Document:

Exhibit 10.5

 

 

SHARE EXCHANGE AGREEMENT

 

BY AND BETWEEN

 

ILLUMINATION AMERICA, INC.

 

AND

 

GROM HOLDINGS, INC.

 

THIS SHARE EXCHANGE
AGREEMENT (the "Agreement") is made and entered into as of May 15, 2017, by and between Illumination America,
Inc., a Florida corporation ("IA") and Grom Holdings, Inc., a Delaware corporation (“Grom”),
who hereby agree as follows.

 

RECITALS

 

WHEREAS, IA desires
to acquire all of the issued and outstanding shares of Grom on the terms and conditions hereinafter set forth, subject to the affirmative
vote of the Grom shareholders.

 

WHEREAS, the Board
of Directors of IA and Grom have determined that the Share Exchange is advisable and in their best interests and have adopted this
Agreement and approved the Share Exchange and the transactions contemplated hereby and thereby;

 

WHEREAS, IA and
Grom desire to make certain representations, warranties, covenants and agreements in respect of the Share Exchange and to prescribe
various conditions thereto, all as hereinafter set forth; and

 

WHEREAS, it is the
intention of the parties that, for United States federal income tax purposes, (i) the Share Exchange shall constitute a “tax-free
reorganization” within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the “Code”),
and (ii) this Agreement shall constitute a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.

 

NOW, THEREFORE,
in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, the parties
hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

SALE AND PURCHASE OF SHARES

 

1.1       Sale
and Purchase. On the Effective Date (as defined herein below) and subject to and upon the terms and satisfaction (or waiver)
of various conditions included in this Agreement, all of the holders of Grom’s issued and outstanding Common Stock, shall
sell, transfer and assign to IA, and IA agrees to acquire all of the shares of Grom’s Common Stock (as defined in Section
3.3) (the "Shares"). As of Closing, the Shares shall constitute all of the issued and outstanding securities of
Grom. The sale and purchase of the Shares contemplated hereunder shall be referred to herein as the "Transaction."

 

1.2       Closing
and Effective Date. Unless this Agreement shall have been terminated pursuant to Article VIII hereof, the closing of the Transaction
(the "Closing") shall take place at the offices of IA on such time and/or location as the parties hereto may so
select (the "Closing Date"). The Effective Date shall be the date upon which all of the conditions stated in Article
VI below have been satisfied.

 

1.3       Purchase
Price. The aggregate purchase price ("Purchase Price") for the Shares shall be 4.17 shares of common stock
of IA (the "IA Shares") or 103,737,677 shares which shall represent approximately ninety one percent (91%) of
the issued and outstanding shares of Common Stock of IA on the Effective Date.

 

1.4       Allocation
of IA's Shares. On the Effective Date, IA's Shares will be issued to each respective Grom shareholder in proportion to their
respective pro rata ownership of the Shares.

 

 

 

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1.5       Delivery
of Certificates Representing the Shares. On the Effective Date the Grom shareholders shall deliver their certificate(s) representing
the Shares, duly endorsed to IA or accompanied by stock powers duly endorsed to IA, with (i) all such other documents as may be
required to vest in IA good and marketable title to the Shares free and clear of any and all Liens (as defined in Section 2.3 hereof)
and (ii) all necessary stock transfer and any other required documentary stamps.

 

1.6       Issuance
of Certificates Representing IA's Shares. Within thirty (30) days following the Effective Date, IA shall cause IA's Shares
to be issued to the Grom stockholders as provided in Section 1.4 above. IA's Shares shall be registered with the US Securities
and Exchange Commission as provided in Section 6.2(d) below, but the principals of Grom,, including all officers, directors and
shareholders owning in excess of 10% of Grom’s Shares shall execute and deliver to IA that certain “lock-up”
attached hereto as Exhibit “C”. IA shall cause its transfer agent (the "Transfer Agent") to recognize
and record the lock-up described in this Section 1.6 on its transfer books, and IA shall issue appropriate stop-transfer instructions
to the Transfer Agent with respect to such shares.

 

1.7       Tax
Consequences. It is intended by the parties hereto that the Transaction shall constitute a ”reorganization” within
the meaning of Section 368 of the Code. The parties hereto adopt this Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.

 

1.8       Name
Change. Simultaneous with the Closing, IA shall take all action necessary to amend its Articles of Incorporation in order to
effectuate a change in the name of IA to “Grom Holding Corporation” or such similar name as may be approved by the
Florida Secretary of State.

 

1.9       Taking
of Necessary Action; Further Action. If, at any time after the Closing, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest IA with full right, title and possession to the Shares, Grom will take all such
lawful and necessary action.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES WITH RESPECT
TO GROM

 

Grom, hereby represents
and warrants to, and covenants with, IA, as follows:

 

2.1       Organization
and Qualification.

 

(a)       Grom
is a corporation duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite corporate power and authority to own, lease and operate its assets and properties
and to carry on its business as it is now being or currently planned by Grom to be conducted. Grom is in possession of all franchises,
grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders ("Approvals")
necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now
being or currently planned by Grom to be conducted, except where the failure to have such Approvals could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect (as defined in Section 8.2(b)) on Grom. Complete and
correct copies of the articles of incorporation or organization and by-laws (or other comparable governing instruments with different
names) (collectively referred to herein as "Charter Documents") of Grom, as amended and currently in effect, are
attached hereto as Schedule 2.1. Grom is not in violation of any of the provisions of its Charter Documents.

 

(b)       Grom
is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary,
except for such failures to be so duly qualified or licensed and in good standing that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Grom.

 

(c)       The
minute books of Grom contain true, complete and accurate records of all meetings and consents in lieu of meetings of its Board
of Directors (and any committees thereof), similar governing bodies and its shareholders ("Corporate Records"),
since the time of Grom's organization. Copies of such Corporate Records of Grom have been heretofore delivered to IA.

 

 

 

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(d)       The
stock transfer records of Grom contain true, complete and accurate records of stock transfers involving the capital stock ("Stock
Records") of Grom since the time of Grom's organization. Copies of such Stock Records of Grom have been heretofore delivered
to IA.

 

(e)       All
of the Grom Shares have been issued in compliance with all applicable state and federal securities laws and are duly issued and
non-assessable.

 

2.2       Subsidiaries.
Grom has three subsidiaries. Other than as disclosed to IA, Grom does not own, directly or indirectly, any ownership, equity, profits
or voting interest in any Person or has any agreement or commitment to purchase any such interest, and Grom has not agreed and
is not obligated to make nor is bound by any written, oral or other agreement, contract, subcontract, lease, binding understanding,
instrument, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan, commitment or undertaking
of any nature, as of the date hereof or any date hereafter, under which it may be obligated to make any future investment in or
capital contribution to any other entity.

 

For purposes of this Agreement,
(i) the term "Subsidiary" shall mean any Person in which Grom, directly or indirectly, owns beneficially securities
or interests representing 50% or more of (x) the aggregate equity or profit interests, or (y) the combined voting power of voting
interests ordinarily entitled to vote for management or otherwise, and (ii) the term "Person" shall mean and include
an individual, a corporation, a partnership (general or limited), a joint venture, an association, a trust or any other organization
or entity, including a government or political subdivision or an agency or instrumentality thereof.

 

2.3       Capitalization.

 

(a)       The
authorized capital stock of Grom consists of 100,000,000 Common Shares, par value $0.0001 per share (the "Grom Common Stock").
On the Closing Date, 24,877,141 shares of Grom’s Common Stock will be issued and outstanding, all of which are validly issued,
fully paid and non-assessable. Except as set forth on Schedule 3.3 hereto, (i) no shares of Grom’s Common Stock were reserved
for issuance upon the exercise of outstanding options to purchase Grom’s Common Stock, and (ii) no shares of Grom Common
Stock were reserved for issuance upon the exercise of outstanding warrants to purchase Grom Common Stock, or if so reserved in
the past, all relevant warrants have been duly cancelled.

 

(b)       Except
as set forth on Schedule 3.3 hereto, there are no equity securities, partnership interests or similar ownership interests of any
class of any equity security of Grom, or any securities exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. There are no subscriptions,
options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which Grom is a party or by which it is bound obligating Grom to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of Grom or obligating
Grom to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right,
commitment or agreement.

 

(c)       There
are no registration rights, and there is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding
to which Grom is a party or by which Grom is bound with respect to any equity security of any class of Grom.

 

2.4       Authority
Relative to this Agreement. Grom has all necessary corporate power and authority to execute and deliver this Agreement and
to perform its obligations hereunder and, to consummate the transactions contemplated hereby (including the Transaction). The execution
and delivery of this Agreement and the consummation by Grom of the transactions contemplated hereby (including the Transaction)
have been duly and validly authorized by all necessary corporate action on the part of Grom (including the approval by its Board
of Directors and by the Grom Stockholders), and no other corporate proceedings on the part of Grom are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered
by Grom and, assuming the due authorization, execution and delivery thereof by IA, constitutes the legal and binding obligation
of Grom, enforceable against Grom in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity and public policy.

 

 

 

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2.5       No
Conflict; Required Filings and Consents.

 

(a)       The
execution and delivery of this Agreement by Grom does not, and the performance of this Agreement by Grom shall not, (i) conflict
with or violate Grom's Charter Documents; (ii) subject to obtaining the adoption of this Agreement and the Transaction by the Grom
shareholders, conflict with or violate any Legal Requirements; or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under, or materially impair Grom's rights or alter the
rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or encumbrance on any of the properties or assets of Grom pursuant to, any Contracts, except,
with respect to clauses (ii) or (iii), for any such conflicts, violations, breaches, defaults or other occurrences that would not,
individually and in the aggregate, have a Material Adverse Effect on Grom.

 

(b)       Except
as provided herein, the execution and delivery of this Agreement by Grom does not, and the performance of its obligations hereunder
will not, require any consent, approval, authorization or permit of, or filing with or notification to, any court, administrative
agency, commission, governmental or regulatory authority, self-regulatory organization, domestic or foreign (a "Governmental
Entity"), except (i) for applicable requirements, if any, of the Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), state securities laws ("Blue Sky Laws"), and the rules and regulations
thereunder, and appropriate documents with the relevant authorities of other jurisdictions in which Grom is qualified to do business;
(ii) consents, approvals, authorizations, permits, filings and notices to be obtained or made prior to Closing; and (iii) where
the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Grom or, after the Closing, IA, or
prevent consummation of the Transaction or otherwise prevent the parties hereto from performing their obligations under this Agreement.

 

2.6       Compliance.
Grom has complied with, is not in violation of, any Legal Requirements with respect to the conduct of its business, or the ownership
or operation of its business, except for failures to comply or violations that, individually or in the aggregate, have not had
and are not reasonably likely to have a Material Adverse Effect on Grom. The businesses and activities of Grom have not been and
are not being conducted in violation of any Legal Requirements. Grom is not in default or violation of any term, condition or provision
of any applicable Charter Documents or Contracts. No notice of non-compliance with any Legal Requirements has been received by
Grom.

 

2.7       Financial
Statements.

 

(a)       Grom
has provided to IA a correct and complete copy of the unaudited financial statements (including, in each case, any related
notes thereto) of Grom for its fiscal year ended December 31, 2016, and the three month period ended March 31, 2017, compiled as to form in all material respects and prepared in accordance with the generally accepted accounting
principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto), and each fairly presents in all material respects the financial position of Grom at the
respective dates thereof and the results of its operations and cash flows for the periods indicated.

 

(b)       The
books of account and other financial records of Grom and each Subsidiary have been maintained in accordance with good business
practice.

 

2.8       No
Undisclosed Liabilities. Except as set forth in Schedule 2.8 hereto, Grom has no liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a balance sheet or in the related notes to the
financial statements which are, individually or in the aggregate, material to the business, results of operations or
financial condition of Grom, except (i) liabilities provided for in or otherwise disclosed in the unaudited balance sheets of
Grom for the period ended December 31, 2016, or (ii) liabilities incurred since March 31, 2017, in the
ordinary course of business, none of which would have a Material Adverse Effect on Grom.

 

 

 

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2.9       Absence
of Certain Changes or Events. Since March 31, 2017, there has not been: (i) any Material Adverse Effect on
Grom; (ii) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of Grom's capital stock, or any purchase, redemption or other acquisition of any of Grom's
capital stock or any other securities of Grom or any options, warrants, calls or rights to acquire any such shares or other
securities; (iii) any split, combination or reclassification of any of Grom's capital stock; (iv) any granting by Grom of any
increase in compensation or fringe benefits, except for normal increases of cash compensation in the ordinary course of
business consistent with past practice, or any payment by Grom of any bonus, except for bonuses made in the ordinary course
of business consistent with past practice, or any granting by Grom of any increase in severance or termination pay or any
entry by Grom into any currently effective employment, severance, termination or indemnification agreement or any agreement
the benefits of which are contingent or the terms of which are materially altered upon the occurrence of a transaction
involving Grom of the nature contemplated hereby; (v) entry by Grom into any licensing or other agreement with regard to
the acquisition or disposition of any Intellectual Property (as defined in Section 2.18 hereof) other than licenses in
the ordinary course of business consistent with past practice or any amendment or consent with respect to any licensing
agreement filed or required to be filed by Grom with respect to any Governmental Entity; (vi) any material change by Grom in
its accounting methods, principles or practices, except as required by concurrent changes in GAAP; (vii) any change in
the auditors of Grom; (viii) any issuance of capital stock of Grom; or (ix) any revaluation by Grom of any of its
assets, including, without limitation, writing down the value of capitalized inventory or writing off notes or accounts
receivable or any sale of assets of Grom other than in the ordinary course of business.

 

2.10       Litigation.
There are no claims, suits, actions, proceedings pending or, to Grom's knowledge, threatened against Grom, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator that seeks to restrain or enjoin the consummation
of the transactions contemplated by this Agreement or which could reasonably be expected, either singularly or in the aggregate
with all such claims, actions or proceedings, to have a Material Adverse Effect on Grom or have a Material Adverse Effect on the
ability of the parties hereto to consummate the Transaction.

 

2.11       Employee
Benefit Plans.

 

(a)       All
employee compensation, incentive, fringe or benefit plans, programs, policies, commitments or other arrangements (whether or not
set forth in a written document) covering any active or former employee, director or consultant of Grom, or any trade or business
(whether or not incorporated) which is under common control with Grom, with respect to which Grom has liability (collectively,
the "Plans") has been maintained and administered in all material respects in compliance with its terms and with
the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such Plans, and all
liabilities with respect to the Plans have been properly reflected in the financial statements of Grom. No suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of Plan activities) has been brought, or to the knowledge
of Grom is threatened, against or with respect to any such Plan. There are no audits, inquiries or proceedings pending or, to the
knowledge of Grom, threatened by any governmental agency with respect to any Plans. All contributions, reserves or premium payments
required to be made or accrued as of the date hereof to the Plans have been timely made or accrued. Grom does not have any plan
or commitment to establish any new Plan, to modify any Plan (except to the extent required by law or to conform any such Plan to
the requirements of any applicable law, in each case as previously disclosed to IA in writing, or as required by this Agreement),
or to enter into any new Plan. Each Plan can be amended, terminated or otherwise discontinued after the Closing in accordance with
its terms, without liability to IA or Grom (other than ordinary administration expenses and expenses for benefits accrued but not
yet paid).

 

(b)       Neither
the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any Stockholder,
director or employee of Grom under any Plan or otherwise, (ii) materially increase any benefits otherwise payable under any Plan,
or (iii) result in the acceleration of the time of payment or vesting of any such benefits.

 

2.12       Labor
Matters. Grom is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed
by Grom nor does Grom know of any activities or proceedings of any labor union to organize any such employees.

 

 

 

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2.13       Restrictions
on Business Activities. There is no agreement, commitment, judgment, injunction, order or decree binding upon Grom or to which
Grom is a party which has or could reasonably be expected to have the effect of prohibiting or materially impairing any business
practice of Grom, any acquisition of property by Grom, or the conduct of business by Grom as currently conducted other than such
effects, individually or in the aggregate, which have not had and could not reasonably be expected to have a Material Adverse Effect
on Grom.

 

2.14       Title
to Property.

 

(a)       All
leases of real property held by Grom and all personal property and other property and assets of Grom owned, used or held for use
in connection with the business of Grom (the "Personal Property") are shown or reflected on the audited balance
sheets of Grom. Grom owns and has good and marketable title to the Personal Property, and all such assets and properties are in
each case held free and clear of all Liens, except for Liens disclosed in the financial statements of Grom or in Schedule 3.14
hereto.

 

(b)       All
leases pursuant to which Grom leases from others material real or personal property are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing material default or event of default of Grom or,
to Grom's knowledge, any other party (or any event which with notice or lapse of time, or both, would constitute a material default),
except where the lack of such validity and effectiveness or the existence of such default or event of default could not reasonably
be expected to have a Material Adverse Effect on Grom.

 

2.15       Taxes.

 

(a)       Definition
of Taxes. For the purposes of this Agreement, "Tax" or "Taxes" refers to any and all
federal, state, local and foreign taxes, including, without limitation, gross receipts, income, profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, assessments,
governmental charges and duties together with all interest, penalties and additions imposed with respect to any such amounts and
any obligations under any agreements or arrangements with any other person with respect to any such amounts and including any liability
of a predecessor entity for any such amounts.

 

(b)       Tax
Returns and Audits. Except as set forth in Schedule 3.15 hereto:

 

(i)       Grom
has timely filed all federal, state, local and foreign returns, estimates, information statements and reports relating to Taxes
("Returns") required to be filed by Grom with any Tax authority prior to the date hereof, except such Returns
which are not material to Grom. All such Returns are true, correct and complete in all material respects. Grom and each Subsidiary
have paid all Taxes shown to be due on such Returns.

 

(ii)       All
Taxes that Grom is required by law to withhold or collect have been duly withheld or collected, and have been timely paid over
to the proper governmental authorities to the extent due and payable.

 

(iii)       Grom
has not been delinquent in the payment of any material Tax nor is there any material Tax deficiency outstanding, proposed or assessed
against Grom, nor has Grom executed any unexpired waiver of any statute of limitations on or extending the period for the assessment
or collection of any Tax.

 

(iv)       No
audit or other examination of any Return of Grom by any Tax authority is presently in progress, nor has Grom been notified of any
request for such an audit or other examination.

 

(v)       No
adjustment relating to any Returns filed by Grom has been proposed in writing, formally or informally, by any Tax authority to
Grom or any representative thereof.

 

(vi)       Grom
has no liability for any material unpaid Taxes which have not been accrued for or reserved on Grom's balance sheet included in
the audited financial statements for the most recent fiscal year ended, whether asserted or unasserted, contingent or otherwise,
which is material to Grom, other than any liability for unpaid Taxes that may have accrued since the end of the most recent fiscal
year in connection with the operation of the business of Grom in the ordinary course of business, none of which is material to
the business, results of operations or financial condition of Grom.

 

 

 

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(vii)       Grom
has not taken any action and does not know of any fact, agreement, plan or other circumstance that is reasonably likely to prevent
the Transaction from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

 

2.16       Environmental
Matters.

 

(a)       Except
for such matters that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect, to its knowledge:
(i) Grom has complied with all applicable Environmental Laws; (ii) the properties currently owned or operated by Grom and each
Subsidiary (including soils, groundwater, surface water, buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Grom and each Subsidiary were not contaminated with Hazardous Substances
during the period of ownership or operation by Grom; (iv) Grom is not subject to liability for any Hazardous Substance disposal
or contamination on any third party property; (v) Grom has not been associated with any release or threat of release of any Hazardous
Substance; (vi) Grom has not received any notice, demand, letter, claim or request for information alleging that Grom may be in
violation of or liable under any Environmental Law; and (vii) Grom is not subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or subject to any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances.

 

(b)       As
used in this Agreement, the term "Environmental Law" means any federal, state, local or foreign law, regulation,
order, decree, permit, authorization, opinion, common law or agency requirement relating to: (i) the protection, investigation
or restoration of the environment, health and safety, or natural resources; (ii) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance; or (iii) noise, odor, wetlands, pollution, contamination or any injury or threat
of injury to persons or property.

 

(c)       As
used in this Agreement, the term "Hazardous Substance" means any substance that is: (i) listed, classified or
regulated pursuant to any Environmental Law; (ii) any petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or (iii) any other substance which is the subject
of regulatory action by any Governmental Entity pursuant to any Environmental Law.

 

2.17       Brokers;
Third Party Expenses. Grom has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agent's commissions or any similar charges in connection with this Agreement or the Transaction contemplated hereby.

 

2.18       Intellectual
Property. For the purposes of this Agreement, the following terms have the following definitions:

 

"Intellectual
Property" shall mean any or all of the following and all worldwide common law and statutory rights in, arising out of,
or associated therewith: (i) patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof ("Patents"); (ii) inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and
all documentation relating to any of the foregoing; (iii) copyrights, copyrights registrations and applications therefor, and all
other rights corresponding thereto throughout the world; (iv) domain names, uniform resource locators ("URLs") and other
names and locators associated with the Internet ("Domain Names"); (v) industrial designs and any registrations
and applications therefor; (vi) trade names, logos, common law trademarks and service marks, trademark and service mark registrations
and applications therefor (collectively, "Trademarks"); (vii) all databases and data collections and all rights
therein; (viii) all moral and economic rights of authors and inventors, however denominated; and (ix) any similar or equivalent
rights to any of the foregoing (as applicable).

 

"Grom
Intellectual Property" shall mean any Intellectual Property that is owned by, or exclusively licensed to, Grom.

 

"Registered
Intellectual Property" means all Intellectual Property that is the subject of an application, certificate, filing, registration
or other document issued, filed with, or recorded by any private, state, government or other legal authority.

 

 

 

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"Grom
Registered Intellectual Property" means all of the Registered Intellectual Property owned by, or filed in the name of,
Grom.

 

"Grom
Products" means all current versions of products or service offerings of Grom.

 

(a)       No
Grom Intellectual Property or Grom Product is subject to any material proceeding or outstanding decree, order, judgment, contract,
license, agreement or stipulation restricting in any manner the use, transfer or licensing thereof by Grom, or which may affect
the validity, use or enforceability of such Grom Intellectual Property or Grom Product, which in any such case could reasonably
be expected to have a Material Adverse Effect on Grom.

 

(b)       Grom
owns and has good and exclusive title to, each material item of Grom Intellectual Property owned by it free and clear of any Liens
(excluding non-exclusive licenses and related restrictions granted in the ordinary course); and Grom is the exclusive owner of
all material Trademarks used in connection with the operation or conduct of the business of Grom, including the sale of any products
or the provision of any services by Grom .

 

(c)       The
operation of the business of Grom as such business currently is conducted, including (i) the design, development, manufacture,
distribution, reproduction, marketing or sale of the products or services of Grom (including Grom Products), and (ii) Grom's use
of any product, device or process, to Grom's knowledge and except as could not reasonably be expected to have a Material Adverse
Effect, has not and does not and will not infringe or misappropriate the Intellectual Property of any third party or constitute
unfair competition or trade practices under the laws of any jurisdiction.

 

2.19       Agreements,
Contracts and Commitments.

 

(a)       Schedule
2.19 hereto sets forth a complete and accurate list of all Material Contracts (as hereinafter defined), specifying the parties
thereto. For purposes of this Agreement:

 

"Contracts"
shall mean all contracts, agreements, leases, mortgages, indentures, notes, bonds, liens, licenses, permits, franchises, purchase
orders, sales orders, arbitration awards, judgments, decrees, orders, documents, instruments, understandings and commitments, or
other instrument or obligation (including without limitation outstanding offers or proposals) of any kind, whether written or oral,
to which Grom is a party or by or to which any of the properties or assets of Grom may be bound, subject or affected (including
without limitation notes or other instruments payable to Grom).

 

"Material
Contracts" shall mean (x) each Contract (I) providing for payments (past, present or future) to Grom in excess of $50,000
in the aggregate or (II) under which or in respect of which Grom presently has any liability or obligation of any nature whatsoever
(absolute, contingent or otherwise) in excess of $50,000; (y) each Contract which otherwise is or may be material to the businesses,
operations, assets, condition (financial or otherwise) or prospects of Grom; and (z) without limitation of subclause (x) or subclause
(y), each of the following Contracts:

 

(i)       any
mortgage, indenture, note, installment obligation or other instrument, agreement or arrangement for or relating to any borrowing
of money by or from Grom, any Subsidiary, or any officer, director or 5% or more stockholder ("Insider") of Grom;

 

(ii)       any
guaranty, direct or indirect, by Grom or any Insider of Grom of any obligation for borrowings, or otherwise, excluding endorsements
made for collection in the ordinary course of business;

 

(iii)       any
Contract made other than in the ordinary course of business or (x) providing for the grant to any preferential rights to purchase
or lease any asset of Grom, or (y) providing for any right (exclusive or non-exclusive) to sell or distribute, or otherwise relating
to the sale or distribution of, any product or service of Grom;

 

(iv)       any
obligation to register any shares of the capital stock or other securities of Grom with the SEC or any state securities commission
or agency;

 

(v)       any
obligation to make payments, contingent or otherwise, arising out of the prior acquisition of the business, assets or stock of
other Persons;

 

 

 

    	 	8	 

     

    

 

(vi)       any
collective bargaining agreement with any labor union;

 

(vii)       any
lease or similar arrangement for the use by Grom of Personal Property; and

 

(viii)       any
Contract to which any Insider of Grom is a party.

 

(b)       Except
for those Contracts included in Schedule 2.19(b), each Contract was entered into at arms' length and in the ordinary course, is
in full force and effect and is valid and binding upon and enforceable against each of the parties thereto. True, correct and complete
copies of all Material Contracts (or written summaries in the case of oral Material Contracts) and of all outstanding offers or
proposals of Grom has been heretofore delivered to IA.

 

(c)       Neither
Grom nor any other party thereto is in breach of or in default under, and no event has occurred which with notice or lapse of time
or both would become a breach of or default under, any Contract, and no party to any Contract has given any notice of any claim
of any such breach, default or event, which, individually or in the aggregate, are reasonably likely to have a Material Adverse
Effect on Grom. Each Contract to which Grom is a party or by which it is bound that has not expired by its terms is in full force
and effect, except where such failure to be in full force and effect is not reasonably likely to have a Material Adverse Effect
on Grom.

 

2.20       Insurance.
Grom maintains insurance policies covering the assets, business, equipment, properties, operations, employees, officers and directors
(collectively, the "Insurance Policies") of Grom that Grom reasonably believes are adequate in amount and scope
for the business in which it is engaged.

 

2.21       Interested
Party Transactions. Except as set forth in the Schedule 3.21 hereto or in the Grom Financial Statements (and notes thereto),
no employee, officer, director or Stockholder of Grom or a member of his or her immediate family is indebted to Grom, nor is Grom
indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf of Grom, and (iii) for other employee benefits made generally
available to all employees. To Grom's knowledge, none of such individuals has any direct or indirect ownership interest in any
Person with whom Grom is affiliated or with whom Grom has a contractual relationship, or any Person that competes with Grom, except
that each employee, Stockholder, officer or director of Grom and members of their respective immediate families may own less than
5% of the outstanding stock in publicly traded companies that may compete with Grom. Except as set forth in Schedule 3.21, to Grom's
knowledge, no officer, director or Stockholder or any member of their immediate families is, directly or indirectly, interested
in any material contract with Grom (other than such contracts as relate to any such individual ownership of capital stock or other
securities of Grom).

 

2.22       Board
Approval. The board of directors of Grom or similar governing body (including any required committee or subgroup of thereof)
has, as of the date of this Agreement, unanimously (i) declared the advisability of the Transaction and approved, subject to the
approval of Grom Stockholders, this Agreement and the transactions contemplated hereby; (ii) determined that the Transaction is
in the best interests of the Grom shareholders and is on terms that are fair to such shareholders; and (iii) recommended that the
Grom shareholders approve and adopt this Agreement and approve the Transaction.

 

2.23       Representations
and Warranties Complete. The representations and warranties of Grom included in this Agreement and any list, statement, document
or information set forth in, or attached to, any Schedule provided pursuant to this Agreement or delivered hereunder, are true
and complete in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained therein not misleading under the circumstance under
which they were made.

    	 	9	 

     

    

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF IA

 

IA represents and warrants
to, and covenants with Grom as follows:

 

3.1       Organization
and Qualification.

 

(a)       IA
is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida and has the requisite
corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being
or currently planned by IA to be conducted. IA is in possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now being or currently planned by IA to be conducted,
except where the failure to have such Approvals could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on IA. Complete and correct copies of the Charter Documents of IA, as amended and currently in effect, are attached
hereto as Schedule 3.1. IA is not in violation of any of the provisions of IA's Charter Documents.

 

(b)       IA
is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary,
except for such failures to be so duly qualified or licensed and in good standing that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on IA.

 

(c)       The
corporate records (“Corporate Records”) of IA contain true, complete and accurate records of all meetings and
consents in lieu of meetings of its Board of Directors (and any committees thereof), similar governing bodies and its shareholders.
Copies of such Corporate Records of IA have been heretofore delivered to Grom.

 

3.2       Subsidiaries.
IA does not have any subsidiaries. Prior to the Effective Date of the Transaction, IA shall form one wholly owned subsidiary to
perpetuate its LED business. Otherwise, IA does not own, directly or indirectly, any ownership, equity, profits or voting interest
in any Person or has any agreement or commitment to purchase any such interest, and IA has not agreed and is not obligated to make
nor is bound by any written, oral or other agreement, contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan, commitment or undertaking of any nature, as of the
date hereof or as may hereafter be in effect under which it may become obligated to make, any future investment in or capital contribution
to any other entity.

 

3.3       Capitalization.

 

(a)       As
of the date of this Agreement the authorized capital stock of IA consists of 100,000,000 shares of Common Stock, par value $0.001
per share ("IA Common Stock") and 25,000,000 shares of Preferred Stock, par value $0.01 per share. Prior to the
Effective Date IA shall take all action necessary to amend the IA Articles of Incorporation to increase the authorized Common Stock
to 200,000,000 shares of Common Stock. At the Closing Date, (i) 10,264,744 shares of IA Common Stock will be issued and outstanding,
all of which are validly issued, fully paid and nonassessable; and (ii) all outstanding shares of IA Common Stock have been issued
and granted in compliance with (A) all applicable securities laws and (in all material respects) other applicable Legal Requirements;
and (B) all requirements set forth in applicable Contracts.

 

(b)       Except
as included in Schedule 3.3 attached hereto, there are no equity securities, partnership interests or similar ownership interests
of any class of any equity security of IA, or any securities exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. There are no subscriptions,
options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which IA is a party or by which it is bound obligating IA to issue, deliver
or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption
or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of IA or obligating IA to
grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment
or agreement.

 

 

 

    	 	10	 

     

    

 

(c)       There
are no registration rights, and there is no voting trust, proxy, rights plan, antitakeover plan or other agreement or understanding
to which IA is a party or by which it is bound with respect to any equity security of any class of IA.

 

3.4       Authority
Relative to this Agreement. IA has full corporate power and authority to: (i) execute, deliver and perform this Agreement,
and each ancillary document which IA has executed or delivered or is to execute or deliver pursuant to this Agreement, and (ii)
carry out IA's obligations hereunder and thereunder and, to consummate the transactions contemplated hereby (including the Transaction).
The execution and delivery of this Agreement and the consummation by IA of the transactions contemplated hereby (including the
Transaction) have been duly and validly authorized by all necessary corporate action on the part of IA (including the approval
by its Board of Directors and by a majority of the holders of IA’s Common Stock relevant to the issue of changing the name
of IA), and no other corporate proceedings on the part of IA are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and delivered by IA and, assuming the due authorization,
execution and delivery thereof by Grom, constitutes the legal and binding obligation of IA, enforceable against IA in accordance
with its terms, except as may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity and public policy.

 

3.5       No
Conflict; Required Filings and Consents.

 

(a)       The
execution and delivery of this Agreement by IA does not, and the performance of this Agreement by IA and shall not: (i) conflict
with or violate IA's Charter Documents; (ii) conflict with or violate any Legal Requirements; or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or materially impair
IA's rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of IA pursuant
to, any Contracts, except, with respect to clauses (ii) or (iii), for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually and in the aggregate, have a Material Adverse Effect on IA.

 

(b)       The
execution and delivery of this Agreement by IA does not, and the performance of its obligations hereunder will not, require any
consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity, except (i) for applicable
requirements, if any, of the Act, the Exchange Act, Blue Sky Laws, and the rules and regulations thereunder, and appropriate documents
with the relevant authorities of other jurisdictions in which IA is qualified to do business; (ii) consents, approvals, authorizations,
permits, filings and notices to be obtained or made prior to Closing; and (iii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on IA, or prevent consummation of the Transaction or otherwise prevent the parties hereto
from performing their obligations under this Agreement.

 

3.6       Compliance.
IA has complied with, and is not in violation of, any Legal Requirements with respect to the conduct of its business, or the ownership
or operation of its business, except for failures to comply or violations that, individually or in the aggregate, have not had
and are not reasonably likely to have a Material Adverse Effect on IA. To IA's knowledge, the businesses and activities of IA have
not been and are not being conducted in violation of any Legal Requirements. IA is not in default or violation of any term, condition
or provision of any applicable Charter Documents or IA’s Contracts, except with respect to such defaults or violations under
IA’s Contracts that would not reasonably be expected to have a Material Adverse Effect on IA. Except as set forth on Schedule
3.6, to IA's knowledge, no notice of non-compliance with any Legal Requirements has been received by IA. To IA’s knowledge,
none of IA's shareholders is in violation of any term of any contract or covenant (either with IA or another entity) relating to
employment, patents, proprietary information disclosure, non-competition or non-solicitation.

 

3.7       Financial
Statements.

 

(a)       IA
has provided to Grom a correct and complete copy of its audited and unaudited financial statements (including, in each case, any
related notes thereto) of IA for the fiscal year ended December 31, 2016 and 2015 and the interim period ended March 31 2017, compiled
as to form in all material respects and prepared in accordance with the generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), and each fairly
presents in all material respects the financial position of IA at the respective dates thereof and the results of its operations
and cash flows for the periods indicated.

 

 

 

    	 	11	 

     

    

 

(b)       The
books of account and other financial records of IA and each Subsidiary have been maintained in accordance with good business practice.

 

3.8       No
Undisclosed Liabilities. Except as set forth in Schedule 3.8 hereto, to IA's knowledge, IA has no liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a balance sheet or in the related notes to the
financial statements prepared in accordance with U.S. GAAP which are, individually or in the aggregate, material to the
business, results of operations or financial condition of IA, except (i) liabilities provided for in or otherwise disclosed
in IA’s financial statements; (ii) liabilities incurred since March 31, 2017, in the ordinary course of
business, none of which would have a Material Adverse Effect on IA; and (iii) those liabilities and obligations specifically
set forth in Section 3.23.

 

3.9       Absence
of Certain Changes or Events. Since March 31, 2017, there has not been: (i) any Material Adverse Effect on
IA; (ii) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of IA's capital stock, or any purchase, redemption or other acquisition of any of IA's capital
stock or any other securities of IA or any options, warrants, calls or rights to acquire any such shares or other securities;
(iii) any split, combination or reclassification of any of IA's capital stock; (iv) any granting by IA of any increase
in compensation or fringe benefits, except for normal increases of cash compensation in the ordinary course of
business consistent with past practice, or any payment by IA of any bonus, except for bonuses made in the ordinary course of
business consistent with past practice, or any granting by IA of any increase in severance or termination pay or any entry by
IA into any currently effective employment, severance, termination or indemnification agreement or any agreement the benefits
of which are contingent or the terms of which are materially altered upon the occurrence of a transaction involving IA of
the nature contemplated hereby; (v) entry by IA into any licensing or other agreement with regard to the acquisition
or disposition of any Intellectual Property other than licenses in the ordinary course of business consistent with past
practice or any amendment or consent with respect to any licensing agreement filed or required to be filed by IA with respect
to any Governmental Entity; (vi) any material change by IA in its accounting methods, principles or practices, except as
required by concurrent changes in U.S. GAAP; (vii) any change in the auditors of IA; (viii) any issuance of capital stock of
IA; or (ix) any revaluation by IA of any of their respective assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable or any sale of assets of IA other than in the ordinary
course of business.

 

3.10       Litigation.
There are no claims, suits, actions or proceedings pending or, to IA's knowledge, threatened against IA, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator that seeks to restrain or enjoin the consummation
of the transactions contemplated by this Agreement or which could reasonably be expected, either singularly or in the aggregate
with all such claims, actions or proceedings, to have a Material Adverse Effect on IA or have a Material Adverse Effect on the
ability of the parties hereto to consummate the Transaction.

 

3.11       Employee
Benefit Plans. Except as set forth in Schedule 3.11, IA does not maintain, and has no liability under, any Plan. Except as
disclosed on Schedule 3.11 hereto, neither the execution and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any stockholder, director or employee of IA, or (ii) result in the acceleration of the time of payment
or vesting of any such benefits.

 

3.12        Labor
Matters. IA is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed
by IA, nor does IA know of any activities or proceedings of any labor union to organize any such employees.

 

3.13       Restrictions
on Business Activities. To IA's knowledge, there is no agreement, commitment, judgment, injunction, order or decree binding
upon IA or to which IA is a party which has or could reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of IA, any acquisition of property by IA or the conduct of business by IA as currently conducted other than
such effects, individually or in the aggregate, which have not had and could not reasonably be expected to have, a Material Adverse
Effect on IA.

 

3.14       Title
to Property. IA does not own or lease any Real Property or Personal Property. There are no options or other contracts under
which IA has a right or obligation to acquire or lease any interest in Real Property or Personal Property.

 

 

 

    	 	12	 

     

    

 

3.15       Taxes.
To IA's knowledge:

 

(a)       IA
has timely filed all Returns required to be filed by IA with any Tax authority prior to the date hereof, except such Returns that
are not material to IA. All such Returns are true, correct and complete in all material respects. IA has paid all Taxes shown to
be due on such Returns.

 

(b)       All
Taxes that IA is required by law to withhold or collect have been duly withheld or collected, and have been timely paid over to
the proper governmental authorities to the extent due and payable.

 

(c)       IA
has not been delinquent in the payment of any material Tax nor is there any material Tax deficiency outstanding, proposed or assessed
against IA, nor has IA executed any unexpired waiver of any statute of limitations on or extending the period for the assessment
or collection of any Tax.

 

(d)       No
audit or other examination of any Return of IA by any Tax authority is presently in progress, nor has IA been notified of any request
for such an audit or other examination.

 

(e)       No
adjustment relating to any Returns filed by IA has been proposed in writing, formally or informally, by any Tax authority to IA
or any representative thereof.

 

(f)       IA
has no liability for any material unpaid Taxes which have not been accrued for or reserved on IA's balance sheets included in the
unaudited financial statements for the most recent fiscal year ended, whether asserted or unasserted, contingent or otherwise,
which is material to IA, other than any liability for unpaid Taxes that may have accrued since the end of the most recent fiscal
year in connection with the operation of the business of IA in the ordinary course of business, none of which is material to the
business, results of operations or financial condition of IA.

 

(g)       IA
has not taken any action and does not know of any fact, agreement, plan or other circumstance that is reasonably likely to prevent
the Transaction from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

 

3.16       Environmental
Matters. Except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material Adverse
Effect, to IA's knowledge: (i) IA has complied with all applicable Environmental Laws; (ii) the properties currently owned or operated
by IA (including soils, groundwater, surface water, buildings or other structures) are not contaminated with any Hazardous Substances;
(iii) the properties formerly owned or operated by IA were not contaminated with Hazardous Substances during the period of ownership
or operation by IA; (iv) IA is not subject to liability for any Hazardous Substance disposal or contamination on any third party
property; (v) IA has not been associated with any release or threat of release of any Hazardous Substance; (vi) IA has not received
any notice, demand, letter, claim or request for information alleging that IA may be in violation of or liable under any Environmental
Law; and (vii) IA is not subject to any orders, decrees, injunctions or other arrangements with any Governmental Entity or subject
to any indemnity or other agreement with any third party relating to liability under any Environmental Law or relating to Hazardous
Substances.

 

3.17       Brokers.
IA has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agent's commissions
or any similar charges in connection with this Agreement or the Transaction contemplated hereby.

 

3.18       Intellectual
Property. Except as disclosed in Schedule 3.18, IA does not own, license or otherwise have any right, title or interest in
any Intellectual Property or Registered Intellectual Property.

 

3.19       Agreements,
Contracts and Commitments.

 

(a)       Except
as disclosed in Schedule 3.19, to IA's knowledge, there are no contracts, agreements, leases, mortgages, indentures, note, bond,
liens, license, permit, franchise, purchase orders, sales orders, arbitration awards, judgments, decrees, orders, documents, instruments,
understandings and commitments, or other instrument or obligation (including without limitation outstanding offers or proposals)
of any kind, whether written or oral, to which IA is a party or by or to which any of the properties or assets of IA may be bound,
subject or affected, which imposes, creates or otherwise results in a material liability or obligation upon IA for the period following
the date hereof ("IA’s Contracts"). The term "material" for purposes of this Section 3.19 shall
mean $5,000 or more.

 

 

 

    	 	13	 

     

    

 

(b)       Each
of IA’s Contracts was entered into at arms' length and in the ordinary course, is in full force and effect and is valid and
binding upon and enforceable against each of the parties thereto. True, correct and complete copies of all of IA’s Contracts
(or written summaries in the case of oral IA’s Contracts) and of all outstanding offers or proposals of IA have been heretofore
delivered to Grom.

 

(c)       Neither
IA nor any other party thereto is in breach of or in default under, and no event has occurred which with notice or lapse of time
or both would become a breach of or default under, any of IA’s Contracts, and no party to any of IA’s Contracts has
given any notice of any claim of any such breach, default or event, which, individually or in the aggregate, are reasonably likely
to have a Material Adverse Effect on IA. Each agreement, contract or commitment to which IA is a party or by which it is bound
that has not expired by its terms is in full force and effect, except where such failure to be in full force and effect is not
reasonably likely to have a Material Adverse Effect on IA.

 

3.20       Insurance.
IA maintains insurance policies covering the assets, business, equipment, properties, operations, employees, officers and directors
(collectively, the "Insurance Policies") of IA that IA reasonably believes are adequate in amount and scope for
the business in which it is engaged.

 

3.21       Governmental
Actions/Filings. IA has been granted and holds, and has made, all Governmental Actions/Filings necessary to the conduct by
IA of its businesses (as presently conducted) or used or held for use by IA, all of which are listed in Schedule 3.21 hereto, and
true, complete and correct copies of which have heretofore been delivered to Grom. Each such Governmental Action/Filing is in full
force and effect and, except as disclosed in Schedule 3.21 hereto, will not expire prior to the date of this Agreement, and IA
is in compliance with all of its obligations with respect thereto. No event has occurred and is continuing which requires or permits,
or after notice or lapse of time or both would require or permit, and consummation of the transactions contemplated by this Agreement
or the ancillary documents will not require or permit (with or without notice or lapse of time, or both), any modification or termination
of any such Governmental Actions/Filings. Except as set forth in Schedule 3.21, no Governmental Action/Filing is necessary to be
obtained, secured or made by IA to enable it to continue to conduct its businesses and operations and use its properties after
the Closing in a manner which is consistent with current practice.

 

3.22       Interested
Party Transactions. Except as set forth in the Schedule 3.22 hereto or in the IA Financial Statement (and notes thereto), no
employee, officer, director or stockholder of IA or a member of his or her immediate family is indebted to IA, nor is IA indebted
(or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered,
(ii) reimbursement for reasonable expenses incurred in the ordinary course of business on behalf of IA, and (iii) for other employee
benefits made generally available to all employees. To IA's knowledge, none of such individuals has any direct or indirect ownership
interest in any Person with whom IA is affiliated or with whom IA has a contractual relationship, or any Person that competes with
IA, except that each employee, stockholder, officer or director of IA and members of their respective immediate families may own
less than 5% of the outstanding stock in publicly traded companies that may compete with IA. Except as set forth in Schedule 3.22,
to IA's knowledge, no officer, director or stockholder or any member of their immediate families is, directly or indirectly, interested
in any material contract with IA (other than such contracts as relate to any such individual ownership of capital stock or other
securities of IA).

 

3.23       Trading
Quotation. IA’s Common Stock is quoted on the OTCQB operated by the OTC Markets under the trading symbol “ILLU”.
There is no action or proceeding pending or, to IA's knowledge, threatened against IA by FINRA or OTC Markets with respect to any
intention by such entities to prohibit or terminate the quotation of IA’s Common Stock.

 

3.24       Board
Approval. The Board of Directors of IA (including any required committee or subgroup of the Board of Directors of IA) has,
as of the date of this Agreement, unanimously declared the advisability of the Transaction and approved this Agreement and the
transactions contemplated hereby.

 

3.25       Representations
and Warranties Complete. The representations and warranties of IA included in this Agreement and any list, statement, document
or information set forth in, or attached to, any Schedule provided pursuant to this Agreement or delivered hereunder, are true
and complete in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained therein not misleading, under the circumstance under
which they were made.

 

 

 

    	 	14	 

     

    

ARTICLE IV

 

CONDUCT PRIOR TO THE EFFECTIVE TIME

 

4.1       Conduct
of Business by Grom and IA. During the period from the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Date, each of Grom and IA shall, except to the extent that the other party
shall otherwise consent in writing, carry on its business in the usual, regular and ordinary course consistent with past practices,
in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations (except where
noncompliance would not have a Material Adverse Effect), pay its debts and taxes when due subject to good faith disputes over such
debts or taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with
past practices and policies to (i) preserve substantially intact its present business organization, (ii) keep available the services
of its present officers and employees, and (iii) preserve its relationships with customers, suppliers, distributors, licensors,
licensees, and others with which it has significant business dealings. In addition, except as permitted or required by the terms
of this Agreement or as previously disclosed to the other party, without the prior written consent of the other party, during the
period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms
or the Closing, Grom and IA shall not do any of the following:

 

(a)       Waive
any stock repurchase rights, accelerate, amend or (except as specifically provided for herein) change the period of exercisability
of options or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize
cash payments in exchange for any options granted under any of such plans;

 

(b)       Grant
any severance or termination pay to any officer or employee except pursuant to applicable law, written agreements outstanding,
or policies existing on the date hereof and as previously or concurrently disclosed in writing or made available to the other party,
or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing
on the date hereof;

 

(c)       Except
as set forth in Schedule 3.1(c), transfer or license to any person or otherwise extend, amend or modify any material rights to
any Intellectual Property of Grom or IA, or enter into grants to transfer or license to any person future patent rights, other
than in the ordinary course of business consistent with past practices provided that in no event shall Grom or IA license on an
exclusive basis or sell any Intellectual Property of Grom or IA, as applicable;

 

(d)       Declare,
set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for any capital stock;

 

(e)       Except
as set forth in Schedule 3.1(e) hereof, purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock
of Grom and IA, as applicable;

 

(f)       Issue,
deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital
stock or any securities convertible into or exchangeable for shares of capital stock, or subscriptions, rights, warrants or options
to acquire any shares of capital stock or any securities convertible into or exchangeable for shares of capital stock, or enter
into other agreements or commitments of any character obligating it to issue any such shares or convertible or exchangeable securities;

 

(g)       Except
as provided herein, amend its Charter Documents;

 

(h)       Acquire
or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership, association or other business organization or division thereof,
or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of IA
or Grom, as applicable, or enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide
for exclusivity of territory or otherwise restrict such party's ability to compete or to offer or sell any products or services;

 

 

 

    	 	15	 

     

    

 

(i)       Sell,
lease, license, encumber or otherwise dispose of any properties or assets, except sales of inventory in the ordinary course of
business consistent with past practice and, except for the sale, lease or disposition (other than through licensing) of property
or assets which are not material, individually or in the aggregate, to the business of such party;

 

(j)       Except
as disclosed in Schedule 4.1(j) hereto, incur any indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of IA or Grom,
as applicable, enter into any "keep well" or other agreement to maintain any financial statement condition or enter into
any arrangement having the economic effect of any of the foregoing;

 

(k)       Adopt
or amend any employee benefit plan, policy or arrangement, any employee stock purchase or employee stock option plan, or enter
into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in
the ordinary course of business consistent with past practice with employees who are terminable "at will"), pay any special
bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or consultants, except in the ordinary course of
business consistent with past practices;

 

(l)       Except
as disclosed in Schedule 4.1(1) hereto, (i) pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement)
other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practices
or in accordance with their terms, or liabilities recognized or disclosed in the most recent financial statements (or the notes
thereto) of Grom or of IA included in IA’s SEC Reports, as applicable, or incurred since the date of such financial statements,
or (ii) waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which Grom is a party or of which Grom is a beneficiary or to which IA is a party or of
which IA is a beneficiary, as applicable;

 

(m)       Except
in the ordinary course of business consistent with past practices, modify, amend or terminate any Contract of Grom or IA, as applicable,
or other material contract or material agreement to which Grom or IA is a party or waive, delay the exercise of, release or assign
any material rights or claims thereunder;

 

(n)       Except
as required by U.S. GAAP, revalue any of its assets or make any change in accounting methods, principles or practices;

 

(o)       Except
as set forth in Schedule 4.1(o) hereto, incur or enter into any agreement, contract or commitment requiring such party to pay in
excess of $50,000 in any 12 month period;

 

(p)       Engage
in any action that could reasonably be expected to cause the Transaction to fail to qualify as a "reorganization" under
Section 368(a) of the Code;

 

(q)       Settle
any litigation;

 

(r)       Make
or rescind any Tax elections that, individually or in the aggregate, could be reasonably likely to adversely affect in any material
respect the Tax liability or Tax attributes of such party, settle or compromise any material income tax liability or, except as
required by applicable law, materially change any method of accounting for Tax purposes or prepare or file any Return in a manner
inconsistent with past practice;

 

(s)       Except
as provided herein, form, establish or acquire any Subsidiary;

 

(t)       Permit
any Person to exercise any of its discretionary rights under any Plan to provide for the automatic acceleration of any outstanding
options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to
such plans; or

 

(u)       Agree
in writing or otherwise agree, commit or resolve to take any of the actions described in Section 4.1 (a) through (t) above.

 

 

 

    	 	16	 

     

    

ARTICLE V

 

ADDITIONAL AGREEMENTS

 

5.1       Board
of Directors of IA. On the Effective Date the current officers of IA shall have resigned their positions with IA and the IA
Board shall have taken all action lawfully required under the laws of the State of Florida and the IA Bylaws to appoint the following
persons to the positions indicated: Sander Schwartz as President, Darren Marks as Chief Executive Officer and Melvin Leiner as
Executive Vice President, Secretary, Treasurer and Chief Financial Officer. The current officers of IA shall become the officers
of IA’s newly formed subsidiary engaged in the LED business.

 

5.2       Other
Actions. Prior to The Effective Date IA shall:

 

(a) obtain the consent
of a majority of IA shareholders to amend IA Articles of Incorporation to increase the number of authorized common shares to 200
million and change the name of IA to “Grom Holding Corporation” or such other name as may be acceptable to Grom and
the Florida Secretary of State.

 

(b) file a preliminary
and definitive Information Statement with the US Securities and Exchange Commission (“SEC”) relating to the matters
referenced in (a), above.

 

(c) prepare with the
assistance of Grom a Form 8-K (the “8-K”)to be filed with the SEC announcing the consummation of the Transaction hereunder,
which shall include a press release ("Press Release"). At the Closing, IA shall distribute the Press Release.

 

(d) prepare and file
a registration statement with the SEC, registering the IA Shares to be issued to the Grom shareholders herein, unless an exemption
from such registration is available.

 

Grom and IA shall cooperate
with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take
or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this
Agreement and applicable laws to consummate the Transaction and the other transactions contemplated hereby as soon as practicable,
including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings
and to obtain as soon as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable
to be obtained from any third party and/or any Governmental Entity in order to consummate the Transaction or any of the other transactions
contemplated hereby. Subject to applicable laws relating to the exchange of information and the preservation of any applicable
attorney-client privilege, work-product doctrine, self-audit privilege or other similar privilege, each of Grom and IA shall have
the right to review and comment on in advance, and to the extent practicable each will consult the other on, all the information
relating to such party, and any of Grom's Subsidiaries, that appear in any filing made with, or written materials submitted to,
any third party and/or any Governmental Entity in connection with the Transaction and the other transactions contemplated hereby.
In exercising the foregoing right, each of Grom and IA shall act reasonably and as promptly as practicable.

 

5.3       Required
Information. In connection with the preparation of the 8-K and Press Release, and for such other reasonable purposes, Grom
and IA each shall, upon request by the other, furnish the other with all information concerning themselves, their respective Subsidiaries,
directors, officers and stockholders (and such other matters as may be reasonably necessary or advisable in connection with the
Transaction, or any other statement, filing, notice or application made by or on behalf of Grom and IA or any of their respective
Subsidiaries to any third party and/or any Governmental Entity in connection with the Transaction and the other transactions contemplated
hereby. Each party warrants and represents to the other party that all such information shall be true and correct in all material
respects and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

 

 

 

    	 	17	 

     

    

5.4       Confidentiality;
Access to Information.

 

(a)       Confidentiality.
Any confidentiality agreement previously executed by the parties shall be superseded in its entirety by the provisions of this
Agreement. Each party agrees to maintain in confidence any non-public information received from the other party, and to use such
non-public information only for purposes of consummating the transactions contemplated by this Agreement. Such confidentiality
obligations will not apply to (i) information which was known to the one party or their respective agents prior to receipt from
the other party; (ii) information which is or becomes generally known; (iii) information acquired by a party or their respective
agents from a third party who was not bound to an obligation of confidentiality; and (iv) disclosure required by law. In the event
this Agreement is terminated as provided in Article IX hereof, each party will return or cause to be returned to the other all
documents and other material obtained from the other in connection with the Transaction contemplated hereby.

 

(b)       Access
to Information.

 

(i)       Grom
will afford IA and its financial advisors, accountants, counsel and other representatives reasonable access during normal business
hours, upon reasonable notice, to the properties, books, records and personnel of Grom during the period prior to the Closing to
obtain all information concerning the business, including the status of product development efforts, properties, results of operations
and personnel of Grom, as IA may reasonably request. No information or knowledge obtained by IA in any investigation pursuant to
this Section 5.4 will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Transaction.

 

(ii)       IA
will afford Grom and its financial advisors, underwriters, accountants, counsel and other representatives reasonable access during
normal business hours, upon reasonable notice, to the properties, books, records and personnel of IA during the period prior to
the Closing to obtain all information concerning the business, including the status of product development efforts, properties,
results of operations and personnel of IA, as Grom may reasonably request. No information or knowledge obtained by Grom in any
investigation pursuant to this Section 5.4 will affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the parties to consummate the Transaction.

 

5.5       No
Solicitation. Other than with respect to the Transaction, Grom and IA agree that neither they nor any of their officers and
directors shall, and that they shall direct and use their reasonable best efforts to cause their agents and other representatives
(including any investment banker, attorney or accountant retained by them or any of their Subsidiaries) not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the making of any proposal or offer with respect to (i) a
merger, reorganization, share exchange, consolidation or similar transaction involving either of them; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or purchase of all or substantially all of the assets or equity securities of either of them, taken
as a whole, in a single transaction or series of related transactions; or (iii) any tender offer or exchange offer for any of the
outstanding shares of IA’s capital stock or Grom’s capital stock (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal"). Grom and IA further agree that neither they nor any of their officers and directors
shall, and that they shall direct and use their reasonable best efforts to cause their agents and representatives not to, directly
or indirectly, engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal. Grom and IA agree that they will immediately cease and cause to be terminated any existing discussions or negotiations
with any parties conducted heretofore with respect to any Acquisition Proposal. Grom and IA agree that they will take the necessary
steps to promptly inform the individuals or entities referred to in the first sentence hereof of the obligations undertaken in
this Section 5.5

 

 

 

    	 	18	 

     

    

 

5.6       Reasonable
Efforts; Notification.

 

(a)       Upon
the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use its commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable,
the Transaction and the other transactions contemplated by this Agreement, including using commercially reasonable efforts to accomplish
the following: (i) the taking of all reasonable acts necessary to cause the conditions precedent set forth in Article V to be satisfied;
(ii) the obtaining of all necessary actions or non-actions, waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations, declarations and filings (including registrations, declarations and filings
with Governmental Entities, if any) and the taking of all reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity; (iii) the obtaining of all consents, approvals or waivers from third parties
required as a result of the transactions contemplated in this Agreement; (iv) the defending of any suits, claims, actions, investigations
or proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated
or reversed; and (v) the execution or delivery of any additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In connection with and without limiting the foregoing,
IA and its board of directors and Grom and its board of directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Transaction, this Agreement or any of the transactions contemplated by this Agreement, use its
commercially reasonable efforts to enable the Transaction and the other transactions contemplated by this Agreement to be consummated
as promptly as practicable on the terms contemplated by this Agreement. Notwithstanding anything herein to the contrary, nothing
in this Agreement shall be deemed to require IA or Grom to agree to any divestiture by itself or any of its affiliates of shares
of capital stock or of any business, assets or property, or the imposition of any material limitation on the ability of any of
them to conduct their business or to own or exercise control of such assets, properties and stock.

 

(b)       Grom
shall give prompt notice to IA upon becoming aware that any representation or warranty made by them contained in this Agreement
has become untrue or inaccurate, or of any failure of Grom to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement, in each case, such that the conditions set forth in Article
V would not be satisfied; provided, however, that no such notification shall affect the representations, warranties, covenants
or agreements of the parties or the conditions to the obligations of the parties under this Agreement.

 

(c)       IA
shall give prompt notice to Grom upon becoming aware that any representation or warranty made by it contained in this Agreement
has become untrue or inaccurate, or of any failure of IA to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement, in each case, such that the conditions set forth in Article
VII would not be satisfied; provided, however, that no such notification shall affect the representations, warranties, covenants
or agreements of the parties or the conditions to the obligations of the parties under this Agreement.

 

5.6       Treatment
as a Reorganization. Neither IA nor Grom shall take any action prior to or following the Transaction that could reasonably
be expected to cause the Transaction to fail to qualify as a "reorganization" within the meaning of Section 368(a) of
the Code.

 

5.7       Business
Records. At the Effective Date Grom shall cause to be delivered to IA all records and documents relating to Grom, which Grom
possesses, including, without limitation, books, records, government filings, Returns, Charter Documents, Corporate Records, Stock
Records, consent decrees, orders, and correspondence, director and stockholder minutes and resolutions, stock ownership records,
financial information and records, electronic files containing any financial information and records, and other documents used
in or associated with Grom ("Business Records").

 

 

 

    	 	19	 

     

    

 

ARTICLE VI

 

CONDITIONS TO THE TRANSACTION

 

6.1       Conditions
to Obligations of Each Party to Effect the Transaction. The respective obligations of each party to this Agreement to effect
the Transaction shall be subject to the satisfaction at or prior to the Closing Date that no Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which has the effect of making the Transaction illegal or otherwise
prohibiting consummation of the Transaction, substantially on the terms contemplated by this Agreement. All waiting periods, if
any, in any jurisdiction in which Grom or IA has material operations relating to the transactions contemplated hereby will have
expired or terminated early.

 

6.2       Additional
Conditions to Obligations of Grom. The obligations of Grom to consummate and effect the Transaction shall be subject to the
satisfaction at or prior to the Effective Date of each of the following conditions, any of which may be waived, in writing, exclusively
by Grom:

 

(a)       Representations
and Warranties. Each representation and warranty of IA contained in this Agreement (i) shall have been true and correct
as of the date of this Agreement, and (ii) shall be true and correct on and as of the Closing Date with the same force and effect
as if made on the Closing Date. Grom shall have received a certificate with respect to the foregoing signed on behalf of IA by
an authorized officer of IA ("IA Closing Certificate").

 

(b)       Agreements
and Covenants. IA shall have performed or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the Closing Date, except to the extent that any failure
to perform or comply (other than a willful failure to perform or comply or failure to perform or comply with an agreement or covenant
reasonably within the control of IA) does not, or will not, constitute a Material Adverse Effect with respect to IA taken as a
whole, and Grom have received IA Closing Certificate to such effect.

 

(c)       Consents.
IA shall have obtained all consents, waivers and approvals required in connection with the consummation of the transactions contemplated
hereby, other than consents, waivers and approvals the absence of which, either alone or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect on IA taken as a whole.

 

(d)       Material
Adverse Effect. No Material Adverse Effect with respect to IA shall have occurred since the date of this Agreement.

 

(e)       Business
Records; Resignation Letter. IA shall have delivered to Grom the Business Records.

 

(f)       Other
Deliveries. IA shall have delivered to Grom: (i) certificates representing IA's Shares to Grom stockholders in accordance
with Section 1.6, (ii) copies of resolutions and actions taken by IA's board of directors in connection with the approval of this
Agreement and the transactions contemplated hereunder, and (iii) such other documents or certificates as shall reasonably be required
by Grom and its counsel in order to consummate the transactions contemplated hereunder.

 

6.3       Additional
Conditions to the Obligations of IA. The obligations of IA to consummate and effect the Transaction shall be subject to the
satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively
by IA:

 

(a)       Representations
and Warranties. Each representation and warranty of Grom contained in this Agreement (i) shall have been true and correct
as of the date of this Agreement, and (ii) shall be true and correct on and as of the Closing Date with the same force and effect
as if made on and as of the Closing.

 

(b)       Agreements
and Covenants. Grom shall have performed or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by them at or prior to the Closing Date except to the extent that any failure
to perform or comply (other than a willful failure to perform or comply or failure to perform or comply with an agreement or covenant
reasonably within the control of Grom) does not, or will not, constitute a Material Adverse Effect on Grom.

 

 

 

    	 	20	 

     

    

 

(c)       Consents.
Grom shall have obtained all consents, waivers and approvals required in connection with the consummation of the transactions contemplated
hereby, other than consents, waivers and approvals the absence of which, either alone or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect on Grom.

 

(d)       Material
Adverse Effect. No Material Adverse Effect with respect to Grom shall have occurred since the date of this Agreement.

 

(e)       Grom
Financial Statements. Grom shall have delivered to IA in a timely manner Grom’s unaudited financial
statements including notes thereto for its fiscal year ended December 31, 2016 and 2015 and for the interim period ended
March 31, 2017, prepared in accordance with U.S. GAAP.

 

(f)       Other
Deliveries. At Closing, Grom shall have delivered to IA all certificates representing the Shares owned by its stockholders,
together with stock powers, in accordance with Section 1.4.

 

 

ARTICLE VII

 

TERMINATION, AMENDMENT AND WAIVER

 

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

 

(a)       by
mutual written agreement of IA and Grom;

 

(b)       by
either IA or Grom if the Transaction shall not have been consummated by September
30, 2017 (“Closing Deadline”) for any reason; provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to any party whose action or failure to act has
been a principal cause of or resulted in the failure of the Transaction to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement, and, provided further, the Closing Deadline shall be further extended
by any cure period in effect under Section 9.1(d) or (e) below;

 

(c)       by
either IA or Grom if a Governmental Entity shall have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting the Transaction, which order, decree, ruling or
other action is final and non-appealable;

 

(d)       by
Grom , upon a material breach of any representation, warranty, covenant or agreement on the part of IA set forth in this Agreement,
or if any representation or warranty of IA shall have become materially untrue, in either case such that the conditions set forth
in Section 6.2(a) or Section 6.2(b) would not be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided, that if such inaccuracy in IA's representations and warranties or breach by IA
is curable by IA prior to the Closing Date, then the Grom Stockholders may not terminate this Agreement under this Section 7.1(d)
for thirty (30) days after delivery of written notice from Grom to IA of such breach, provided IA continues to exercise commercially
reasonable efforts to cure such breach (it being understood that Grom may not terminate this Agreement pursuant to this Section
7.1(d) if Grom shall have also materially breached this Agreement or if such breach by IA is cured during such thirty (30) day
period); or

 

(e)       by
IA, upon a material breach of any representation, warranty, covenant or agreement on the part of Grom set forth in this Agreement,
or if any representation or warranty of Grom shall have become materially untrue, in either case such that the conditions set forth
in Section 6.3(a) or Section 6.3(b) would not be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided, that if such inaccuracy in Grom's representations and warranties or breach by Grom
is curable by Grom prior to the Closing Date, then IA may not terminate this Agreement under this Section 7.1(e) for thirty (30)
days after delivery of written notice from IA to Grom of such breach, provided Grom continues to exercise commercially reasonable
efforts to cure such breach (it being understood that IA may not terminate this Agreement pursuant to this Section 7.1(e) if it
shall have materially breached this Agreement or if such breach by Grom is cured during such thirty (30) day period).

 

 

 

    	 	21	 

     

    

 

7.2       Notice
of Termination; Effect of Termination. Any termination of this Agreement under Section 7.1 above will be effective immediately
upon (or, if the termination is pursuant to Section 7.1(d) or Section 7.1(e) and the proviso therein is applicable, thirty (30)
days after the party in breach fails to cure the breach) the delivery of written notice of the terminating party to the other parties
hereto. In the event of the termination of this Agreement as provided in Section 7.1, this Agreement shall be of no further force
or effect and the Transaction shall be abandoned, except (i) as set forth in this Section 7.2, Section 7.3, Section 5.4(a) (Confidentiality)
and Article VIII (General Provisions), each of which shall survive the termination of this Agreement, and (ii) nothing herein shall
relieve any party from liability for any intentional or willful breach of this Agreement.

 

7.3       Fees
and Expenses. All fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the Transaction is consummated.

 

7.4       Amendment.
This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each
of the parties hereto.

 

7.5       Extension;
Waiver. At any time prior to the Closing, any party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties made to such party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance with
any of the agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Delay
in exercising any right under this Agreement shall not constitute a waiver of such right.

 

ARTICLE VIII

 

GENERAL PROVISIONS

 

8.1       Notices.
All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at
such other address or telecopy numbers for a party as shall be specified by like notice):

 

	 	(a)	 if to IA, to:
	 	 	 
	 	 	Ismael Llera, President
	 	 	Illumination America, Inc.
	 	 	2060 NW Boca Raton Blvd., #6
	 	 	Boca Raton, FL 33431
	 	 	 
	 	(b)	if to Grom to:
	 	 	 
	 	 	Darren Marks
	 	 	Grom Holdings Inc.
	 	 	2060 NW Boca Raton Blvd., #6
	 	 	Boca Raton, FL 33431

 

8.2       Interpretation.

 

(a)       When
a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement. Unless otherwise
indicated the words "include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.

 

 

 

    	 	22	 

     

    

 

(b)       For
purposes of this Agreement, the term "Material Adverse Effect" when used in connection with an entity means any
change, event, violation, inaccuracy, circumstance or effect, individually or when aggregated with other changes, events, violations,
inaccuracies, circumstances or effects, that is materially adverse to the business, assets (including intangible assets), revenues,
financial condition or results of operations of such entity, if any, taken as a whole (it being understood that neither of the
following alone or in combination shall be deemed, in and of itself, to constitute a Material Adverse Effect: (a) changes attributable
to the public announcement or pendency of the transactions contemplated hereby, (b) changes in general national or regional economic
conditions, or (c) changes affecting the industry generally in which Grom or IA operates.

 

(c)       For
purposes of this Agreement, the term "Person" shall mean any individual, corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, Grom (including
any limited liability Grom or joint stock Grom), firm or other enterprise, association, organization, entity or Governmental Entity.

 

(d)       For
purposes of this Agreement, all monetary amounts set forth herein are referenced in United States dollars, unless otherwise noted.

 

8.3       Counterparts
Facsimile Execution. For purposes of this Agreement, a document (or signature page thereto) signed and transmitted by facsimile
machine or telecopier is to be treated as an original document. The signature of any party thereon, for purposes hereof, is to
be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an
original signature on an original document. At the request of any party, a facsimile or telecopy document is to be re-executed
in original form by the parties who executed the facsimile or telecopy document. No party may raise the use of a facsimile machine
or telecopier machine as a defense to the enforcement of the Agreement or any amendment or other document executed in compliance
with this Section.

 

8.4       Entire
Agreement; Third Party Beneficiaries. This Agreement and the documents and instruments and other agreements among the parties
hereto as contemplated by or referred to herein, including the Schedules hereto, constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.

 

8.5       Severability.
In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application
of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

 

8.6       Other
Remedies; Specific Performance. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a
party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party,
and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of
the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law
or in equity.

 

8.7       Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, regardless of the
laws that might otherwise govern under applicable principles of conflicts of law thereof.

 

8.8       Rules
of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities
in an agreement or other document will be construed against the party drafting such agreement or document.

 

 

 

    	 	23	 

     

    

 

8.9       Assignment.
No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the first sentence of this Section 8.9, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and permitted assigns.

 

8.10       Attorneys
Fees. The prevailing party(ies) in any litigation, arbitration, insolvency or other proceeding (“Proceeding”)
relating to the enforcement or interpretation of this Agreement may recover from the unsuccessful party(ies) all costs, expenses,
and attorney’s fees (including expert witness and other consultants’ fees and costs) relating to or arising out of
(a) the Proceeding (whether or not the Proceeding proceeds to judgment), and (b) any post-judgment or post-award proceeding including,
without limitation, one to enforce or collect any judgment or award resulting from the Proceeding. All such judgments and awards
shall contain a specific provision for the recovery of all such subsequently incurred costs, expenses, and attorney’s fees.

 

(The balance of page intentionally
left blank – signature page follows)

 

 

 

 

 

 

 

 

 

 

    	 	24	 

     

    

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

 

ILLUMINATION AMERICA, INC.

 

By: s/ Ismael Llera

Ismael Llera, President

 

 

GROM HOLDINGS, INC. 

 

By: s/ Darren Marks

Darren Marks, President

 

 

 

 

 

 

 

 

 

    	 	25smsi-ex41_10.htm

Exhibit 4.1

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

smith micro software, inc.

		
	
Warrant Shares: _______
	
Initial Exercise Date: November 18, 2017

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after November 18, 2017 (the “Initial Exercise Date”) and on or prior to the close of business on May 16, 2022 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Smith Micro Software, Inc., a Delaware corporation (the “Company”), up to ___________ shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s common stock (“Common Stock”).  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1.Definitions.  In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated in this Section 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.

“Board of Directors” means the board of directors of the Company.

“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.

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

1

 

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

 

“Liens” means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Person” means 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.

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

“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. 

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

“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

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

“Transfer Agent” means ComputerShare Trust Company, the current transfer agent of the Company, and any successor transfer agent of the Company.

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

2

 

acceptable to the Company, the fees and expenses of which shall be paid by the Company.

Section 2.Exercise.

a)Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b)Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be [$1.265] [$1.155], subject to adjustment hereunder (the “Exercise Price”).

c)Cashless Exercise.  This Warrant may also be exercised, in whole or in part, by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 (A) = the last VWAP immediately preceding the time of delivery of the Notice of Exercise giving rise to the applicable “cashless exercise”, as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last 

3

 

VWAP as calculated over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading Market is open, the prior Trading Day’s VWAP shall be used in this calculation);

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares.  The Company agrees not to take any position contrary to this Section 2(c).

 

	
 
	
d)
	
Mechanics of Exercise. 

i.Delivery of Warrant Shares Upon Exercise.  The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”).   Upon delivery of the Notice of Exercise  the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares; provided  payment of the aggregate Exercise Price (other than in the case of a Cashless Exercise) is received within three Trading Days of delivery of the Notice of Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this warrant remains outstanding and exercisable.

ii.Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the 

4

 

rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii.Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv.Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

v.No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this 

5

 

Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi.Charges, Taxes and Expenses.  Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.  The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii.Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

e)Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations 

6

 

promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.  Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

Section 3.Certain Adjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or 

7

 

distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re‐classification.

b)Subsequent Rights Offerings.  In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

c)Pro Rata Distributions.  During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock 

8

 

acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

d)Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate 

9

 

Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

e)Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f)Notice to Holder.  

i.Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or emaila notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

10

 

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice  except as may otherwise be expressly set forth herein.

Section 4.Transfer of Warrant.

a)Transferability. Pursuant to FINRA Rule 5110(g)(1), neither this Warrant nor any Warrant Shares issued upon exercise of this Warrant shall be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering pursuant to which this Warrant is being issued, except the transfer of any security:

	
 
	
1.
	
by operation of law or by reason of reorganization of the Company; 

11

 

	
 
	
2.
	
to any FINRA member firm participating in the offering and the officers and partners thereof, if all securities so transferred remain subject to the lock-up restriction in this Section 4(a) for the remainder of the time period;

	
 
	
3.
	
if the aggregate amount of securities of the Company held by the Holder or related person do not exceed 1% of the securities being offered;

	
 
	
4.
	
that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10% of the equity in the fund; or 

	
 
	
5.
	
the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction in this Section 4(a) for the remainder of the time period.

Subject to the foregoing restriction, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.  

b)New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto. 

c)Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any 

12

 

exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, provides to the Company an opinion of counsel, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that the transfer of this Warrant does not require registration under the Securities Act.

e)Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

Section 5.Miscellaneous.

a)No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.  

b)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

c)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.

d)Authorized Shares.  

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares 

13

 

upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).  

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e)Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof.  Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of this Warrant shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”).  Each party hereto hereby irrevocably submits to 

14

 

the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.  Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant.  If any party shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

f)Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

g)Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h)Notices.  Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above Attention: _________________, facsimile number _______________, email address _______________, or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders.  Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in 

15

 

this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

i)Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j)Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k)Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l)Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

m)Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n)Piggyback Registration Rights. If, at any time after the Initial Exercise Date, the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act), or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the stock option or other employee benefit plans, the Company shall send to each Holder a written notice of such determination and if, within 15 calendar days after the date of such notice, the Holder (or any permitted successor or assign) shall so request in writing, the Company shall include in such registration statement all or any part of the Warrant Shares that such Holder requests to 

16

 

be registered.  Further, in the event that the offering is a firm-commitment underwritten offering, the Company may exclude the Warrant Shares if so requested in writing by the lead underwriter of such offering. If less than all of the Warrant Shares are required to be excluded, then such cutbacks shall be allocated pro-rata among the Holders requesting to be included. In the case of inclusion in a firm-commitment underwritten offering, the Holders must sell their Warrant Shares on the same terms set by the underwriters for shares of Common Stock to be sold for the account of the Company.

o)Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

 

(Signature Page Follows)

17

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  

	
smith micro software, inc.

 

 

	
By:__________________________________________

     Name:

     Title:

 

 

 

 

 

18

 

 

NOTICE OF EXERCISE

 

To:smith micro software, inc.

 

(1)The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

 

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute
this form and supply required information. 
Do not use this form to exercise the warrant.)

 

 

 

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________.

 

 

 

_______________________________________________________________

 

 

	
 
	
Dated:
	
 
	
,
	
 

 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
Holder’s Signature:
	
 

	
 
	
 
	
 

	
 
	
Holder’s Address:
	
 

	
 
	
 
	
 

	
 
	
 
	
 

 

 

 

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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