law,  the  interest  chargeable  hereunder  shall  be  reduced  to  the  maximum                 amount permitted by law and any excess over the maximum amount permitted by law shall                 be credited to the Principal balance of this Note and applied to the same and not to the                 payment of Interest.                        (h)   Remedies.                                (i)   No failure on the part of the Company to exercise, and no delay in                       exercising, any right, power or remedy hereunder shall operate as a waiver thereof;                       nor shall  any  single  or  partial  exercise  by  the  Company  of  any  right,  power  or                       remedy preclude any other or further exercise thereof or the exercise of any other                       right,  power or  remedy.  In addition,  the exercise of  any  right  or remedy of the                       Company at law or equity or under this Note shall not be deemed to be an election                       of Company’s rights or remedies under this Note or at law or equity.                              (ii)  No failure on the part of the Investor to exercise, and no delay in                       exercising, any right, power or remedy hereunder (including, without limitation,                       any Netting permitted hereunder) shall operate as a waiver thereof; nor shall any                       single or partial exercise by the Investor of any right, power or remedy preclude                       any other or further exercise thereof or the exercise of any other right, power or                       remedy. The remedies herein provided are cumulative and are not exclusive of any                       remedies provided by law. In addition, the exercise of any right or remedy of the                       Investor at law or equity or under this Note shall not be deemed to be an election                       of Investor’s rights or remedies under this Note or at law or equity.                                              10  Error! Unknown document property name. 

 

                     (i)   Waiver  of  Presentment.   The  Investor  hereby  waives  presentment,                 diligence, protest and demand, notice of protest, demand and dishonor and nonpayment of                 this Note.                                        [Signature Page Follows]                                              11  Error! Unknown document property name. 

 

               IN WITNESS WHEREOF, this Note has been executed as of the date first written above.                                                ALTO OPPORTUNITY MASTER FUND, SPC                                              - SEGREGATED MASTER PORTFOLIO B                                                                                                                                                                                            By: _________________________________                                                  Name:                                                   Title:                                                          Agreed and accepted as of            this ___ day of July, 2020 by:            PHUNWARE, INC.             By: _________________________________              Name:               Title:                                                                                             12  Error! Unknown document property name. 

 

                                                                                                         Schedule I                                                                                           Collateral Account                                                                   Bank:                  Bank Address:                 Account Number:                  Account Name:                                                                                                           Error! Unknown document property name. 

 

                                                                   Schedule II                                                                                         Permitted Financial Institutions                                                              Pershing LLC or any of their affiliates           HSBC NA, or any of their affiliates           BNP Paribas, or any of their affiliates           Wells Fargo or any of their affiliates           UBS AG or any of their affiliates           Citibank NA or any of their affiliates           Bank of America Merrill Lynch or any of their affiliates           Deutsche Bank, AG or any of their affiliates           Fidelity Investments, FMR LLC or any of their affiliates           Morgan Stanley or any of their affiliates           First Republic Bank or any of their affiliates    Error! Unknown document property name.

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