Document:

commonstockpurchaseagree

                                                              Execution Version                                                                                                       COMMON STOCK PURCHASE AGREEMENT                            Dated as of November 11, 2020                                   by and between                    INDEPENDENCE CONTRACT DRILLING, INC.                                        and                           TUMIM STONE CAPITAL LLC       4839-6950-8556\8 

 

                                 TABLE OF CONTENTS                                                                                 Page   ARTICLE I DEFINITIONS ...................................................................................................................... 1   ARTICLE II PURCHASE AND SALE OF COMMON STOCK ............................................................. 1    Section 2.1.  Purchase and Sale of Stock ....................................................................................... 1    Section 2.2.  Closing Date; Settlement Dates ................................................................................ 2    Section 2.3.  Initial Public Announcements and Required Filings ................................................ 2   ARTICLE III PURCHASE TERMS ......................................................................................................... 3    Section 3.1.  Fixed Purchases ........................................................................................................ 3    Section 3.2.  VWAP Purchases ...................................................................................................... 3    Section 3.3.  Settlement ................................................................................................................. 4    Section 3.4.  Compliance with Rules of Trading Market. ............................................................. 5    Section 3.5.  Beneficial Ownership Limitation .............................................................................. 6   ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR ..... 6    Section 4.1.  Organization and Standing of the Investor ............................................................... 6    Section 4.2.  Authorization and Power .......................................................................................... 6    Section 4.3.  No Conflicts .............................................................................................................. 7    Section 4.4.  Investment Purpose ................................................................................................... 7    Section 4.5.  Accredited Investor Status ........................................................................................ 8    Section 4.6.  Reliance on Exemptions ........................................................................................... 8    Section 4.7.  Information ............................................................................................................... 8    Section 4.8.  No Governmental Review ......................................................................................... 8    Section 4.9.  No General Solicitation ............................................................................................. 8    Section 4.10.  Not an Affiliate ......................................................................................................... 9    Section 4.11.  No Prior Short Sales.................................................................................................. 9    Section 4.12.  Statutory Underwriter Status..................................................................................... 9    Section 4.13.  Resales of Shares ...................................................................................................... 9   ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY ...... 9    Section 5.1.  Organization, Good Standing and Power.................................................................. 9    Section 5.2.  Authorization, Enforcement .................................................................................... 10    Section 5.3.  Capitalization .......................................................................................................... 10    Section 5.4.  Issuance of Shares ................................................................................................... 11    Section 5.5.  No Conflicts ............................................................................................................ 11    Section 5.6.  Commission Documents, Financial Statements; Disclosure Controls and                  Procedures; Internal Controls Over Financial Reporting; Accountants ................. 11    Section 5.7.  Subsidiaries ............................................................................................................. 14    Section 5.8.  No Material Adverse Effect or Material Adverse Change ...................................... 14    Section 5.9.  No Undisclosed Liabilities ...................................................................................... 15    Section 5.10.  No Undisclosed Events or Circumstances .............................................................. 15    Section 5.11.  Indebtedness; Solvency ........................................................................................... 15    Section 5.12.  Title To Assets ........................................................................................................ 16                                            i  4839-6950-8556\8 

 

  Section 5.13.  Actions Pending ...................................................................................................... 16    Section 5.14.  Compliance With Law ............................................................................................ 16    Section 5.15.  Certain Fees ............................................................................................................ 16    Section 5.16.  Disclosure ............................................................................................................... 17    Section 5.17.  Operation of Business ............................................................................................. 17    Section 5.18.  Environmental Compliance .................................................................................... 18    Section 5.19.  Material Agreements ............................................................................................... 18    Section 5.20.  Transactions With Affiliates ................................................................................... 18    Section 5.21.  Employees; Labor Laws ......................................................................................... 19    Section 5.22.  Use of Proceeds ....................................................................................................... 19    Section 5.23.  Investment Company Act Status ............................................................................. 19    Section 5.24.  ERISA ..................................................................................................................... 19    Section 5.25.  Taxes ....................................................................................................................... 20    Section 5.26.  Insurance ................................................................................................................. 20    Section 5.27.  Exemption from Registration; Valid Issuances ...................................................... 20    Section 5.28.  No General Solicitation or Advertising .................................................................. 20    Section 5.29.  No Integrated Offering ............................................................................................ 20    Section 5.30.  Dilutive Effect ......................................................................................................... 21    Section 5.31.  Manipulation of Price ............................................................................................. 21    Section 5.32.  Securities Act .......................................................................................................... 21    Section 5.33.  Listing and Maintenance Requirements; DTC Eligibility ...................................... 21    Section 5.34.  Application of Takeover Protections ...................................................................... 22    Section 5.35.  No Unlawful Payments ........................................................................................... 22    Section 5.36.  Money Laundering Laws ........................................................................................ 22    Section 5.37.  OFAC ...................................................................................................................... 23    Section 5.38.  U.S. Real Property Holding Corporation ................................................................ 23    Section 5.39.  Bank Holding Company Act ................................................................................... 23    Section 5.40.  Information Technology; Compliance With Data Privacy Laws ........................... 23    Section 5.41.  No Disqualification Events ..................................................................................... 24    Section 5.42.  Accuracy of Certain Summaries and Statements .................................................... 24    Section 5.43.  Acknowledgement Regarding Investor’s Acquisition of Shares ............................ 24   ARTICLE VI ADDITIONAL COVENANTS ........................................................................................ 25    Section 6.1.  Securities Compliance ............................................................................................ 25    Section 6.2.  Reservation of Common Stock ............................................................................... 25    Section 6.3.  Registration and Listing .......................................................................................... 25    Section 6.4.  Compliance with Laws. .......................................................................................... 26    Section 6.5.  Keeping of Records and Books of Account; Due Diligence. ................................. 26    Section 6.6.  No Frustration; No Variable Rate Transactions. ..................................................... 27    Section 6.7.  Corporate Existence ................................................................................................ 27    Section 6.8.  Fundamental Transaction ........................................................................................ 27    Section 6.9.  Selling Restrictions. ................................................................................................ 28    Section 6.10.  Effective Registration Statement ............................................................................ 28    Section 6.11.  Blue Sky .................................................................................................................. 28    Section 6.12.  Non-Public Information .......................................................................................... 28    Section 6.13.  Broker/Dealer ..........................................................................................................  29    Section 6.14.  Disclosure Schedule. ............................................................................................... 29                                           ii  4839-6950-8556\8 

 

  Section 6.15.  Delivery of Bring Down Opinions and Compliance Certificates Upon Occurrence                  of Certain Events .................................................................................................... 30   ARTICLE VII CONDITIONS TO CLOSING AND CONDITIONS TO THE SALE AND PURCHASE                  OF THE SHARES ................................................................................................... 30    Section 7.1.  Conditions Precedent to Closing ............................................................................. 30    Section 7.2.  Conditions Precedent to Commencement ............................................................... 31    Section 7.3.  Conditions Precedent to Fixed Purchases and VWAP Purchases after                  Commencement Date ............................................................................................. 34   ARTICLE VIII TERMINATION ............................................................................................................ 38    Section 8.1.  Automatic Termination ........................................................................................... 38    Section 8.2.  Other Termination ................................................................................................... 38    Section 8.3.  Effect of Termination .............................................................................................. 39   ARTICLE IX INDEMNIFICATION ...................................................................................................... 40    Section 9.1.  Indemnification of Investor..................................................................................... 40    Section 9.2.  Indemnification Procedures .................................................................................... 41   ARTICLE X MISCELLANEOUS .......................................................................................................... 42    Section 10.1.  Certain Fees and Expenses; Commitment Fee; Commencement Irrevocable                  Transfer Agent Instructions. ................................................................................... 42    Section 10.2.  Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial. ................... 44    Section 10.3.  Entire Agreement .................................................................................................... 44    Section 10.4.  Notices .................................................................................................................... 45    Section 10.5.  Waivers ................................................................................................................... 46    Section 10.6.  Amendments ........................................................................................................... 46    Section 10.7.  Headings ................................................................................................................. 46    Section 10.8.  Construction ............................................................................................................ 46    Section 10.9.  Binding Effect ......................................................................................................... 46    Section 10.10.  No Third Party Beneficiaries .................................................................................. 46    Section 10.11.  Governing Law ....................................................................................................... 47    Section 10.12.  Survival ................................................................................................................... 47    Section 10.13.  Counterparts ............................................................................................................ 47    Section 10.14.  Publicity .................................................................................................................. 47    Section 10.15.  Severability ............................................................................................................. 47    Section 10.16.  Further Assurances.................................................................................................. 48    Annex I.  Definitions                                               iii  4839-6950-8556\8 

 

                      COMMON STOCK PURCHASE AGREEMENT          This COMMON STOCK PURCHASE AGREEMENT is made and entered into as of   November 11, 2020 (this “Agreement”), by and between Tumim Stone Capital LLC, a Delaware   limited liability company (the “Investor”), and Independence Contract Drilling, a Delaware   corporation (the “Company”).                                     RECITALS          WHEREAS, the parties desire that, upon the terms and subject to the conditions and   limitations set forth herein, the Company may issue and sell to the Investor, from time to time as   provided herein, and the Investor shall purchase from the Company, up to the lesser of (i)   $5,000,000 worth of newly issued shares of the Company’s common stock, par value $0.01 per   share (“Common Stock”), and (ii) the Exchange Cap (to the extent applicable under Section 3.4   hereof);          WHEREAS, such sales of Common Stock by the Company to the Investor will be made   in reliance upon the provisions of Section 4(a)(2) of the Securities Act (“Section 4(a)(2)”) and   Rule 506(b) of Regulation D promulgated by the Commission under the Securities Act   (“Regulation D”), and upon such other exemption from the registration requirements of the   Securities Act as may be available with respect to any or all of the sales of Common Stock to the   Investor to be made hereunder;          WHEREAS, the parties hereto are concurrently entering into a Registration Rights   Agreement in the form attached as Exhibit A hereto (the “Registration Rights Agreement”),   pursuant to which the Company shall register the resale of the Registrable Securities (as defined   in the Registration Rights Agreement), upon the terms and subject to the conditions set forth   therein; and          NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as   follows:                                     ARTICLE I                                   DEFINITIONS         Capitalized terms used in this Agreement shall have the meanings ascribed to such terms  in Annex I hereto, and hereby made a part hereof, or as otherwise set forth in this Agreement.                                     ARTICLE II                    PURCHASE AND SALE OF COMMON STOCK         Section 2.1. Purchase and Sale of Stock.  Upon the terms and subject to the conditions   of this Agreement, during the Investment Period, the Company, in its sole discretion, shall have   the right, but not the obligation, to issue and sell to the Investor, and the Investor shall purchase  from the Company, up to the lesser of (i) $5,000,000 (the “Total Commitment”) in aggregate gross  purchase price of duly authorized, validly issued, fully paid and non-assessable shares of Common   Stock and (ii) the Exchange Cap, to the extent applicable under Section 3.4 (such lesser amount of     4839-6950-8556\8 

 

     shares of Common Stock, the “Aggregate Limit”), by the delivery to the Investor of Fixed   Purchase Notices as provided in Article III.          Section 2.2. Closing Date; Settlement Dates. This Agreement shall become effective   and binding (the “Closing”) upon (a) the payment of the Document Preparation Fee to the   Investor’s counsel and payment of the Investor Expense Reimbursement to the Investor at or prior   to the Closing pursuant to Sections 7.1 and 10.1(i), (b) the payment of the Commitment Fee to the   Investor at or prior to the Closing pursuant to Sections 7.1 and 10.1(ii), (c) the delivery of   counterpart signature pages of this Agreement and the Registration Rights Agreement executed by   each of the parties hereto and thereto, and (d) the delivery of all other documents, instruments and   writings required to be delivered at the Closing, in each case as provided in Section 7.1, to the   offices of Dorsey & Whitney LLP, 51 West 52nd Street, New York, NY 10019-6119, at 4:00 p.m.,   New York City time, on the Closing Date. In consideration of and in express reliance upon the   representations, warranties and covenants contained in, and upon the terms and subject to the  conditions of, this Agreement, during the Investment Period the Company shall issue and sell to  the Investor, and the Investor shall purchase from the Company, the Shares in respect of each Fixed   Purchase and each VWAP Purchase. The payment for, against simultaneous delivery of, Shares in   respect of each Fixed Purchase and each VWAP Purchase shall occur in accordance with Section   3.3, provided that all of the conditions precedent in Article VII  shall have been fulfilled at the   applicable times set forth in Article VII.         Section 2.3. Initial Public Announcements and Required Filings.  The Company   shall, within the time period required under the Exchange Act, file with the Commission a Current   Report on Form 8-K describing the material terms of the transactions contemplated by the   Transaction Documents, and attaching as exhibits thereto copies of each of this Agreement, the   Registration Rights Agreement and, if applicable, any press release issued by the Company   disclosing the execution of this Agreement by the Company (including all exhibits thereto, the   “Current Report”). The Company shall provide the Investor a reasonable opportunity to comment  on a draft of the Current Report prior to filing the Current Report with the Commission and shall  give due consideration to all such comments. From and after the filing of the Current Report with  the Commission, the Company shall have publicly disclosed all material, nonpublic information   delivered to the Investor (or the Investor’s representatives or agents) by the Company or any of its   Subsidiaries, or any of their respective officers, directors, employees, agents or representatives (if   any) in connection with the transactions contemplated by the Transaction Documents. The Investor   covenants that until such time as the transactions contemplated by this Agreement are publicly   disclosed by the Company as described in this Section 2.3, the Investor shall maintain the   confidentiality of all disclosures made to it in connection with the transactions contemplated by   the Transaction Documents (including the existence and terms of the transactions), except that the   Investor may disclose the terms of such transactions to its financial, accounting, legal and other   advisors (provided that the Investor directs such Persons to maintain the confidentiality of such   information). Not later than 15 calendar days following the Closing Date, the Company shall file   a Form D with respect to the sale of the Shares in accordance with Regulation D and shall provide   a copy thereof to the Investor promptly after such filing. The Company shall use its commercially   reasonable efforts to prepare and, as soon as practicable, but in no event later than the applicable   Filing Deadline, file with the Commission the Initial Registration Statement and any New   Registration Statement covering only the resale by the Investor of the Registrable Securities in   accordance with the Securities Act and the Registration Rights Agreement. At or before 8:30 a.m.     2   4839-6950-8556\8 

 

     (New York City time) on the Trading Day immediately following the Effective Date of the Initial   Registration Statement and any New Registration Statement (or any post-effective amendment   thereto), the Company shall use its commercially reasonable efforts to file with the Commission   in accordance with Rule 424(b) under the Securities Act the final Prospectus to be used in   connection with sales pursuant to such Registration Statement (or post-effective amendment   thereto).                                     ARTICLE III                                PURCHASE TERMS          Subject to the satisfaction of the conditions set forth in Article VII, the parties agree as   follows:          Section 3.1. Fixed Purchases.  Upon the initial satisfaction of all of the conditions set   forth in set forth in Section 7.2 (the “Commencement” and the date of initial satisfaction of all of  such conditions, the “Commencement Date”) and from time to time thereafter, subject to the  satisfaction of all of the conditions set forth in Section 7.3, the Company shall have the right, but  not the obligation, to direct the Investor, by its delivery to the Investor of a Fixed Purchase Notice,  to purchase a Fixed Purchase Share Amount, not to exceed the applicable Fixed Purchase  Maximum Amount (calculated as of the applicable Fixed Purchase Date), at the applicable Fixed  Purchase Price therefor on the applicable Fixed Purchase Date in accordance with this Agreement  (each such purchase a “Fixed Purchase”); provided, however, that the Investor’s committed   obligation under any single Fixed Purchase shall not exceed $1,000,000. The Investor is obligated   to accept each Fixed Purchase Notice prepared and delivered by the Company in accordance with   the terms of and subject to the satisfaction of the conditions contained in this Agreement. If the   Company delivers any Fixed Purchase Notice directing the Investor to purchase a Fixed Purchase   Share Amount in excess of the applicable Fixed Purchase Maximum Amount (calculated as of the   applicable Fixed Purchase Date), such Fixed Purchase Notice shall be void ab initio to the extent   of the amount by which the Fixed Purchase Share Amount set forth in such Fixed Purchase Notice   exceeds such applicable Fixed Purchase Maximum Amount, and the Investor shall have no   obligation to purchase such excess Shares in respect of such Fixed Purchase Notice; provided,   however, that the Investor shall remain obligated to purchase the applicable Fixed Purchase   Maximum Amount in such Fixed Purchase. The Company may deliver a Fixed Purchase Notice   to the Investor as often as every Trading Day, so long as (i) the Closing Sale Price of the Common   Stock on such Trading Day is not less than the Fixed Purchase Threshold Price and (ii) all Shares   subject to all prior Fixed Purchases and VWAP Purchases (as applicable) theretofore required to   have been received by the Investor as DWAC Shares under this Agreement have been delivered   to the Investor as DWAC Shares in accordance with this Agreement. Notwithstanding the   foregoing, the Company shall not deliver any Fixed Purchase Notices to the Investor during (A)   the PEA Period and (B) the MPA Period.          Section 3.2. VWAP Purchases. Upon the initial satisfaction of all of the conditions set   forth in set forth in Section 7.2 on the Commencement Date and from time to time thereafter,   subject to the satisfaction of all of the conditions set forth in Section 7.3, in addition to purchases   of Shares as described in Section 3.1, the Company shall also have the right, but not the obligation,   to direct the Investor, by its delivery to the Investor of a VWAP Purchase Notice, to purchase the   applicable VWAP Purchase Share Amount, not to exceed the applicable VWAP Purchase     3   4839-6950-8556\8 

 

     Maximum Amount, at the applicable VWAP Purchase Price therefor on the applicable VWAP   Purchase Date in accordance with this Agreement (each such purchase, a “VWAP Purchase”).  The Company may deliver VWAP Purchase Notice to the Investor only on a Trading Day on which  (i) the Company also properly submitted a Fixed Purchase Notice providing for a Fixed Purchase  of an amount of Shares not less than the applicable Fixed Purchase Maximum Amount (calculated  as of the applicable Fixed Purchase Date), (ii) the Closing Sale Price of the Common Stock is not  less than the VWAP Purchase Threshold Price, and (iii) all Shares subject to all prior Fixed  Purchases and VWAP Purchases (as applicable) theretofore required to have been received by the  Investor as DWAC Shares under this Agreement have been delivered to the Investor as DWAC  Shares in accordance with this Agreement. The Investor is obligated to accept each VWAP  Purchase Notice prepared and delivered by the Company in accordance with the terms of and  subject to the satisfaction of the conditions contained in this Agreement. If the Company delivers  any VWAP Purchase Notice directing the Investor to purchase a VWAP Purchase Share Amount  in excess of the applicable VWAP Purchase Maximum Amount that the Company is then  permitted to include in such VWAP Purchase Notice, such VWAP Purchase Notice shall be void  ab initio to the extent of the amount by which the VWAP Purchase Share Amount set forth in such   VWAP Purchase Notice exceeds such applicable VWAP Purchase Maximum Amount, and the   Investor shall have no obligation to purchase such excess Shares in respect of such VWAP   Purchase Notice; provided, however, that the Investor shall remain obligated to purchase the   applicable VWAP Purchase Maximum Amount in such VWAP Purchase. Within one (1) Trading   Day after completion of each VWAP Purchase Date for a VWAP Purchase, the Investor shall   provide to the Company a written confirmation of such VWAP Purchase setting forth the   applicable VWAP Purchase Share Amount and VWAP Purchase Price for such VWAP Purchase   (each, a “VWAP Purchase Confirmation”). Notwithstanding the foregoing, the Company shall   not deliver any VWAP Purchase Notices to the Investor during (A) the PEA Period and (B) the   MPA Period.          Section 3.3. Settlement. The payment for, against simultaneous delivery of, Shares in   respect of each Fixed Purchase shall be settled on the Trading Day immediately following the   applicable Fixed Purchase Date for such Fixed Purchase. The payment for, against simultaneous   delivery of, Shares in respect of each VWAP Purchase shall be settled on the Trading Day   immediately following the applicable VWAP Purchase Date for such VWAP Purchase. For each   Fixed Purchase and each VWAP Purchase, the Investor shall pay to the Company an amount in   cash equal to, (i) in the case of a Fixed Purchase, the product of (A) the total number of Shares   purchased by the Investor in such Fixed Purchase and (B) the applicable Fixed Purchase Price for   such Shares, and (ii) in the case of a VWAP Purchase, the product of (A) the total number of   Shares purchased by the Investor in such VWAP Purchase and (B) the applicable VWAP Purchase  Price for such Shares, in each case as full payment for such Shares, via wire transfer of immediately   available funds on the same Trading Day that the Investor receives such Shares as DWAC Shares   in accordance with this Agreement, if all of such Shares are so received by the Investor before   1:00 p.m., New York City time, or, if such Shares are received by the Investor after 1:00 p.m.,   New York City time, then payment therefor shall be made on the Trading Day immediately   following the Trading Day on which the Investor has received all of such Shares as DWAC Shares.   If the Company or the Transfer Agent shall fail for any reason, other than a failure of the Investor   or its Broker-Dealer to set up a DWAC and required instructions, to electronically transfer any   Shares as DWAC Shares in respect of a Fixed Purchase or a VWAP Purchase within two (2)   Trading Days following the receipt by the Company of the applicable purchase price therefor in     4   4839-6950-8556\8 

 

     compliance with this Section 3.3, and if on or after such Trading Day the Investor purchases (in   an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a   sale by the Investor of such Shares that the Investor anticipated receiving from the Company in   respect of such Fixed Purchase or VWAP Purchase (as applicable), then the Company shall, within   two (2) Trading Days after the Investor’s request, either (1) pay cash to the Investor in an amount   equal to the Investor’s total purchase price (including brokerage commissions, if any) for the shares   of Common Stock so purchased (the “Cover Price”), at which point the Company’s obligation to   deliver such Shares as DWAC Shares shall terminate, or (ii) promptly honor its obligation to   deliver to the Investor such Shares as DWAC Shares and pay cash to the Investor in an amount  equal to the excess (if any) of the Cover Price over the total purchase price paid by the Investor  pursuant to this Agreement for all of the Shares to be purchased by the Investor in connection with  such Fixed Purchase or VWAP Purchase (as applicable). The Company shall not issue any fraction  of a share of Common Stock upon any Fixed Purchase or VWAP Purchase.  If the issuance would  result in the issuance of a fraction of a share of Common Stock, the Company shall round such  fraction of a share of Common Stock up or down to the nearest whole share. All payments made  under this Agreement shall be made in lawful money of the United States of America or wire   transfer of immediately available funds to such account as the Company may from time to time   designate by written notice in accordance with the provisions of this Agreement. Whenever any   amount expressed to be due by the terms of this Agreement is due on any day that is not a Trading   Day, the same shall instead be due on the next succeeding day that is a Trading Day.         Section 3.4. Compliance with Rules of Trading Market.                (a)   Exchange Cap. Subject to Section 3.4(b), the Company shall not issue or   sell any shares of Common Stock pursuant to this Agreement, and the Investor shall not purchase   or acquire any shares of Common Stock pursuant to this Agreement, to the extent that after giving   effect thereto, the aggregate number of shares of Common Stock that would be issued pursuant to   this Agreement and the transactions contemplated hereby would exceed 1,234,546 (representing  19.99% of the shares of Common Stock issued and outstanding immediately prior to the execution  of this Agreement), which number of shares shall be reduced, on a share-for-share basis, by the  number of shares of Common Stock issued or issuable pursuant to any transaction or series of  transactions that may be aggregated with the transactions contemplated by this Agreement under   applicable rules of the Trading Market (such maximum number of shares, the “Exchange Cap”),   unless the Company’s stockholders have approved the issuance of Common Stock pursuant to this   Agreement in excess of the Exchange Cap in accordance with the applicable rules of the Trading   Market. For the avoidance of doubt, the Company may, but shall be under no obligation to, request   its stockholders to approve the issuance of Common Stock pursuant to this Agreement; provided,   that if such stockholder approval is not obtained, the Exchange Cap shall be applicable for all   purposes of this Agreement and the transactions contemplated hereby at all times during the term   of this Agreement (except as set forth in Section 3.4(b)).                    (b)   At-Market Transaction. Notwithstanding Section 3.4(a), the Exchange   Cap shall not be applicable to issuances and sales of Common Stock pursuant to this Agreement   to the extent such issuances and sales are deemed a “bona fide private financing” (within the   meaning of Section 3.12.04(g) of the NYSE Listed Company Manual) involving sales of Common   Stock for cash at a price equal to or in excess of the Base Price. For purposes of this Agreement,   “Base Price” shall mean a price per Share equal to the sum of (i) the Minimum Price and (ii)     5   4839-6950-8556\8 

 

     $0.128; “Minimum Price” shall mean the lower of: (i) the Official Closing Price immediately   preceding the delivery by the Company of a Fixed Purchase Notice or a VWAP Purchase Notice  under this Agreement and (ii) the average Official Closing Price for the five (5) consecutive  Trading Days immediately preceding the delivery by the Company of a Fixed Purchase Notice or  a VWAP Purchase Notice under this Agreement; and “Official Closing Price” shall mean: the  official closing price on the Exchange as reported to the Consolidated Tape immediately preceding  the delivery by the Company of a Fixed Purchase Notice or a VWAP Purchase Notice under this  Agreement (and as defined in Section 3.12.04(j) of the NYSE Listed Company Manual).               (c)   General. The Company shall not issue or sell any shares of Common Stock   pursuant to this Agreement if such issuance or sale would reasonably be expected to result in (A)   a violation of the Securities Act or (B) a breach of the rules of the Trading Market. The provisions  of this Section 3.4 shall be implemented in a manner otherwise than in strict conformity with the   terms of this Section 3.4 only if necessary to ensure compliance with the Securities Act and the   applicable rules of the Trading Market.          Section 3.5. Beneficial Ownership Limitation. Notwithstanding anything to the   contrary contained in this Agreement, the Company shall not issue or sell, and the Investor shall   not purchase or acquire, any shares of Common Stock under this Agreement which, when   aggregated with all other shares of Common Stock then beneficially owned by the Investor and its   affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated   thereunder), would result in the beneficial ownership by the Investor of more than 4.99% of the   outstanding shares of Common Stock (the “Beneficial Ownership Limitation”). Upon the written   or oral request of the Investor, the Company shall promptly (but not later than the next business   day on which the Transfer Agent is open for business) confirm orally or in writing to the Investor   the number of shares of Common Stock then outstanding. The Investor and the Company shall   each cooperate in good faith in the determinations required under this Section 3.5 and the   application of this Section 3.5. The Investor’s written certification to the Company of the   applicability of the Beneficial Ownership Limitation, and the resulting effect thereof hereunder at   any time, shall be conclusive with respect to the applicability thereof and such result absent   manifest error. The provisions of this Section 3.5 shall be construed and implemented in a manner   otherwise than in strict conformity with the terms of this Section 3.5 to the extent necessary to   properly give effect to the limitations contained in this Section 3.5.                                     ARTICLE IV      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR          The Investor hereby makes the following representations, warranties and covenants to the   Company:          Section 4.1. Organization and Standing of the Investor.  The Investor is a limited   liability company duly organized, validly existing and in good standing under the laws of the State   of Delaware.          Section 4.2. Authorization and Power.  The Investor has the requisite limited liability   company power and authority to enter into and perform its obligations under this Agreement and   the Registration Rights Agreement and to purchase or acquire the Shares in accordance with the     6   4839-6950-8556\8 

 

     terms hereof. The execution, delivery and performance by the Investor of this Agreement and the   Registration Rights Agreement and the consummation by it of the transactions contemplated  hereby and thereby have been duly authorized by all necessary limited liability company action,  and no further consent or authorization of the Investor, its Board of Directors or its members is   required. Each of this Agreement and the Registration Rights Agreement has been duly executed   and delivered by the Investor and constitutes a valid and binding obligation of the Investor  enforceable against it in accordance with its terms, except as such enforceability may be limited  by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship,   receivership, or similar laws relating to, or affecting generally the enforcement of, creditor’s rights   and remedies or by other equitable principles of general application (including any limitation of   equitable remedies).          Section 4.3. No Conflicts.  The execution, delivery and performance by the Investor of   this Agreement and the Registration Rights Agreement and the consummation by the Investor of   the transactions contemplated hereby and thereby do not and shall not (i) result in a violation of   such Investor’s certificate of formation, limited liability company agreement or other applicable   organizational instruments, (ii) conflict with, constitute a default (or an event which, with notice  or lapse of time or both, would become a default) under, or give rise to any rights of termination,  amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust,   indenture, note, bond, license, lease agreement, instrument or obligation to which the Investor is a   party or is bound, (iii) create or impose any lien, charge or encumbrance on any property of the   Investor under any agreement or any commitment to which the Investor is party or under which   the Investor is bound or under which any of its properties or assets are bound, or (iv) result in a   violation of any federal, state, local or foreign statute, rule, or regulation, or any order, judgment   or decree of any court or governmental agency applicable to the Investor or by which any of its   properties or assets are bound or affected, except, in the case of clauses (ii), (iii) and (iv), for such   conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would   not, individually or in the aggregate, prohibit or otherwise interfere with, in any material respect,   the ability of the Investor to enter into and perform its obligations under this Agreement and the   Registration Rights Agreement. The Investor is not required under any applicable federal, state,   local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make   any filing or registration with, any court or governmental agency in order for it to execute, deliver   or perform any of its obligations under this Agreement and the Registration Rights Agreement or   to purchase or acquire the Shares in accordance with the terms hereof; provided, however, that for   purposes of the representation made in this sentence, the Investor is assuming and relying upon   the accuracy of the relevant representations and warranties and the compliance with the relevant   covenants and agreements of the Company in the Transaction Documents to which it is a party.         Section 4.4. Investment Purpose. The Investor is acquiring the Shares for its own   account, for investment purposes and not with a view towards, or for resale in connection with,   the public sale or distribution thereof, except pursuant to sales registered under or exempt from the   registration requirements of the Securities Act; provided, however, that by making the   representations herein, the Investor does not agree, or make any representation or warranty, to hold   any of the Shares for any minimum or other specific term and reserves the right to dispose of the   Shares at any time in accordance with, or pursuant to, a registration statement filed pursuant to the   Registration Rights Agreement or an applicable exemption under the Securities Act. The Investor     7   4839-6950-8556\8 

 

     does not presently have any agreement or understanding, directly or indirectly, with any Person to   sell or distribute any of the Shares.          Section 4.5. Accredited Investor Status. The Investor is an “accredited investor” as   that term is defined in Rule 501(a) of Regulation D.          Section 4.6. Reliance on Exemptions. The Investor understands that the Shares are   being offered and sold to it in reliance on specific exemptions from the registration requirements   of U.S. federal and state securities laws and that the Company is relying in part upon the truth and   accuracy of, and the Investor’s compliance with, the representations, warranties, agreements,   acknowledgments and understandings of the Investor set forth herein in order to determine the   availability of such exemptions and the eligibility of the Investor to acquire the Shares.          Section 4.7. Information.  All materials relating to the business, financial condition,   management and operations of the Company and materials relating to the offer and sale of the   Shares which have been requested by the Investor have been furnished or otherwise made available  to the Investor or its advisors, including, without limitation, the Commission Documents.  The  Investor understands that its investment in the Shares involves a high degree of risk. The Investor  is able to bear the economic risk of an investment in the Shares and has such knowledge and  experience in financial and business matters that it is capable of evaluating the merits and risks of  a proposed investment in the Shares. The Investor and its advisors have been afforded the  opportunity to ask questions of and receive answers from representatives of the Company  concerning the financial condition and business of the Company and other matters relating to an  investment in the Shares.  Neither such inquiries nor any other due diligence investigations  conducted by the Investor or its advisors, if any, or its representatives shall modify, amend or affect  the Investor’s right to rely on the Company’s representations and warranties contained in this  Agreement or in any other Transaction Document to which the Company is a party or the Investor’s   right to rely on any other document or instrument executed and/or delivered in connection with   this Agreement or the consummation of the transaction contemplated hereby (including, without   limitation, the opinions of the Company’s counsel delivered pursuant to Sections 7.1(iv) and   7.2(xv)). The Investor has sought such accounting, legal and tax advice as it has considered   necessary to make an informed investment decision with respect to its acquisition of the Shares.   The Investor understands that it (and not the Company) shall be responsible for its own tax   liabilities that may arise as a result of this investment or the transactions contemplated by this   Agreement.          Section 4.8. No Governmental Review. The Investor understands that no United States   federal or state agency or any other government or governmental agency has passed on or made  any recommendation or endorsement of the Shares or the fairness or suitability of the investment   in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the   Shares.          Section 4.9. No General Solicitation. The Investor is not purchasing or acquiring the   Shares as a result of any form of general solicitation or general advertising (within the meaning of  Regulation D) in connection with the offer or sale of the Shares.      8   4839-6950-8556\8 

 

           Section 4.10. Not an Affiliate. The Investor is not an officer, director or an Affiliate of   the Company. As of the date of this Agreement, the Investor does not beneficially own any shares   of Common Stock or securities exercisable for or convertible into shares of Common Stock, and   during the Restricted Period, Investor will not acquire beneficial ownership of any shares of the   Company’s capital stock (including shares of Common Stock or securities exercisable for or   convertible into shares of Common Stock) other than pursuant to this Agreement; provided,   however, that nothing in this Agreement shall prohibit or be deemed to prohibit the Investor from   purchasing, in an open market transaction or otherwise, shares of Common Stock necessary to   make delivery by the Investor in satisfaction of a sale by the Investor of Shares that the Investor  anticipated receiving from the Company in connection with the settlement of a Fixed Purchase or  VWAP Purchase, as applicable, if the Company or its transfer agent shall have failed for any reason  (other than a failure of Investor or its Broker-Dealer to set up a DWAC and required instructions)  to electronically transfer all of the Shares subject to such Fixed Purchase or VWAP Purchase, as  applicable, to the Investor on the applicable Settlement Date by crediting the Investor’s or its  designated Broker-Dealer’s account at DTC through its DWAC delivery system in compliance  with Section 3.3 of this Agreement.         Section 4.11. No Prior Short Sales. At no time prior to the date of this Agreement has   any of the Investor, its agents, representatives or Affiliates engaged in or effected, in any manner   whatsoever, directly or indirectly, any (i) “short sale” (as such term is defined in Rule 200 of   Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which   establishes a net short position with respect to the Common Stock.          Section 4.12. Statutory Underwriter Status. The Investor acknowledges that it will be   disclosed as an “underwriter” and a “selling stockholder” in each Registration Statement and in   any Prospectus contained therein to the extent required by applicable law and to the extent the   Prospectus is related to the resale of Registrable Securities.         Section 4.13. Resales of Shares. The Investor represents, warrants and covenants that it   will resell such Shares only pursuant to the Registration Statement in which the resale of such   Shares is registered under the Securities Act, in a manner described under the caption “Plan of   Distribution” in such Registration Statement, and in a manner in compliance with all applicable   U.S. federal and state securities laws, rules and regulations, including, without limitation, any  applicable prospectus delivery requirements of the Securities Act.                                     ARTICLE V      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY          Except as set forth in the disclosure schedule delivered by the Company to the Investor   (which is hereby incorporated by reference in, and constitutes an integral part of, this Agreement)   (the “Disclosure Schedule”), the Company hereby makes the following representations,   warranties and covenants to the Investor:          Section 5.1. Organization, Good Standing and Power.  The Company and each of its   Subsidiaries has been duly incorporated, is validly existing as a corporation or limited liability  company in good standing under the laws of the State of Delaware, has the corporate or limited  liability company power and authority to own its property and to conduct its business as described     9   4839-6950-8556\8 

 

     in the Commission Documents and is duly qualified to transact business and is in good standing   in each jurisdiction in which the conduct of its business or its ownership or leasing of property   requires such qualification, except to the extent that the failure to be so qualified or be in good   standing would not have a Material Adverse Effect.          Section 5.2. Authorization, Enforcement.  The Company has the requisite corporate   power and authority to enter into and perform its obligations under each of the Transaction   Documents to which it is a party and to issue the Shares in accordance with the terms hereof and   thereof. Except for approvals of the Company’s Board of Directors or a committee thereof as may   be required in connection with any issuance and sale of Shares to the Investor hereunder (which   approvals shall be obtained prior to the delivery of any Fixed Purchase Notice and any VWAP   Purchase Notice), the execution, delivery and performance by the Company of each of the   Transaction Documents to which it is a party and the consummation by it of the transactions   contemplated hereby and thereby have been duly and validly authorized by all necessary corporate   action, and no further consent or authorization of the Company, its Board of Directors or its   stockholders is required. Each of the Transaction Documents to which the Company is a party has   been duly executed and delivered by the Company and constitutes a valid and binding obligation   of the Company enforceable against the Company in accordance with its terms, except as such   enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,   liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the   enforcement of, creditor’s rights and remedies or by other equitable principles of general   application (including any limitation of equitable remedies).          Section 5.3. Capitalization.  The authorized capital stock of the Company and the   shares thereof issued and outstanding were as set forth in the Commission Documents as of the   dates reflected therein. All of the outstanding shares of Common Stock have been duly authorized   and validly issued, and are fully paid and non-assessable. Except as set forth in the Commission   Documents, this Agreement and the Registration Rights Agreement, there are no agreements or   arrangements under which the Company is obligated to register the sale of any securities under the   Securities Act. Except as set forth in the Commission Documents, no shares of Common Stock are   entitled to preemptive rights and there are no outstanding debt securities and no contracts,  commitments, understandings, or arrangements by which the Company is or may become bound  to issue additional shares of the capital stock of the Company or options, warrants, scrip, rights to  subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights  convertible into or exchangeable for, any shares of capital stock of the Company other than those  issued or granted in the ordinary course of business pursuant to the Company’s equity incentive  and/or compensatory plans or arrangements. Except as set forth in the Stockholders’ Agreement  filed as an exhibit to the Commission Documents, and for customary transfer restrictions contained  in agreements entered into by the Company to sell restricted securities or as set forth in the  Commission Documents, the Company is not a party to, and it has no Knowledge of, any  agreement restricting the voting or transfer of any shares of the capital stock of the Company.  Except as set forth in the Commission Documents, there are no securities or instruments containing  anti-dilution or similar provisions that will be triggered by this Agreement or any of the other  Transaction Documents or the consummation of the transactions described herein or therein. The  Company has filed with the Commission true and correct copies of the Company’s Certificate of  Incorporation as in effect on the Closing Date (the “Charter”), and the Company’s Bylaws as in  effect on the Closing Date (the “Bylaws”).     10   4839-6950-8556\8 

 

           Section 5.4. Issuance of Shares. The Shares to be issued under this Agreement have   been, or with respect to Shares to be purchased by the Investor pursuant to a particular Fixed   Purchase Notice and pursuant to a particular VWAP Purchase Notice, will be, prior to the delivery   to the Investor hereunder of such Fixed Purchase Notice and such VWAP Purchase Notice,   respectively, duly authorized by all necessary corporate action on the part of the Company. The   Shares, when issued and delivered against payment therefor in accordance with this Agreement,   shall be validly issued, fully paid and non-assessable and free from all liens, charges, taxes,   security interests, encumbrances, rights of first refusal, preemptive or similar rights and other   encumbrances with respect to the issue thereof (other than encumbrances pursuant to applicable   securities laws), and the Investor shall be entitled to all rights accorded to a holder of Common   Stock. An aggregate of 1,500,000 shares of Common Stock have been duly authorized and   reserved by the Company for issuance upon purchase under this Agreement as Shares.          Section 5.5. No Conflicts.  The execution, delivery and performance by the Company   of each of the Transaction Documents to which it is a party and the consummation by the Company   of the transactions contemplated hereby and thereby do not and shall not (i) result in a violation of   any provision of the Company’s Charter or Bylaws, (ii) result in a breach or violation of any of   the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time   or both, would become a default) under, or give rise to any rights of termination, amendment,   acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note,   bond, license, lease agreement, instrument or obligation to which the Company or any of its   Significant Subsidiaries is a party or is bound, (iii) create or impose a lien, charge or encumbrance   on any property or assets of the Company or any of its Significant Subsidiaries under any   agreement or any commitment to which the Company or any of its Significant Subsidiaries is a   party or by which the Company or any of its Significant Subsidiaries is bound or to which any of  their respective properties or assets is subject, or (iv) result in a violation of any federal, state, local  or foreign statute, rule, regulation, order, judgment or decree applicable to the Company or any of  its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries are  bound or affected (including federal and state securities laws and regulations and the rules and  regulations of the Trading Market or applicable Eligible Market), except, in the case of clauses  (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration,  cancellations, liens, charges, encumbrances and violations as would not, individually or in the  aggregate, have a Material Adverse Effect.  Except as specifically contemplated by this Agreement  or the Registration Rights Agreement and as required under the Securities Act and any applicable  state securities laws, the Company is not required under any federal, state, local or foreign law,  rule or regulation to obtain any consent, authorization or order of, or make any filing or registration  with, any court or governmental agency (including, without limitation, the Trading Market) in  order for it to execute, deliver or perform any of its obligations under the Transaction Documents  to which it is a party, or to issue the Shares to the Investor in accordance with the terms hereof and  thereof (other than such consents, authorizations, orders, filings or registrations as have been  obtained or made prior to the Closing Date); provided, however, that, for purposes of the   representation made in this sentence, the Company is assuming and relying upon the accuracy of   the representations and warranties of the Investor in this Agreement and the compliance by it with   its covenants and agreements contained in this Agreement and the Registration Rights Agreement.          Section 5.6. Commission Documents, Financial Statements; Disclosure Controls   and Procedures; Internal Controls Over Financial Reporting; Accountants.       11   4839-6950-8556\8 

 

                 (a)   The Company has timely filed (giving effect to permissible extensions in   accordance with Rule 12b-25 under the Exchange Act) all Commission Documents for the twelve   months preceding the date of this Agreement. The Company has delivered or made available to   the Investor via EDGAR or otherwise true and complete copies of the Commission Documents   filed with or furnished to the Commission prior to the Closing Date (including, without limitation,   the 2019 Form 10-K). No Subsidiary of the Company is required to file or furnish any report,  schedule, registration, form, statement, information or other document with the Commission. As  of its filing date, each Commission Document filed with or furnished to the Commission prior to  the Closing Date (including, without limitation, the 2019 Form 10-K) complied in all material  respects with the requirements of the Securities Act or the Exchange Act, as applicable, and other   federal, state and local laws, rules and regulations applicable to it, and, as of its filing date (or, if   amended or superseded by a filing prior to the Closing Date, on the date of such amended or   superseded filing). Each Registration Statement, on the date it is filed with the Commission, on   the date it is declared effective by the Commission, on each Fixed Purchase Date and on each   VWAP Purchase Date shall comply in all material respects with the requirements of the Securities   Act (including, without limitation, Rule 415 under the Securities Act) and shall not contain any   untrue statement of a material fact or omit to state a material fact required to be stated therein or   necessary in order to make the statements therein not misleading, except that this representation   and warranty shall not apply to statements in or omissions from such Registration Statement made   in reliance upon and in conformity with information relating to the Investor furnished to the   Company in writing by or on behalf of the Investor expressly for use therein. The Prospectus and   each Prospectus Supplement required to be filed pursuant to this Agreement or the Registration   Rights Agreement after the Closing Date, when taken together, on its date, on each Fixed Purchase   Exercise Date and on each Settlement Date, shall comply in all material respects with the   requirements of the Securities Act (including, without limitation, Rule 424(b) under the Securities   Act) and shall not contain any untrue statement of a material fact or omit to state a material fact   required to be stated therein or necessary in order to make the statements therein, in light of the   circumstances under which they were made, not misleading, except that this representation and   warranty shall not apply to statements in or omissions from the Prospectus or any Prospectus   Supplement made in reliance upon and in conformity with information relating to the Investor   furnished to the Company in writing by or on behalf of the Investor expressly for use therein. Each   Commission Document (other than the Initial Registration Statement or any New Registration   Statement, or the Prospectus included therein or any Prospectus Supplement thereto) to be filed   with or furnished to the Commission after the Closing Date and incorporated by reference in the   Initial Registration Statement or any New Registration Statement, or the Prospectus included   therein or any Prospectus Supplement thereto required to be filed pursuant to this Agreement or   the Registration Rights Agreement (including, without limitation, the Current Report), when such   document is filed with or furnished to the Commission and, if applicable, when such document   becomes effective, as the case may be, shall comply in all material respects with the requirements   of the Securities Act or the Exchange Act, as applicable, and other federal, state and local laws,   rules and regulations applicable to it. The Company has delivered or made available to the Investor   via EDGAR or otherwise true and complete copies of all comment letters and substantive   correspondence received by the Company from the Commission relating to the Commission   Documents filed with or furnished to the Commission as of the Closing Date, together with all   written responses of the Company thereto in the form such responses were filed via EDGAR. There   are no outstanding or unresolved comments or undertakings in such comment letters received by     12   4839-6950-8556\8 

 

     the Company from the Commission. The Commission has not issued any stop order or other order   suspending the effectiveness of any registration statement filed by the Company under the   Securities Act or the Exchange Act.                (b)   The financial statements of the Company included or incorporated by   reference in the Commission Documents, together with the related notes and schedules, comply in   all material respects with the requirements of the Securities Act and the Exchange Act and fairly   present the financial condition of the Company and its consolidated subsidiaries as of the dates   indicated and the results of operations and changes in cash flows for the periods therein specified in  conformity with generally accepted accounting principles in the United States (“GAAP”) consistently  applied throughout the periods involved; all non-GAAP financial information included or   incorporated by reference in the Commission Documents complies with the requirements of   Regulation G and Item 10 of Regulation S-K under the Securities Act, to the extent applicable; and,   except as disclosed in the Commission Documents, there are no material off-balance sheet  arrangements (as defined in Regulation S-K under the Act, Item 303(a)(4)(ii)) or any other  relationships with unconsolidated entities or other persons, that may have a material current or, to the  Company’s Knowledge, material future effect on the Company’s financial condition, results of  operations, liquidity, capital expenditures, capital resources or significant components of revenue or   expenses. No other financial statements or schedules are required to be included in the Commission   Documents.                 (c)   The Company and each of its Subsidiaries, on a consolidated basis, maintain   a system of internal accounting controls over financial reporting sufficient to provide reasonable   assurance that (i) transactions are executed in accordance with management’s general or specific  authorizations; (ii) transactions are recorded as necessary to permit preparation of financial  statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is  permitted only in accordance with management’s general or specific authorization; (iv) the  interactive data in eXtensible Business Reporting Language included or incorporated by reference  in the Commission Documents fairly presents the information called for in all material respects  and has been prepared in accordance with the Commission’s rules and guidelines applicable  thereto; and (v) the recorded accountability for assets is compared with the existing assets at  reasonable intervals and appropriate action is taken with respect to any differences.  Except as  described in the Commission Documents, since the end of the Company’s most recent audited  fiscal year, (i) the Company has no reason to believe that there has been any material weakness in  the Company’s internal control over financial reporting (whether or not remediated) and (ii) there  has been no change in the Company’s internal control over financial reporting that has materially  affected, or is reasonably likely to materially affect, the Company’s internal control over financial  reporting.               (d)   The Company and its Subsidiaries maintain a system of “disclosure controls  and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that complies with the  requirements of the Exchange Act and that has been designed to ensure that information required   to be disclosed by the Company in reports that it files or submits under the Exchange Act is   recorded, processed, summarized and reported within the time periods specified in the   Commission’s rules and forms, including controls and procedures designed to ensure that such   information is accumulated and communicated to the Company’s management as appropriate to   allow timely decisions regarding required disclosure and such disclosure controls and procedures     13   4839-6950-8556\8 

 

     are effective in all material respects to perform the functions for which they were established.  The   Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure   controls and procedures as required by Rule 13a-15 of the Exchange Act.                (e)   To the Company’s Knowledge, BDO USA, LLP, which has expressed its   opinion with respect to the consolidated financial statements and schedule as of December 31, 2019  and 2018, and for each of the three years in the period ended December 31, 2019, and management’s  assessment of the effectiveness of internal control over financial reporting as of December 31, 2019,  to be filed as a part of the Initial Registration Statement and incorporated by reference in the Initial  Registration Statement and the Prospectus included therein, is (x) an independent public accounting  firm within the meaning of the Act and the Rules and Regulations, (y) a registered public  accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes- Oxley Act”)) and (z) not in violation of the auditor independence requirements of the Sarbanes- Oxley Act.               (f)   The section entitled “Critical Accounting Policies” to be included or  incorporated by reference in the Initial Registration Statement and any New Registration Statement  (and any post-effective amendment thereto) shall accurately describe in all material respects (i) the  accounting policies that the Company believes are the most important in the portrayal of the  Company’s financial condition and results of operations and that require management’s most  difficult, subjective or complex judgments (“Critical Accounting Policies”); (ii) the judgments  and uncertainties affecting the application of Critical Accounting Policies; and (iii) the likelihood  that materially different amounts would be reported under different conditions or using different  assumptions, and an explanation thereof.               (g)   There is no failure on the part of the Company or, to the Knowledge of the  Company, any of the Company’s directors or officers, in their capacities as such, to comply in all  material respects with any provision of the Sarbanes-Oxley Act and the rules and regulations  promulgated in connection therewith that are applicable to the Company or its directors or officers  in their capacities as directors or officers of the Company.         Section 5.7. Subsidiaries.  As of the filing date of the 2019 Form 10-K, the Company   had no Significant Subsidiaries, and as of such date and the Closing Date, Sidewinder Drilling   LLC, a Delaware limited liability company that is wholly owned by the Company,  is the only   Subsidiary of the Company.          Section 5.8. No Material Adverse Effect or Material Adverse Change. Except as   otherwise disclosed in any Commission Documents, since the end of the Company’s most recent   audited fiscal year: (i) the Company has not experienced or suffered any Material Adverse Effect,   and there exists no current state of facts, condition or event which would have a Material Adverse   Effect; (ii) there has not occurred any material adverse change, or any development that would   reasonably be expected to result in a prospective material adverse change, in the condition,   financial or otherwise, or in the earnings, business or operations of the Company from that set   forth in the Commission Documents, including, without limitation, as a result of the recent  outbreak of COVID-19, or as a result of any measures intended to contain the outbreak of COVID- 19 imposed by any federal, state, local or foreign government or government agency in any country  or region in which the Company, or any of its agents, consultants, advisors or vendors, has assets     14   4839-6950-8556\8 

 

     or properties or conducts business, including, without limitation, any limitations, curtailments,   suspensions or closures of businesses, business offices or establishments, schools, properties and   other public areas due to quarantines, curfews, travel restrictions, workplace controls, “stay-at-  home” orders, social distancing requirements or guidelines or other public gathering restrictions   or limitations; (iii) neither the Company nor any of its Subsidiaries has incurred any material   liability or obligation, direct or contingent, nor entered into any material transaction; (iv) the   Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise   made any dividend or distribution of any kind on its capital stock other than ordinary and   customary dividends; and (v) there has not been any material change in the capital stock, short-  term debt or long-term debt of the Company.          Section 5.9. No Undisclosed Liabilities. Neither the Company nor any of its   Subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated,   secured or unsecured, absolute, accrued, contingent or otherwise) that would be required to be   disclosed on a balance sheet of the Company or any Subsidiary (including the notes thereto) in   conformity with GAAP and are not disclosed in the Commission Documents, other than those   incurred in the ordinary course of the Company’s or its Subsidiaries respective businesses since   December 31, 2019 and which, individually or in the aggregate, would not reasonably be expected  to have a Material Adverse Effect.         Section 5.10. No Undisclosed Events or Circumstances. No event or circumstance has   occurred or information exists with respect to the Company or any of its Subsidiaries or its or their   business, properties, liabilities, operations (including results thereof) or conditions (financial or   otherwise), which, under applicable law, rule or regulation, requires public disclosure or   announcement by the Company at or before the Closing but which has not been so publicly   announced or disclosed, except for events or circumstances which, individually or in the aggregate,   would not reasonably be expected to have a Material Adverse Effect.          Section 5.11. Indebtedness; Solvency.  The Company’s Quarterly Report on Form 10-Q   for its fiscal quarter ended June 30, 2020 sets forth, as of June 30, 2020, all outstanding secured  and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any  Subsidiary has commitments through such date. For the purposes of this Agreement,  “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of   $500,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all   guaranties, endorsements, indemnities and other contingent obligations in respect of Indebtedness   of others in excess of $500,000, whether or not the same are or should be reflected in the   Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable   instruments for deposit or collection or similar transactions in the ordinary course of business; and   (c) the present value of any lease payments in excess of $500,000 due under leases required to be   capitalized in accordance with GAAP.  There is no existing or continuing default or event of   default in respect of any Indebtedness of the Company or any of its Subsidiaries. The Company   has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant  to Title 11 of the United States Code or any similar federal or state bankruptcy law or law for the  relief of debtors, nor does the Company have any Knowledge that its creditors intend to initiate  involuntary bankruptcy, insolvency, reorganization or liquidation proceedings or other  proceedings for relief under Title 11 of the United States Code or any other federal or state     15   4839-6950-8556\8 

 

     bankruptcy law or any law for the relief of debtors. The Company is financially solvent and is   generally able to pay its debts as they become due.          Section 5.12. Title To Assets.  The Company and each of its Subsidiaries have good and   marketable title in fee simple to all real property and good and marketable title to all personal   property owned by them which is material to the business of the Company, in each case free and   clear of all liens, encumbrances and defects except such as are described in the Commission   Documents or such as do not materially affect the value of such property and do not interfere with   the use made and proposed to be made of such property by the Company and its Subsidiaries; and   any real property and buildings held under lease by the Company and its Subsidiaries are held by   it under valid, subsisting and enforceable leases with such exceptions as are not material and do   not interfere in any material respect with the use made and proposed to be made of such property   and buildings by the Company and its Subsidiaries, in each case except as described in the   Commission Documents.          Section 5.13. Actions Pending.  There are no legal or governmental proceedings pending   or, to the Knowledge of the Company, threatened to which the Company or any of its Subsidiaries   are a party or to which any of the properties of the Company or any of its Subsidiaries is subject   (i) other than proceedings accurately described in all material respects in the Commission   Documents and proceedings that, individually or in the aggregate, would not reasonably be   expected to have a Material Adverse Effect, or on the power or ability of the Company to perform   its obligations under this Agreement and the Registration Rights Agreement or to consummate the   transactions contemplated by the Transaction Documents or (ii) that are required to be described   in the Commission Documents and are not so described; and there are no statutes, regulations,   contracts or other documents that are required to be described in the Commission Documents or   to be filed as exhibits to the Commission Documents that are not described or filed as required.          Section 5.14. Compliance With Law; Compliance with Continued Listing Standards.   The business of the Company and the Subsidiaries has been and is presently being conducted in   compliance with all applicable federal, state, local and foreign governmental laws, rules,   regulations and ordinances, except as set forth in the Commission Documents and except for such   non-compliance which, individually or in the aggregate, would not have a Material Adverse Effect.   Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order   or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries,   and neither the Company nor any of its Subsidiaries will conduct its business in violation of any   of the foregoing, except in all cases for any such violations which could not, individually or in the  aggregate, have a Material Adverse Effect. The Company has not received any notice of any  continuing failure to maintain requirements for continued listing or quotation of its Common Stock  on an applicable Trading Market or in violation of any of the rules, regulations or requirements of  any applicable Trading Market, other than as disclosed to the Investor (including any intended  changes with respect to another applicable Trading Market in connection with any failure to  maintain such requirements).         Section 5.15. Certain Fees.  Except as set forth on Schedule 5.15, no brokerage or   finder’s fees or commissions are or will be payable by the Company to any broker, financial   advisor or consultant, finder, placement agent, investment banker, bank or other Person with  respect to the transactions contemplated by the Transaction Documents. The Investor shall have     16   4839-6950-8556\8 

 

     no obligation with respect to any fees or with respect to any claims made by or on behalf of other   Persons for fees of a type contemplated in this Section 5.15 incurred by the Company or its   Subsidiaries that may be due or payable in connection with the transactions contemplated by the  Transaction Documents.         Section 5.16. Disclosure.  The Company confirms that neither it nor any other Person   acting on its behalf has provided the Investor or any of its agents, advisors or counsel with any   information that constitutes or could reasonably be expected to constitute material, nonpublic   information concerning the Company or any of its Subsidiaries, other than the existence of the   transactions contemplated by the Transaction Documents. The Company understands and   confirms that the Investor will rely on the foregoing representations in effecting resales of Shares   under the Registration Statement. All disclosure provided to Investor regarding the Company and  its Subsidiaries, their businesses and the transactions contemplated by the Transaction Documents   (including, without limitation, the representations and warranties of the Company contained in the   Transaction Documents to which it is a party (as modified by the Disclosure Schedule)) furnished   in writing by or on behalf of the Company or any of its Subsidiaries for purposes of or in connection   with the Transaction Documents (other than forward-looking information and projections and   information of a general economic nature and general information about the Company’s industry),   taken together, is true and correct in all material respects on the date on which such information is   dated or certified, and does not contain any untrue statement of a material fact or omit to state any   material fact necessary in order to make the statements made therein, in the light of the   circumstances under which they were made, not misleading at such time.          Section 5.17. Operation of Business.                  (a)   The Company and its Subsidiaries possess all certificates, authorizations   and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to   conduct its business, except where the failure to possess such certificates, authorizations or permits   would not, individually or in the aggregate, have a Material Adverse Effect; and neither the   Company nor any of its Subsidiaries have received any notice of proceedings relating to the   revocation or modification of any such certificate, authorization or permit which, singly or in the   aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be   expected to have a Material Adverse Effect, except as described in the Commission Documents.   This Section 5.17(a) does not relate to environmental matters, such items being the subject of   Section 5.18.                (b)   The Company and its subsidiaries own or possess, or can acquire on   reasonable terms, all material patents, patent rights, licenses, inventions, copyrights, know how   (including trade secrets and other unpatented and/or unpatentable proprietary or confidential   information, systems or procedures), trademarks, service marks and trade names currently   employed by them in connection with the business now operated by them, except where the failure   to so own or possess would not, individually or in the aggregate, have a Material Adverse Effect,   and the Company has not received any notice of infringement of or conflict with asserted rights of   others with respect to any of the foregoing which, individually or in the aggregate, if the subject   of an unfavorable decision, ruling or finding, would reasonably be expected to have a Material   Adverse Effect.     17   4839-6950-8556\8 

 

           Section 5.18. Environmental Compliance.  The Company and each of its Subsidiaries   (i) is in compliance with any and all applicable federal, state and local laws and regulations relating   to the protection of human health and safety (to the extent such health and safety relates to exposure   to hazardous or toxic substances or wastes, pollutants or contaminants), the environment or  hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”),   (ii) has received all permits, licenses or other approvals required of them under applicable   Environmental Laws to conduct their respective businesses as they are currently being conducted   and (iii) is in compliance with all terms and conditions of any such permit, license or approval,   except where such noncompliance with Environmental Laws, failure to receive required permits,   licenses or other approvals or failure to comply with the terms and conditions of such permits,   licenses or approvals would not, individually or in the aggregate, reasonably be expected to have   a Material Adverse Effect.  There are no proceedings that are pending, or to the Company’s   Knowledge, threatened, against the Company or any of its Subsidiaries under Environmental Laws   in which a governmental authority is also a party, other than such proceedings regarding which it  is reasonably believed no monetary sanctions of $100,000 or more will be imposed.  There are no   costs or liabilities associated with Environmental Laws with respect to the operations or properties  of the Company or any of its subsidiaries (including, without limitation, any capital or operating  expenditures required for clean-up, closure of properties or compliance with Environmental Laws  or any permit, license or approval, or any related constraints on operating activities and any  potential liabilities to third parties) that would, individually or in the aggregate, reasonably be  expected to have a Material Adverse Effect.         Section 5.19. Material Agreements Except as set forth in the Commission Documents,   neither the Company nor any Subsidiary of the Company is a party to any written or oral contract,   instrument, agreement commitment, obligation, plan or arrangement, a copy of which would be   required to be filed with the Commission as an exhibit to an annual report on Form 10-K   (collectively, “Material Agreements”). Each of the Material Agreements described in the   Commission Documents conform in all material respects to the descriptions thereof contained or   incorporated by reference therein. Except as set forth in the Commission Documents, the Company   and each of its Subsidiaries have performed in all material respects all the obligations then required   to be performed by them under the Material Agreements, have received no notice of default or an   event of default by the Company or any of its Subsidiaries thereunder and are not aware of any   basis for the assertion thereof, and neither the Company or any of its Subsidiaries nor, to the   Knowledge of the Company, any other contracting party thereto are in default under any Material   Agreement now in effect, the result of which would have a Material Adverse Effect.  Except as set   forth in the Commission Documents, each of the Material Agreements is in full force and effect,   and constitutes a legal, valid and binding obligation enforceable in accordance with its terms   against the Company and/or any of its Subsidiaries and, to the Knowledge of the Company, each   other contracting party thereto, except as such enforceability may be limited by applicable   bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or   similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies   or by other equitable principles of general application.          Section 5.20. Transactions With Affiliates.  Except as set forth in the Commission   Documents, there are no loans, leases, agreements, contracts, royalty agreements, management   contracts, service arrangements or other continuing transactions exceeding $120,000 between (a)   the Company or any Subsidiary, on the one hand, and (b) any person or entity who would be     18   4839-6950-8556\8 

 

     covered by Item 404(a) of Regulation S-K, on the other hand.  Except as disclosed in the   Commission Documents, there are no outstanding amounts payable to or receivable from, or   advances by the Company or any of its Subsidiaries to, and neither the Company nor any of its   Subsidiaries is otherwise a creditor of or debtor to, any beneficial owner of more than 5% of the   outstanding shares of Common Stock, or any director, employee or affiliate of the Company or   any of its Subsidiaries, other than (i) reimbursement for reasonable expenses incurred on behalf of   the Company or any of its Subsidiaries or (ii) as part of the normal and customary terms of such   person’s employment or service as a director with the Company or any of its Subsidiaries.          Section 5.21. Employees; Labor Laws.  No material labor dispute with the employees   of the Company exists, except as described in the Commission Documents, or, to the Knowledge   of the Company, is imminent; and the Company is not aware of any existing, threatened or   imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or   contractors that would reasonably be expected to have a Material Adverse Effect. Neither the   Company nor any Subsidiary is in violation of or has received notice of any violation with respect   to any federal or state law relating to discrimination in the hiring, promotion or pay of employees,   nor any applicable federal or state wage and hour laws, nor any state law precluding the denial of   credit due to the neighborhood in which a property is situated, the violation of any of which could   reasonably be expected to have a Material Adverse Effect.          Section 5.22. Use of Proceeds.  The proceeds from the sale of the Shares by the Company   to Investor shall be used by the Company and its Subsidiaries in the manner as will be set forth in  the Prospectus included in any Registration Statement (and any post-effective amendment thereto)   and any Prospectus Supplement thereto filed pursuant to the Registration Rights Agreement.          Section 5.23. Investment Company Act Status.  The Company is not, and as a result of   the consummation of the transactions contemplated by the Transaction Documents and the   application of the proceeds from the sale of the Shares as will be set forth in the Prospectus   included in any Registration Statement (and any post-effective amendment thereto) and any   Prospectus Supplement thereto filed pursuant to the Registration Rights Agreement the Company   will not be an “investment company” within the meaning of the Investment Company Act of 1940,  as amended.         Section 5.24. ERISA.  No liability to the Pension Benefit Guaranty Corporation has been   incurred with respect to any Plan by the Company or any of its Subsidiaries which has had or   would have a Material Adverse Effect.  No “prohibited transaction” (as defined in Section 406 of   ERISA or Section 4975 of the Code) or “accumulated funding deficiency” (as defined in Section   302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred with   respect to any Plan which has had or would have a Material Adverse Effect, and the execution and   delivery of this Agreement and the issuance and sale of the Shares hereunder shall not result in   any of the foregoing events.  Each Plan is in compliance in all material respects with applicable   law, including ERISA and the Code; the Company has not incurred and does not expect to incur   liability under Title IV of ERISA with respect to the termination of, or withdrawal from, any Plan;   and each Plan for which the Company would have any liability that is intended to be qualified   under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred,   whether by action or failure to act, which would cause the loss of such qualifications.  As used in   this Section 5.24, the term “Plan” shall mean an “employee pension benefit plan” (as defined in     19   4839-6950-8556\8 

 

     Section 3 of ERISA) which is or has been established or maintained, or to which contributions are   or have been made, by the Company or any Subsidiary or by any trade or business, whether or not   incorporated, which, together with the Company or any Subsidiary, is under common control, as   described in Section 414(b) or (c) of the Code.          Section 5.25. Taxes.  The Company and each of its Subsidiaries has filed all federal, state,   local and foreign tax returns required to be filed through the date of this Agreement or have   requested extensions thereof (except where the failure to file would not, individually or in the  aggregate, reasonably be expected to have a Material Adverse Effect) and have paid all taxes  required to be paid thereon (except for cases in which the failure to file or pay would not reasonably  be expected to have a Material Adverse Effect, or, except as currently being contested in good  faith and for which reserves required by GAAP have been created in the financial statements of  the Company), and no tax deficiency has been determined adversely to the Company or any of its  Subsidiaries which have had a Material Adverse Effect, nor does the Company have any notice or  Knowledge of any tax deficiency which could reasonably be expected to be determined adversely  to the Company or any of its Subsidiaries and which would reasonably be expected to have a  Material Adverse Effect.         Section 5.26. Insurance. The Company and each of its Subsidiaries are insured by   insurers of recognized financial responsibility against such losses and risks and in such amounts  as are prudent and customary in the businesses in which it is engaged; neither the Company nor  any of its Subsidiaries have been refused any insurance coverage sought or applied for; and neither  the Company nor any of its Subsidiaries have any reason to believe that it will not be able to renew  its existing insurance coverage as and when such coverage expires or to obtain similar coverage  from similar insurers as may be necessary to continue its business at a cost that would not have a  Material Adverse Effect, except as described in the Commission Documents.         Section 5.27. Exemption from Registration. Subject to, and in reliance on, the   representations, warranties and covenants made herein by the Investor, the offer and sale of the   Shares in accordance with the terms and conditions of this Agreement is exempt from the   registration requirements of the Securities Act pursuant to Section 4(a)(2) and Rule 506(b) of   Regulation D; provided, however, that at the request of and with the express agreements of the   Investor (including, without limitation, the representations, warranties and covenants of Investor   set forth in Section 4.9 through 4.13), the Shares will be delivered to the Investor in book entry   through DTC and will not bear legends noting restrictions as to resale of such securities under   federal or state securities laws, nor will any such securities be subject to stop transfer instructions.          Section 5.28. No General Solicitation or Advertising. Neither the Company, nor any of   its Subsidiaries or Affiliates, nor any Person acting on its or their behalf, has engaged in any form   of general solicitation or general advertising (within the meaning of Regulation D) in connection   with the offer or sale of the Shares.          Section 5.29. No Integrated Offering. None of the Company, its Subsidiaries or any of   their Affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers   or sales of any security or solicited any offers to buy any security, under circumstances that would   require registration of the issuance of any of the Shares under the Securities Act, whether through   integration with prior offerings or otherwise, or cause this offering of the Shares to require approval     20   4839-6950-8556\8 

 

     of stockholders of the Company under any applicable stockholder approval provisions, including,   without limitation, under the rules and regulations of the Trading Market.  None of the Company,   its Subsidiaries, their Affiliates nor any Person acting on their behalf will take any action or steps   referred to in the preceding sentence that would require registration of the issuance of any of the   Shares under the Securities Act or cause the offering of any of the Shares to be integrated with   other offerings.          Section 5.30. Dilutive Effect. The Company is aware and acknowledges that issuance of   the Shares could cause dilution to existing stockholders and could significantly increase the  outstanding number of shares of Common Stock. The Company further acknowledges that its  obligation to issue Shares pursuant to the terms of a Fixed Purchase or VWAP Purchase in  accordance with this Agreement is, in each case, absolute and unconditional regardless of the  dilutive effect that such issuance may have on the ownership interests of other stockholders of the  Company.         Section 5.31. Manipulation of Price. Neither the Company nor any of its officers,   directors or Affiliates has, and, to the Knowledge of the Company, no Person acting on their behalf   has, (i) taken, directly or indirectly, any action designed or intended to cause or to result in the  stabilization or manipulation of the price of any security of the Company, or which caused or  resulted in, or which would in the future reasonably be expected to cause or result in, the  stabilization or manipulation of the price of any security of the Company, in each case to facilitate  the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or paid any compensation for  soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person any  compensation for soliciting another to purchase any other securities of the Company. Neither the  Company nor any of its officers, directors or Affiliates will during the term of this Agreement,  and, to the Knowledge of the Company, no Person acting on their behalf will during the term of  this Agreement, take any of the actions referred to in the immediately preceding sentence.         Section 5.32. Securities Act. Except as set forth in the Disclosure Schedule, the Company   has complied and shall comply with all applicable federal and state securities laws in connection   with the offer, issuance and sale of the Shares hereunder, including, without limitation, the   applicable requirements of the Securities Act. Each Registration Statement, upon filing with the   Commission and at the time it is declared effective by the Commission, shall satisfy all of the   requirements of the Securities Act to register the resale of the Registrable Securities included   therein by the Investor in accordance with the Registration Rights Agreement on a delayed or   continuous basis under Rule 415 under the Securities Act at then-prevailing market prices, and not   fixed prices. The Company is not, and has not previously been at any time, an issuer identified in,   or subject to, Rule 144(i).          Section 5.33. Listing and Maintenance Requirements; DTC Eligibility. As of the date   of this Agreement and the Closing Date, the Common Stock is registered pursuant to Section 12(b)  of the Exchange Act, and the Company has taken no action designed to, or which to its Knowledge   is likely to have the effect of, terminating the registration of the Common Stock under the   Exchange Act, nor has the Company received any notification that the Commission is   contemplating terminating such registration. As of the date of this Agreement and the Closing   Date, the Company has not received notice from the Trading Market or any Eligible Market on   which the Common Stock is or has been listed or quoted to the effect that the Company is not in     21   4839-6950-8556\8 

 

     compliance with the listing or maintenance requirements of such Trading Market or Eligible   Market, as applicable. As of the Closing Date, the Company is in compliance with all such listing   and maintenance requirements. The Common Stock is eligible for participation in the DTC book   entry system and has shares on deposit at DTC for transferred electronically to third parties via   DTC through its Deposit/Withdrawal at Custodian (“DWAC”) delivery system. The Company has  not received notice from DTC to the effect that a suspension of, or restriction on, accepting  additional deposits of the Common Stock, electronic trading or book-entry services by DTC with   respect to the Common Stock is being imposed or is contemplated.          Section 5.34. Application of Takeover Protections. The Company and its Board of   Directors have taken all necessary action, if any, in order to render inapplicable any control share   acquisition, business combination, poison pill (including any distribution under a rights   agreement) or other similar anti-takeover provision under the Company’s Charter or the laws of   its state of incorporation that is or could become applicable to the Investor as a result of the Investor   and the Company fulfilling their respective obligations or exercising their respective rights under   the Transaction Documents (as applicable), including, without limitation, as a result of the  Company’s issuance of the Shares and the Investor’s ownership of the Shares.         Section 5.35. No Unlawful Payments.  Neither the Company nor any of its Subsidiaries   nor any director or officer, nor, to the Knowledge of the Company, any employee, agent,   representative or Affiliate of the Company, has taken within the past five years any action in  furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or   giving of money, property, gifts or anything else of value, directly or indirectly, to any   “government official” (including any officer or employee of a government or government-owned   or controlled entity or of a public international organization, or any person acting in an official  capacity for or on behalf of any of the foregoing, or any political party or party official or candidate  for political office) to influence official action or secure an improper advantage (to the extent  acting on behalf of or providing services to the Company); and the Company and its Subsidiaries  have conducted their businesses within the past five years in compliance with the U.S. Foreign  Corrupt Practices Act of 1977, as amended (the “FCPA”), any applicable law or regulation   implementing the OECD Convention on Combating Bribery of Foreign Public Officials in   International Business Transactions, signed December 17, 1997, the U.K. Bribery Act 2010 and   other applicable anti-corruption, anti-money laundering and anti-bribery laws, and have instituted   and maintain policies and procedures designed to promote and achieve compliance with such laws   and with the representation and warranty contained herein.          Section 5.36. Money Laundering Laws.  The operations of the Company are and have   been conducted at all times within the past five years in material compliance with all applicable   financial recordkeeping and reporting requirements, including those of the Currency and Foreign   Transactions Reporting Act of 1970, as amended, and the applicable anti-money laundering   statutes, including but not limited to, applicable federal, state, international, foreign or other laws,  regulations or government guidance regarding anti-money laundering, including, without limitation,   Title 18 US. Code section 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international  anti-money laundering principles or procedures by an intergovernmental group or organization, such  as the Financial Action Task Force on Money Laundering, of which the United States is a member  and with which designation the United States representative to the group or organization continues to  concur, all as amended, and any Executive order, directive, or regulation pursuant to the authority of     22   4839-6950-8556\8 

 

     any of the foregoing, or any orders or licenses issued thereunder, of jurisdictions where the Company   conducts business, the rules and regulations thereunder and any related or similar rules, regulations   or guidelines, issued, administered or enforced by any governmental agency (collectively, the   “Money Laundering Laws”), and no action, suit or proceeding by or before any court or   governmental agency, authority or body or any arbitrator involving the Company with respect to   the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.          Section 5.37. OFAC.  Neither the Company nor any of its Subsidiaries, nor any director,   officer, or employee thereof, nor, to the Company’s Knowledge, any agent, affiliate or   representative of the Company, is a Person that is, or is owned or controlled by a Person that is (i)   the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office   of Foreign Assets Control, the United Nations Security Council, the European Union, Her   Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor (ii)   located, organized or resident in a country or territory that is the subject of Sanctions (including,  without limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria).  Neither the Company nor  any of its Subsidiaries will, directly or indirectly, use the proceeds from the sale of Shares under  this Agreement, or lend, contribute or otherwise make available such proceeds to any Subsidiary,   joint venture partner or other Person (a) to fund or facilitate any activities or business of or with  any Person or in any country or territory that, at the time of such funding or facilitation, is the  subject of Sanctions, or (b) in any other manner that will result in a violation of Sanctions by any  Person (including any Person participating in the offering, whether as underwriter, advisor,  investor or otherwise).  For the past five years, neither the Company nor any of its Subsidiaries  have knowingly engaged in, or are now knowingly engaged in, any dealings or transactions with  any Person, or in any country or territory, that at the time of the dealing or transaction is or was  the subject of Sanctions.         Section 5.38. U.S. Real Property Holding Corporation. Neither the Company nor any   of its Subsidiaries is, or has ever been, and so long as any of the Shares are held by the Investor,   shall become a U.S. real property holding corporation within the meaning of Section 897 of the   Code.          Section 5.39. Bank Holding Company Act.  Neither the Company nor any of its   Subsidiaries or affiliates is subject to the Bank Holding Company Act of 1956, as amended (the  “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the  “Federal Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls,  directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting   securities or twenty-five percent or more of the total equity of a bank or any entity that is subject   to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its   Subsidiaries or affiliates exercises a controlling influence over the management or policies of a   bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.          Section 5.40. Information Technology; Compliance With Data Privacy Laws. Except   as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse   Effect, the Company and its Subsidiaries’ information technology equipment, computers, systems,   networks, hardware, software, websites, and databases (collectively, “IT Systems”) are adequate   for, and operate and perform as reasonably required to operate the business of the Company and   its Subsidiaries as currently conducted, free and clear of all material bugs, errors, defects, Trojan     23   4839-6950-8556\8 

 

     horses, time bombs, malware and other malicious code.  Except as would not, individually or in   the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its   Subsidiaries have implemented and maintained commercially reasonable physical, technical and   administrative controls, policies, procedures, and safeguards designed to protect their material   confidential information and the integrity, continuous operation, and security of all IT Systems   and Personal Data used in connection with their businesses.  “Personal Data” means any   information about an individual person that would enable the Company, either alone or in   combination with other information, to identify a natural person.  Within the past five years, neither   the Company nor its Subsidiaries have experienced a material information security incident except   for those that have been remedied without causing a Material Adverse Effect or a legal obligation   to notify any other Person.  The Company and its Subsidiaries are in material compliance with all   applicable state and federal data privacy and security laws of jurisdictions where the Company and   its Subsidiaries conduct business.          Section 5.41. No Disqualification Events.  None of the Company, any of its   predecessors, any affiliated issuer, any director, executive officer, other officer of the Company   participating in the offering contemplated hereby, any beneficial owner of 20% or more of the   Company's outstanding voting equity securities, calculated on the basis of voting power, nor any   promoter (as that term is defined in Rule 405 under the Securities Act) connected with the   Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any  of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities  Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2)  or (d)(3) under the Securities Act. The Company has exercised reasonable care to determine  whether any Issuer Covered Person is subject to a Disqualification Event.         Section 5.42. Accuracy of Certain Summaries and Statements. The statements to be   set forth or incorporated by reference, as applicable, in each Registration Statement (and each post-  effective amendment thereto) and the Prospectus included therein under the captions “Description   of Capital Stock,” and in the 2019 Form 10-K under the caption “Certain Relationships and Related   Transactions, and Director Independence”, insofar as they purport to summarize the provisions of   the laws and documents referred to therein, are accurate summaries in all material respects.          Section 5.43. Acknowledgement Regarding Investor’s Acquisition of Shares. The   Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s-  length purchaser with respect to this Agreement and the transactions contemplated by the   Transaction Documents. The Company further acknowledges that the Investor is not acting as a   financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this   Agreement and the transactions contemplated by the Transaction Documents, and any advice given   by the Investor or any of its representatives or agents in connection therewith is merely incidental   to the Investor’s acquisition of the Shares. The Company further represents to the Investor that the   Company’s decision to enter into the Transaction Documents to which it is a party has been based   solely on the independent evaluation of the transactions contemplated thereby by the Company   and its representatives. The Company acknowledges and agrees that the Investor has not made and   does not make any representations or warranties with respect to the transactions contemplated by   the Transaction Documents other than those specifically set forth in Article IV.      24   4839-6950-8556\8 

 

                                      ARTICLE VI                            ADDITIONAL COVENANTS          The Company covenants with the Investor, and the Investor covenants with the Company,   as follows, which covenants of one party are for the benefit of the other party, during the   Investment Period (and with respect to the Company, for the period following the termination of   this Agreement specified in Section 8.3 pursuant to and in accordance with Section 8.3):          Section 6.1. Securities Compliance. The Company shall notify the Commission and the   Trading Market, if and as applicable, in accordance with their respective rules and regulations, of   the transactions contemplated by the Transaction Documents, and shall take all necessary action,   undertake all proceedings and obtain all registrations, permits, consents and approvals for the legal   and valid issuance of the Shares to the Investor in accordance with the terms of the Transaction   Documents, as applicable.          Section 6.2. Reservation of Common Stock. The Company has available and the   Company shall reserve and keep available at all times, free of preemptive and other similar rights   of stockholders, the requisite aggregate number of authorized but unissued shares of Common  Stock to enable the Company to timely effect the issuance, sale and delivery of all Shares pursuant  to this Agreement. Without limiting the generality of the foregoing, as of the date of this   Agreement the Company has reserved, and as of the Commencement Date shall have continued to   reserve, out of its authorized and unissued Common Stock, 1,500,000 shares of Common Stock   solely for the purpose of effecting Fixed Purchases and VWAP Purchases under this Agreement.   The number of shares of Common Stock so reserved for the purpose of effecting Fixed Purchases   and VWAP Purchases under this Agreement may be increased from time to time by the Company   from and after the Commencement Date, and such number of reserved shares may be reduced from   and after the Commencement Date only by the number of Shares actually issued, sold and   delivered to the Investor pursuant to any Fixed Purchase and VWAP Purchase effected from and   after the Commencement Date pursuant to this Agreement.          Section 6.3. Registration and Listing. The Company shall use its commercially   reasonable efforts to cause the Common Stock to continue to be registered as a class of securities   under Sections 12(b) or 12(g) of the Exchange Act, and to comply with its reporting and filing   obligations under the Exchange Act, and shall not take any action or file any document (whether   or not permitted by the Securities Act or the Exchange Act) to terminate or suspend such   registration or to terminate or suspend its reporting and filing obligations under the Exchange Act   or Securities Act, except as permitted herein. The Company shall use its commercially reasonable  efforts to continue the listing and trading of its Common Stock and the listing of the Shares  purchased by the Investor hereunder on the Trading Market and to comply with the Company’s   reporting, filing and other obligations under the b rules and regulations of the Trading Market. The  Company shall not take any action which could be reasonably expected to result in the delisting  or suspension of the Common Stock on the Trading Market. If the Company receives any final and  non-appealable notice that the listing or quotation of the Common Stock on the Trading Market  shall be terminated on a date certain, the Company shall promptly (and in any case within 24 hours)  notify the Investor of such fact in writing and shall use its commercially reasonable efforts to cause  the Common Stock to be listed or quoted on another Eligible Market.     25   4839-6950-8556\8 

 

         Section 6.4. Compliance with Laws.               (i)   During the Investment Period, the Company (a) shall comply, and cause  each Subsidiary to comply, with all laws, rules, regulations and orders applicable to the business  and operations of the Company and its Subsidiaries, except as would not have a Material Adverse  Effect and (b) with applicable provisions of the Securities Act and the Exchange Act, including  Regulation M thereunder, applicable state securities or “Blue Sky” laws, and applicable listing  rules of the Trading Market or Eligible Market, except as would not, individually or in the  aggregate, prohibit or otherwise interfere with the ability of the Company to enter into and perform  its obligations under this Agreement in any material respect or for Investor to conduct resales of  Shares under the Registration Statement in any material respect. Without limiting the foregoing,  neither the Company, nor any of its Subsidiaries, nor to the Knowledge of the Company, any of  their respective directors, officers, agents, employees or any other Persons acting on their behalf  shall, in connection with the operation of the Company’s and its Subsidiaries’ respective  businesses, (1) use any corporate funds for unlawful contributions, payments, gifts or  entertainment or to make any unlawful expenditures relating to political activity to government  officials, candidates or members of political parties or organizations, (2) pay, accept or receive any  unlawful contributions, payments, expenditures or gifts, or (3) violate or operate in noncompliance  with any export restrictions, anti-boycott regulations, embargo regulations or other applicable  domestic or foreign laws and regulations, including, without limitation, the FCPA and the Money  Laundering Laws.               (ii)  The Investor shall comply with all laws, rules, regulations and orders  applicable to the performance by it of its obligations under this Agreement and its investment in  the Shares, except as would not, individually or in the aggregate, prohibit or otherwise interfere  with the ability of the Investor to enter into and perform its obligations under this Agreement in  any material respect. Without limiting the foregoing, the Investor shall comply with all applicable  provisions of the Securities Act and the Exchange Act, including Regulation M thereunder, and all  applicable state securities or “Blue Sky” laws.         Section 6.5. Keeping of Records and Books of Account; Due Diligence.               (i)   During the Investment Period, (a) the Company shall keep and cause each  Subsidiary to keep adequate records and books of account, in which complete entries shall be made  in accordance with GAAP consistently applied, reflecting all financial transactions of the  Company and its Subsidiaries, and in which, for each fiscal year, all proper reserves for  depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in  connection with its business shall be made; and (b) the Company shall maintain a system of internal  accounting controls that (x) pertain to the maintenance of records that in reasonable detail  accurately and fairly reflect the transactions and dispositions of the assets of the Company; (y)  provide reasonable assurance that transactions are recorded as necessary to permit preparation of  financial statements in accordance with generally accepted accounting principles, and that receipts  and expenditures of the Company are being made only in accordance with authorizations of  management and directors of the Company; and (z) provide reasonable assurance regarding  prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s  assets that could have a material effect on the Company’s financial statements (it being  acknowledged and agreed that the identification by the Company and/or its independent registered    26  4839-6950-8556\8 

 

     public accounting firm of any “significant deficiencies” or “material weaknesses” (each as defined  by the Public Company Accounting Oversight Board) in the Company’s internal controls over its  financial reporting shall not, in and of itself, constitute a breach of this Section 6.5(i)).               (ii)   Subject to the requirements of Section 6.12, from time to time from and   after the Closing Date, the Company shall make available for inspection and review by the Investor   during normal business hours and after reasonable notice, customary documentation reasonably   requested by the Investor and/or its appointed counsel or advisors to conduct due diligence;   provided, however, that after the Closing Date, the Investor’s continued due diligence shall not be   a condition precedent to the Company’s right to deliver to the Investor any Fixed Purchase Notice   or any VWAP Purchase Notice or the settlement thereof.          Section 6.6. No Frustration; No Variable Rate Transactions.                (i)   No Frustration. The Company shall not enter into, announce or   recommend to its stockholders any agreement, plan, arrangement or transaction in or of which the   terms thereof would restrict, materially delay, conflict with or impair the ability or right of the   Company to perform its obligations under the Transaction Documents to which it is a party,   including, without limitation, the obligation of the Company to deliver (i) the Shares to the Investor   in respect of a Fixed Purchase on the Trading Day immediately following the applicable Fixed   Purchase Date, and (ii) the Shares to the Investor in respect of a VWAP Purchase not later than   the Trading Day immediately following the applicable VWAP Purchase Date. For the avoidance   of doubt, nothing in this Section 6.6(i) shall in any way limit the Company’s right to terminate this   Agreement in accordance with Section 8.2 (subject in all cases to Section 8.3).                (ii)  No Variable Rate Transactions. The Company shall not effect or enter   into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common   Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate   Transaction, other than in connection with an Exempt Issuance. The Investor shall be entitled to   seek injunctive relief against the Company and its Subsidiaries to preclude any such issuance,   which remedy shall be in addition to any right to collect damages, without the necessity of showing   economic loss and without any bond or other security being required.          Section 6.7. Corporate Existence.  The Company shall take all steps necessary to   preserve and continue the corporate existence of the Company; provided, however, that, except as   provided in Section 6.8, nothing in this Agreement shall be deemed to prohibit the Company from   engaging in any Fundamental Transaction with another Person. For the avoidance of doubt,   nothing in this Section 6.7 shall in any way limit the Company’s right to terminate this Agreement   in accordance with Section 8.2 (subject in all cases to Section 8.3).          Section 6.8. Fundamental Transaction. If a Fixed Purchase Notice or a VWAP   Purchase Notice has been delivered to the Investor and the transactions contemplated therein have   not yet been fully settled in accordance with the terms and conditions of this Agreement, the   Company shall not effect any Fundamental Transaction until the expiration of five (5) Trading  Days following the date of full settlement thereof and the issuance to the Investor of all of the   Shares issuable pursuant to the Fixed Purchase or VWAP Purchase to which such Fixed Purchase   Notice or VWAP Purchase Notice, respectively, relates.     27   4839-6950-8556\8 

 

         Section 6.9. Selling Restrictions.               (i)   Except as expressly set forth below, the Investor covenants that from and  after the Closing Date through and including the Trading Day next following the expiration or  termination of this Agreement (the “Restricted Period”), neither the Investor nor any of its  Affiliates nor any entity managed or controlled by the Investor (collectively, the “Restricted  Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall, directly  or indirectly, (x) engage in any Short Sales involving the Company’s securities or (y) grant any  option to purchase, or acquire any right to dispose of or otherwise dispose for value of, any shares  of Common Stock or any securities convertible into or exercisable or exchangeable for any shares  of Common Stock, or enter into any swap, hedge or other similar agreement that transfers, in whole  or in part, the economic risk of ownership of the Common Stock. Notwithstanding the foregoing,  it is expressly understood and agreed that nothing contained herein shall (without implication that  the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period  from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) the  Shares; or (2) selling a number of shares of Common Stock equal to the number of Shares that  such Restricted Person is or may be obligated to purchase under a pending Fixed Purchase Notice  or a pending VWAP Purchase Notice but has not yet taken possession of so long as such Restricted  Person (or the Broker-Dealer, as applicable) delivers the Shares purchased pursuant to such Fixed  Purchase Notice or such VWAP Purchase Notice (as applicable) to the purchaser thereof or the  applicable Broker-Dealer.               (ii)  In addition to the foregoing, in connection with any sale of Shares  (including any sale permitted by paragraph (i) above), the Investor shall comply in all respects  with all applicable laws, rules, regulations and orders, including, without limitation, the  requirements of the Securities Act and the Exchange Act.         Section 6.10. Effective Registration Statement.  During the Investment Period, the  Company shall use its commercially reasonable efforts to maintain the continuous effectiveness of  the Initial Registration Statement and each New Registration Statement filed with the Commission  under the Securities Act for the applicable Registration Period pursuant to and in accordance with  the Registration Rights Agreement.         Section 6.11. Blue Sky.  The Company shall take such action, if any, as is necessary by  the Company in order to obtain an exemption for or to qualify the Shares for sale by the Company  to the Investor pursuant to the Transaction Documents, and at the request of the Investor, the  subsequent resale of Registrable Securities by the Investor, in each case, under applicable state  securities or “Blue Sky” laws and shall provide evidence of any such action so taken to the Investor  from time to time following the Closing Date; provided, however, that the Company shall not be  required in connection therewith or as a condition thereto to (x) qualify to do business in any  jurisdiction where it would not otherwise be required to qualify but for this Section 6.11, (y) subject  itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process  in any such jurisdiction.         Section 6.12. Non-Public Information.  Neither the Company or any of its Subsidiaries,  nor any of their respective directors, officers, employees or agents shall disclose any material non- public information about the Company to the Investor, unless a simultaneous public announcement    28  4839-6950-8556\8 

 

     thereof is made by the Company in the manner contemplated by Regulation FD. In the event of a   breach of the foregoing covenant by the Company or any of its Subsidiaries, or any of their   respective directors, officers, employees and agents (as determined in the reasonable good faith   judgment of the Investor), (i) the Investor shall promptly provide written notice of such breach to   the Company and (ii) after such notice has been provided to the Company and, provided that the   Company shall have failed to publicly disclose such material, non-public information within 24   hours following demand therefor by the Investor, in addition to any other remedy provided herein   or in the other Transaction Documents, the Investor shall have the right to make a public disclosure,   in the form of a press release, public advertisement or otherwise, of such material, non-public   information without the prior approval by the Company, any of its Subsidiaries, or any of their   respective directors, officers, employees or agents. The Investor shall not have any liability to the   Company, any of its Subsidiaries, or any of their respective directors, officers, employees,  stockholders or agents, for any such disclosure.         Section 6.13. Broker/Dealer.  The Investor shall use one or more broker-dealers to   effectuate all sales, if any, of the Shares that it may purchase or otherwise acquire from the   Company pursuant to the Transaction Documents, as applicable, which (or whom) shall be   unaffiliated with the Investor and not then currently engaged or used by the Company, and a DTC   participant (collectively, the “Broker-Dealer”). The Investor shall, from time to time, provide the   Company and its transfer agent with all information regarding the Broker-Dealer reasonably   requested by the Company. The Investor shall be solely responsible for all fees and commissions   of the Broker-Dealer, which shall not exceed customary brokerage fees and commissions and shall   be responsible for designating only a DTC participant eligible to receive DWAC Shares.          Section 6.14. Disclosure Schedule.                (i)   The Company may, from time to time, update the Disclosure Schedule as   may be required to satisfy the conditions set forth in Section 7.2(i) and Section 7.3(i) (to the extent   such condition set forth in Section 7.3(i) relates to the condition in Section 7.2(i) as of a specific  Fixed Purchase Date and VWAP Purchase Date).  For purposes of this Section 6.14, any disclosure  made in a schedule to the Compliance Certificate shall be deemed to be an update of the Disclosure  Schedule. Notwithstanding anything in this Agreement to the contrary, no update to the Disclosure  Schedule pursuant to this Section 6.14 shall cure any breach of a representation or warranty of the  Company contained in this Agreement and made prior to the update and shall not affect any of the  Investor’s rights or remedies with respect thereto.               (ii)  Notwithstanding anything to the contrary contained in the Disclosure  Schedule or in this Agreement, the information and disclosure contained in any Schedule of the   Disclosure Schedule shall be deemed to be disclosed and incorporated by reference in any other   Schedule of the Disclosure Schedule as though fully set forth in such Schedule for which   applicability of such information and disclosure is readily apparent on its face.  The fact that any   item of information is disclosed in the Disclosure Schedule shall not be construed to mean that   such information is required to be disclosed by this Agreement.  Except as expressly set forth in   this Agreement, such information and the thresholds (whether based on quantity, qualitative   characterization, dollar amounts or otherwise) set forth herein shall not be used as a basis for   interpreting the terms “material” or “Material Adverse Effect” or other similar terms in this   Agreement.     29   4839-6950-8556\8 

 

         Section 6.15. Delivery of Bring Down Opinions and Compliance Certificates Upon  Occurrence of Certain Events. Within three (3) Trading Days immediately following (i) the end  of each PEA Period, if the Company is required under the Securities Act to file with the  Commission (A) a post-effective amendment to the Initial Registration Statement required to be  filed by the Company with the Commission pursuant to Section 2(a) of the Registration Rights  Agreement, (B) a New Registration Statement required to be filed by the Company with the  Commission pursuant to Section 2(c) of the Registration Rights Agreement, or (C) a post-effective  amendment to a New Registration Statement required to be filed by the Company with the  Commission pursuant to Section 2(c) of the Registration Rights Agreement, in each case with  respect to a fiscal year ending after the Commencement Date, to register the resale of Shares by  the Investor under the Securities Act pursuant to this Agreement and the Registration Rights  Agreement, and (ii) the date the Company files with the Commission (A) a Prospectus Supplement  to the Prospectus contained in the Initial Registration Statement or any New Registration Statement  under the Securities Act, (B) an annual report on Form 10-K under the Exchange Act with respect  to a fiscal year ending after the Commencement Date, (C) an amendment on Form 10-K/A to an  annual report on Form 10-K under the Exchange Act with respect to a fiscal year ending after the  Commencement Date,  which contains amended material financial information (or a restatement  of material financial information) or an amendment to other material information contained in a  previously filed Form 10-K, and (D) a Commission Document under the Exchange Act (other than  those referred to in clauses (ii)(A) and (ii)(B) of this Section 6.15), which contains amended  material financial information (or a restatement of material financial information) or an  amendment to other material information contained or incorporated by reference in the Initial  Registration Statement, any New Registration Statement, or the Prospectus or any Prospectus  Supplement contained in the Initial Registration Statement or any New Registration Statement (it  being hereby acknowledged and agreed that the filing by the Company with the Commission of a  quarterly report on Form 10-Q that includes only updated financial information as of the end of  the Company’s most recent fiscal quarter shall not, in and of itself, constitute an “amendment” or  “restatement” for purposes of clause (ii) of this Section 6.15), in each case of this clause (ii) if the  Company is not also then required under the Securities Act to file a post-effective amendment to  the Initial Registration Statement, any New Registration Statement or a post-effective amendment  to any New Registration Statement, in each case with respect to a fiscal year ending after the  Commencement Date, to register the resale of Shares by the Investor under the Securities Act  pursuant to this Agreement and the Registration Rights Agreement, and in any case of this clause  (ii), not more than once per calendar quarter, the Company shall (I) deliver to the Investor a  Compliance Certificate, dated such date, and (II) cause to be furnished to the Investor an opinion  “bring down” from outside counsel to the Company substantially in the form mutually agreed to  by the Company and the Investor prior to the date of this Agreement, modified, as necessary, to  relate to such Registration Statement or post-effective amendment, or the Prospectus contained  therein as then amended or supplemented by such Prospectus Supplement, as applicable (each such  opinion, a “Bring Down Opinion”).                                   ARTICLE VII         CONDITIONS TO CLOSING AND CONDITIONS TO THE SALE AND                           PURCHASE OF THE SHARES         Section 7.1. Conditions Precedent to Closing. The Closing is subject to the satisfaction  of each of the conditions set forth in this Section 7.1 on the Closing Date.    30  4839-6950-8556\8 

 

                 (i)   Accuracy of the Investor’s Representations and Warranties.  The   representations and warranties of the Investor contained in this Agreement (a) that are not qualified   by “materiality” shall be true and correct in all material respects as of the Closing Date, except to   the extent such representations and warranties are as of another date, in which case, such   representations and warranties shall be true and correct in all material respects as of such other   date and (b) that are qualified by “materiality” shall be true and correct as of the Closing Date,   except to the extent such representations and warranties are as of another date, in which case, such   representations and warranties shall be true and correct as of such other date.                (ii)  Accuracy of the Company’s Representations and Warranties.  The   representations and warranties of the Company contained in this Agreement (a) that are not   qualified by “materiality” or “Material Adverse Effect” shall be true and correct in all material   respects as of the Closing Date, except to the extent such representations and warranties are as of   another date, in which case, such representations and warranties shall be true and correct in all  material respects as of such other date and (b) that are qualified by “materiality” or “Material  Adverse Effect” shall be true and correct as of the Closing Date, except to the extent such  representations and warranties are as of another date, in which case, such representations and  warranties shall be true and correct as of such other date.               (iii) Payment of Document Preparation Fee, Investor Expense   Reimbursement and Commitment Fee. On or prior to the Closing Date, the Company shall have   paid by wire transfer of immediately available funds (a) to an account designated by the Investor’s   counsel on or prior to the date hereof, the Document Preparation Fee in accordance with Section  10.1(i), (b) to an account designated by the Investor on or prior to the date hereof, the Investor   Expense Reimbursement in accordance with Section 10.1(i), and (c) to an account designated by   the Investor on or prior to the date hereof, the Commitment Fee in accordance with Section 10.1(ii),   in each case, all of which Document Preparation Fee, Investor Expense Reimbursement and   Commitment Fee shall be fully earned and non-refundable as of the Closing Date, regardless of  whether any Fixed Purchases or VWAP Purchases are made or settled hereunder or any subsequent  termination of this Agreement.               (iv)  Closing Deliverables. At the Closing, counterpart signature pages of this   Agreement and the Registration Rights Agreement executed by each of the parties hereto shall be  delivered as provided in Section 2.2. Simultaneously with the execution and delivery of this   Agreement and the Registration Rights Agreement, the Investor’s counsel shall have received (a)   the opinions of outside counsel to the Company, dated the Closing Date, in the forms mutually   agreed to by the Company and the Investor prior to the date of this Agreement, and (b) the closing   certificate from the Company, dated the Closing Date, in the form of Exhibit B hereto.          Section 7.2. Conditions Precedent to Commencement. The right of the Company to   commence delivering Fixed Purchase Notices and VWAP Purchase Notices under this Agreement,   and the obligation of the Investor to accept Fixed Purchase Notices and VWAP Purchase Notices   delivered to the Investor by the Company under this Agreement, are subject to the initial   satisfaction, at Commencement, of each of the conditions set forth in this Section 7.2.                (i)   Accuracy of the Company’s Representations and Warranties.  The   representations and warranties of the Company contained in this Agreement (a) that are not     31   4839-6950-8556\8 

 

     qualified by “materiality” or “Material Adverse Effect” shall have been true and correct in all   material respects when made and shall be true and correct in all material respects as of the  Commencement Date with the same force and effect as if made on such date, except to the extent   such representations and warranties are as of another date, in which case, such representations and   warranties shall be true and correct in all material respects as of such other date and (b) that are   qualified by “materiality” or “Material Adverse Effect” shall have been true and correct when   made and shall be true and correct as of the Commencement Date with the same force and effect   as if made on such date, except to the extent such representations and warranties are as of another   date, in which case, such representations and warranties shall be true and correct as of such other   date.                (ii)  Performance of the Company.  The Company shall have performed,   satisfied and complied in all material respects with all covenants, agreements and conditions   required by this Agreement and the Registration Rights Agreement to be performed, satisfied or   complied with by the Company at or prior to the Commencement. The Company shall deliver to  the Investor on the Commencement Date the compliance certificate substantially in the form  attached hereto as Exhibit C (the “Compliance Certificate”).                (iii) Initial Registration Statement Effective. The Initial Registration   Statement covering the resale by the Investor of the Registrable Securities included therein   required to be filed by the Company with the Commission pursuant to Section 2(a) of the   Registration Rights Agreement shall have been declared effective under the Securities Act by the   Commission, and the Investor shall be permitted to utilize the Prospectus therein to resell all of   the Registrable Securities included in such Prospectus.                (iv)  No Material Notices. None of the following events shall have occurred and   be continuing: (a) receipt of any request by the Commission or any other federal or state   governmental authority for any additional information relating to the Initial Registration   Statement, the Prospectus contained therein or any Prospectus Supplement thereto, or for any   amendment of or supplement to the Initial Registration Statement, the Prospectus contained therein   or any Prospectus Supplement thereto; (b) the issuance by the Commission or any other federal or   state governmental authority of any stop order suspending the effectiveness of the Initial   Registration Statement or prohibiting or suspending the use of the Prospectus contained therein or   any Prospectus Supplement thereto, or of the suspension of qualification or exemption from   qualification of the Shares for offering or sale in any jurisdiction, or the initiation or contemplated   initiation of any proceeding for such purpose; or (c) the occurrence of any event or the existence   of any condition or state of facts, which makes any statement of a material fact made in the Initial   Registration Statement, the Prospectus contained therein or any Prospectus Supplement thereto   untrue or which requires the making of any additions to or changes to the statements then made in   the Initial Registration Statement, the Prospectus contained therein or any Prospectus Supplement   thereto in order to state a material fact required by the Securities Act to be stated therein or   necessary in order to make the statements then made therein (in the case of the Prospectus or any   Prospectus Supplement, in light of the circumstances under which they were made) not misleading,   or which requires an amendment to the Initial Registration Statement or a supplement to the   Prospectus contained therein or any Prospectus Supplement thereto to comply with the Securities   Act or any other law. The Company shall have no Knowledge of any event that could reasonably   be expected to have the effect of causing the suspension of the effectiveness of the Initial     32   4839-6950-8556\8 

 

     Registration Statement or the prohibition or suspension of the use of the Prospectus contained   therein or any Prospectus Supplement thereto in connection with the resale of the Registrable   Securities by the Investor.                (v)   Other Commission Filings. The Current Report and the Form D shall have   been filed with the Commission as required pursuant to Section 2.3. The final Prospectus included   in the Initial Registration Statement shall have been filed with the Commission prior to   Commencement in accordance with Section 2.3 and the Registration Rights Agreement. All   reports, schedules, registrations, forms, statements, information and other documents required to   have been filed by the Company with the Commission pursuant to the reporting requirements of   the Exchange Act, including all material required to have been filed pursuant to Section 13(a) or   15(d) of the Exchange Act, prior to Commencement shall have been filed with the Commission.                (vi)  No Suspension of Trading in or Notice of Delisting of Common Stock.    Trading in the Common Stock shall not have been suspended by the Commission, the Trading   Market or the FINRA (except for any suspension of trading of limited duration agreed to by the   Company, which suspension shall be terminated prior to the Commencement Date), the Company   shall not have received any final and non-appealable notice that the listing or quotation of the   Common Stock on the Trading Market shall be terminated on a date certain (unless, prior to such   date certain, the Common Stock is listed or quoted on any other Eligible Market), nor shall there   have been imposed any suspension of, or restriction on, accepting additional deposits of the   Common Stock, electronic trading or book-entry services by DTC with respect to the Common   Stock that is continuing, the Company shall not have received any notice from DTC to the effect   that a suspension of, or restriction on, accepting additional deposits of the Common Stock,   electronic trading or book-entry services by DTC with respect to the Common Stock is being   imposed or is contemplated (unless, prior to such suspension or restriction, DTC shall have notified   the Company in writing that DTC has determined not to impose any such suspension or   restriction).                (vii) Compliance with Laws.  The Company shall have complied with all   applicable federal, state and local governmental laws, rules, regulations and ordinances in  connection with the execution, delivery and performance of this Agreement and the other  Transaction Documents to which it is a party and the consummation of the transactions  contemplated hereby and thereby, including, without limitation, the Company shall have obtained  all permits and qualifications required by any applicable state securities or “Blue Sky” laws for  the offer and sale of the Shares by the Company to the Investor and the subsequent resale of the   Registrable Securities by the Investor (or shall have the availability of exemptions therefrom).                (viii) No Injunction.  No statute, regulation, order, decree, writ, ruling or   injunction shall have been enacted, entered, promulgated, threatened or endorsed by any court or   governmental authority of competent jurisdiction which prohibits the consummation of or which   would materially modify or delay any of the transactions contemplated by the Transaction   Documents.                (ix)  No Proceedings or Litigation.  No action, suit or proceeding before any   arbitrator or any court or governmental authority shall have been commenced, and no inquiry or   investigation by any governmental authority shall have been commenced, against the Company or     33   4839-6950-8556\8 

 

     any Subsidiary, or any of the officers, directors or affiliates of the Company or any Subsidiary,   seeking to restrain, prevent or change the transactions contemplated by the Transaction   Documents, or seeking material damages in connection with such transactions.                (x)   Listing of Shares.  All of the Shares that have been and may be issued   pursuant to this Agreement shall have been approved for listing or quotation on the Trading Market   as of the Commencement Date, subject only to notice of issuance.                (xi)  No Material Adverse Effect. No condition, occurrence, state of facts or   event constituting a Material Adverse Effect shall have occurred and be continuing.                (xii) No Bankruptcy Proceedings. No Person shall have commenced a   proceeding against the Company pursuant to or within the meaning of any Bankruptcy Law. The   Company shall not have, pursuant to or within the meaning of any Bankruptcy Law, (a)   commenced a voluntary case, (b) consented to the entry of an order for relief against it in an  involuntary case, (c) consented to the appointment of a Custodian of the Company or for all or   substantially all of its property, or (d) made a general assignment for the benefit of its creditors. A   court of competent jurisdiction shall not have entered an order or decree under any Bankruptcy   Law that (I) is for relief against the Company in an involuntary case, (II) appoints a Custodian of   the Company or for all or substantially all of its property, or (III) orders the liquidation of the   Company or any of its Significant Subsidiaries.                (xiii) Delivery of Commencement Irrevocable Transfer Agent Instructions   and Notice of Effectiveness. The Commencement Irrevocable Transfer Agent Instructions shall   have been executed by the Company and delivered to acknowledged in writing by the Company’s   transfer agent, and the Notice of Effectiveness relating to the Initial Registration Statement shall   have been executed by the Company’s outside counsel and delivered to the Company’s transfer   agent, in each case directing the Company’s transfer agent to issue to the Investor or its designated   Broker-Dealer all of the Registrable Securities included in the Initial Registration Statement as   DWAC Shares in accordance with this Agreement and the Registration Rights Agreement.                (xiv) Reservation of Shares. As of the Commencement Date, the Company shall   have reserved out of its authorized and unissued Common Stock, 1,500,000 shares of Common   Stock solely for the purpose of effecting Fixed Purchases and VWAP Purchases under this   Agreement.                (xv)  Opinions and Bring-Down Opinions of Company Counsel. On the   Commencement Date, the Investor shall have received the opinions, bring-down opinions and   negative assurances from outside counsel to the Company, dated the Commencement Date, in the  forms mutually agreed to by the Company and the Investor prior to the date of this Agreement.         Section 7.3. Conditions Precedent to Fixed Purchases and VWAP Purchases after   Commencement Date. The right of the Company to deliver Fixed Purchase Notices and VWAP   Purchase Notices under this Agreement after the Commencement Date, and the obligation of the   Investor to accept Fixed Purchase Notices and VWAP Purchase Notices under this Agreement   after the Commencement Date, are subject to the satisfaction of each of the conditions set forth in      34   4839-6950-8556\8 

 

     this Section 7.3 at each Fixed Purchase Date and each VWAP Purchase Date after the   Commencement Date.                (i)   Satisfaction of Certain Prior Conditions. Each of the conditions set forth   in subsections (i), (ii), and (vii) through (xiii) set forth in Section 7.2 shall be satisfied on each   Fixed Purchase Date and each VWAP Purchase Date after the Commencement Date (with the   terms “Commencement” and “Commencement Date” in the conditions set forth in subsections (i)   and (ii) of Section 7.2 replaced with “applicable Fixed Purchase Date and applicable VWAP  Purchase Date (as applicable)”); provided, however, that the Company shall not be required to   deliver the Compliance Certificate after the Commencement Date, except as provided in Section   6.15 and Section 7.3(v).                (ii)  Initial Registration Statement Effective. The Initial Registration   Statement covering the resale by the Investor of the Registrable Securities included therein filed   by the Company with the Commission pursuant to Section 2(a) of the Registration Rights   Agreement, and any post-effective amendment thereto required to be filed by the Company with   the Commission after the Commencement Date and prior to the applicable Fixed Purchase Date   and the applicable VWAP Purchase Date (as applicable) pursuant to the Registration Rights  Agreement, in each case shall have been declared effective under the Securities Act by the   Commission and shall remain effective for the applicable Registration Period (as defined in the   Registration Rights Agreement), and the Investor shall be permitted to utilize the Prospectus   therein, and any Prospectus Supplement thereto, to resell (a) all of the Shares included in the Initial  Registration Statement, and any post-effective amendment thereto, that have been issued and sold  to the Investor hereunder pursuant to all Fixed Purchase Notices and all VWAP Purchase Notices  (as applicable) delivered by the Company to the Investor prior to such applicable Fixed Purchase   Date and such applicable VWAP Purchase Date (as applicable), respectively, and (b) all of the   Shares included in the Initial Registration Statement, and any post-effective amendment thereto,   that are issuable pursuant to the applicable Fixed Purchase Notice and the applicable VWAP   Purchase Notice (as applicable) delivered by the Company to the Investor with respect to a Fixed   Purchase and a VWAP Purchase (as applicable), respectively, to be effected hereunder on such   applicable Fixed Purchase Date and such applicable VWAP Purchase Date (as applicable),   respectively.                 (iii) Any Required New Registration Statement Effective. Any New   Registration Statement covering the resale by the Investor of the Registrable Securities included   therein, and any post-effective amendment thereto, required to be filed by the Company with the   Commission pursuant to the Registration Rights Agreement after the Commencement Date and   prior to the applicable Fixed Purchase Date and the applicable VWAP Purchase Date (as   applicable), in each case shall have been declared effective under the Securities Act by the   Commission and shall remain effective for the applicable Registration Period, and the Investor   shall be permitted to utilize the Prospectus therein, and any Prospectus Supplement thereto, to   resell (a) all of the Shares included in such New Registration Statement, and any post-effective   amendment thereto, that have been issued and sold to the Investor hereunder pursuant to all Fixed   Purchase Notices and all VWAP Purchase Notices (as applicable) delivered by the Company to   the Investor prior to such applicable Fixed Purchase Date and such applicable VWAP Purchase   Date (as applicable), respectively, and (b) all of the Shares included in such new Registration   Statement, and any post-effective amendment thereto, that are issuable pursuant to the applicable     35   4839-6950-8556\8 

 

     Fixed Purchase Notice and the applicable VWAP Purchase Notice (as applicable) delivered by the  Company to the Investor with respect to a Fixed Purchase and a VWAP Purchase (as applicable),  respectively, to be effected hereunder on such applicable Fixed Purchase Date and such applicable  VWAP Purchase Date (as applicable), respectively.               (iv)  Delivery of Subsequent Irrevocable Transfer Agent Instructions and   Notice of Effectiveness. With respect to any post-effective amendment to the Initial Registration   Statement, any New Registration Statement or any post-effective amendment to any New  Registration Statement, in each case declared effective by the Commission after the  Commencement Date, the Company shall have delivered or caused to be delivered to its transfer  agent (a) irrevocable instructions in the form substantially similar to the Commencement  Irrevocable Transfer Agent Instructions executed by the Company and acknowledged in writing  by the Company’s transfer agent and (b) the Notice of Effectiveness, in each case modified as  necessary to refer to such Registration Statement or post-effective amendment and the Registrable  Securities included therein, to issue the Registrable Securities included therein as DWAC Shares  in accordance with the terms of this Agreement and the Registration Rights Agreement.               (v)   No Material Notices. None of the following events shall have occurred and   be continuing: (a) receipt of any request by the Commission or any other federal or state   governmental authority for any additional information relating to the Initial Registration Statement   or any post-effective amendment thereto, any New Registration Statement or any post-effective   amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus   Supplement thereto, or for any amendment of or supplement to the Initial Registration Statement   or any post-effective amendment thereto, any New Registration Statement or any post-effective   amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus   Supplement thereto; (b) the issuance by the Commission or any other federal or state governmental   authority of any stop order suspending the effectiveness of the Initial Registration Statement or   any post-effective amendment thereto, any New Registration Statement or any post-effective   amendment thereto, or prohibiting or suspending the use of the Prospectus contained in any of the   foregoing or any Prospectus Supplement thereto, or of the suspension of qualification or exemption   from qualification of the Shares for offering or sale in any jurisdiction, or the initiation or   contemplated initiation of any proceeding for such purpose; or (c) the occurrence of any event or   the existence of any condition or state of facts, which makes any statement of a material fact made   in the Initial Registration Statement or any post-effective amendment thereto, any New   Registration Statement or any post-effective amendment thereto, or the Prospectus contained in   any of the foregoing or any Prospectus Supplement thereto untrue or which requires the making   of any additions to or changes to the statements then made in the Initial Registration Statement or   any post-effective amendment thereto, any New Registration Statement or any post-effective   amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus   Supplement thereto in order to state a material fact required by the Securities Act to be stated   therein or necessary in order to make the statements then made therein (in the case of the   Prospectus or any Prospectus Supplement, in light of the circumstances under which they were   made) not misleading, or which requires an amendment to the Initial Registration Statement or any   post-effective amendment thereto, any New Registration Statement or any post-effective   amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus   Supplement thereto to comply with the Securities Act or any other law (other than the transactions   contemplated by the applicable Fixed Purchase Notice and the applicable VWAP Purchase Notice     36   4839-6950-8556\8 

 

     (as applicable) delivered by the Company to the Investor with respect to a Fixed Purchase and a   VWAP Purchase (as applicable), respectively, to be effected hereunder on such applicable Fixed   Purchase Date and such applicable VWAP Purchase Date (as applicable), respectively, and the   settlement thereof). The Company shall have no Knowledge of any event that could reasonably be  expected to have the effect of causing the suspension of the effectiveness of the Initial Registration  Statement or any post-effective amendment thereto, any New Registration Statement or any post- effective amendment thereto, or the prohibition or suspension of the use of the Prospectus  contained in any of the foregoing or any Prospectus Supplement thereto in connection with the  resale of the Registrable Securities by the Investor.               (vi)  Other Commission Filings. The final Prospectus included in any post-  effective amendment to the Initial Registration Statement, and any Prospectus Supplement thereto,   required to be filed by the Company with the Commission pursuant to Section 2.3 and the   Registration Rights Agreement after the Commencement Date and prior to the applicable Fixed   Purchase Date and the applicable VWAP Purchase Date (as applicable), shall have been filed with   the Commission in accordance with Section 2.3 and the Registration Rights Agreement. The final   Prospectus included in any New Registration Statement and in any post-effective amendment   thereto, and any Prospectus Supplement thereto, required to be filed by the Company with the   Commission pursuant to Section 2.3 and the Registration Rights Agreement after the   Commencement Date and prior to the applicable Fixed Purchase Date and the applicable VWAP   Purchase Date (as applicable), shall have been filed with the Commission in accordance with   Section 2.3 and the Registration Rights Agreement. All reports, schedules, registrations, forms,   statements, information and other documents required to have been filed by the Company with the   Commission pursuant to the reporting requirements of the Exchange Act, including all material   required to have been filed pursuant to Section 13(a) or 15(d) of the Exchange Act, after the   Commencement Date and prior to the applicable Fixed Purchase Date and the applicable VWAP   Purchase Date (as applicable), shall have been filed with the Commission and, if any Registrable   Securities are covered by a Registration Statement on Form S-3, such filings shall have been made   within the applicable time period prescribed for such filing under the Exchange Act.                (vii) No Suspension of Trading in or Notice of Delisting of Common Stock.    Trading in the Common Stock shall not have been suspended by the Commission, the Trading   Market or the FINRA (except for any suspension of trading of limited duration agreed to by the   Company, which suspension shall be terminated prior to the applicable Fixed Purchase Date and   the applicable VWAP Purchase Date, as applicable), the Company shall not have received any   final and non-appealable notice that the listing or quotation of the Common Stock on the Trading   Market shall be terminated on a date certain (unless, prior to such date certain, the Common Stock   is listed or quoted on any other Eligible Market), nor shall there have been imposed any suspension   of, or restriction on, accepting additional deposits of the Common Stock, electronic trading or   book-entry services by DTC with respect to the Common Stock that is continuing, the Company   shall not have received any notice from DTC to the effect that a suspension of, or restriction on,   accepting additional deposits of the Common Stock, electronic trading or book-entry services by   DTC with respect to the Common Stock is being imposed or is contemplated (unless, prior to such   suspension or restriction, DTC shall have notified the Company in writing that DTC has   determined not to impose any such suspension or restriction).      37   4839-6950-8556\8 

 

                 (viii) Certain Limitations.  The issuance and sale of the Shares issuable pursuant   to the applicable Fixed Purchase Notice and the applicable VWAP Purchase Notice (as applicable)   shall not (a) exceed the Fixed Purchase Maximum Amount and the VWAP Purchase Maximum   Amount, respectively, (b) cause the Aggregate Limit or the Beneficial Ownership Limitation to be   exceeded, or (c) cause the Exchange Cap (to the extent applicable under Section 3.4) to be   exceeded, unless in the case of this clause (c), unless the Company’s stockholders have theretofore   approved the issuance of Common Stock under this Agreement in excess of the Exchange Cap in   accordance with the applicable rules of the Trading Market.                (ix)  Shares Authorized and Delivered. All of the Shares issuable pursuant to   the applicable Fixed Purchase Notice and the applicable VWAP Purchase Notice (as applicable)   shall have been duly authorized by all necessary corporate action of the Company. The Company   shall have delivered all Shares relating to all prior Fixed Purchase Notices and all prior VWAP   Purchase Notices (as applicable) as DWAC Shares.                (x)   Opinions and Bring-Down Opinions of Company Counsel. The Investor   shall have received (a) all Bring Down Opinions from the Company’s outside counsel for which   the Company was obligated to instruct its outside counsel to deliver to the Investor prior to the  applicable Fixed Purchase Date and the applicable VWAP Purchase Date (as applicable) and (b)  all Compliance Certificates from the Company that the Company was obligated to deliver to the  Investor prior to the applicable Fixed Purchase Date and the applicable VWAP Purchase Date (as  applicable), in each case in accordance with Section 6.15.                                    ARTICLE VIII                                  TERMINATION         Section 8.1. Automatic Termination.  Unless earlier terminated as provided hereunder,   this Agreement shall terminate automatically on the earliest to occur of (i) the first day of the   month next following the 24-month anniversary of the Effective Date of the Initial Registration   Statement (it being hereby acknowledged and agreed that such term may not be extended by the   parties hereto), (ii) the date on which the Investor shall have purchased the Total Commitment  worth of Shares pursuant to this Agreement, (iii) the date on which the Common Stock shall have  failed to be listed or quoted on the Trading Market or any other Eligible Market, and (iv) the date  on which, pursuant to or within the meaning of any Bankruptcy Law, the Company commences a  voluntary case or any Person commences a proceeding against the Company, a Custodian is  appointed for the Company or for all or substantially all of its property, or the Company makes a  general assignment for the benefit of its creditors.          Section 8.2. Other Termination.  Subject to Section 8.3, the Company may terminate   this Agreement after the Commencement Date effective upon ten (10) Trading Days’ prior written   notice to the Investor in accordance with Section 10.4; provided, however, that prior to issuing any   press release, or making any public statement or announcement, with respect to such termination,   the Company shall consult with the Investor and its counsel on the form and substance of such   press release or other disclosure. Subject to Section 8.3, this Agreement may be terminated at any   time by the mutual written consent of the parties, effective as of the date of such mutual written   consent unless otherwise provided in such written consent. Subject to Section 8.3, the Investor   shall have the right to terminate this Agreement effective upon ten (10) Trading Days’ prior written     38   4839-6950-8556\8 

 

     notice to the Company in accordance with Section 10.4, if: (a) any condition, occurrence, state of  facts or event constituting a Material Adverse Effect has occurred and is continuing; (b) a  Fundamental Transaction shall have occurred; (c) the Initial Registration Statement and any New   Registration Statement is not filed by the applicable Filing Deadline therefor or declared effective   by the Commission by the applicable Effectiveness Deadline (as defined in the Registration Rights   Agreement) therefor, or the Company is otherwise in breach or default in any material respect  under any of the other provisions of the Registration Rights Agreement, and, if such failure, breach  or default is capable of being cured, such failure, breach or default is not cured within 10 Trading  Days after notice of such failure, breach or default is delivered to the Company pursuant to Section  10.4; (d) while a Registration Statement, or any post-effective amendment thereto, is required to  be maintained effective pursuant to the terms of the Registration Rights Agreement and the  Investor holds any Registrable Securities, the effectiveness of such Registration Statement, or any  post-effective amendment thereto, lapses for any reason (including, without limitation, the  issuance of a stop order by the Commission) or such Registration Statement or any post-effective   amendment thereto, the Prospectus contained therein or any Prospectus Supplement thereto   otherwise becomes unavailable to the Investor for the resale of all of the Registrable Securities   included therein in accordance with the terms of the Registration Rights Agreement, and such lapse   or unavailability continues for a period of 20 consecutive Trading Days or for more than an  aggregate of 60 Trading Days in any 365-day period, other than due to acts of the Investor; (e)  trading in the Common Stock on the Trading Market (or if the Common Stock is then listed on an  Eligible Market, trading in the Common Stock on such Eligible Market) shall have been suspended  and such suspension continues for a period of three (3) consecutive Trading Days; or (f) the   Company is in material breach or default of this Agreement, and, if such breach or default is   capable of being cured, such breach or default is not cured within 10 Trading Days after notice of   such breach or default is delivered to the Company pursuant to Section 10.4. Unless notification   thereof is required elsewhere in this Agreement (in which case such notification shall be provided   in accordance with such other provision), the Company shall promptly (but in no event later than   24 hours) notify the Investor (and, if required under applicable law, including, without limitation,   Regulation FD promulgated by the Commission, or under the applicable rules and regulations of   the Trading Market, the Company shall publicly disclose such information in accordance with   Regulation FD and the applicable rules and regulations of the Trading Market) upon becoming   aware of any of the events set forth in the immediately preceding sentence.          Section 8.3. Effect of Termination.  In the event of termination by the Company or the   Investor (other than by mutual termination) pursuant to Section 8.2, written notice thereof shall   forthwith be given to the other party as provided in Section 10.4 and the transactions contemplated   by this Agreement shall be terminated without further action by either party. If this Agreement is   terminated as provided in Section 8.1 or Section 8.2, this Agreement shall become void and of no   further force and effect, except that (i) the provisions of Article V (Representations, Warranties   and Covenants of the Company), Article IX (Indemnification), Article X (Miscellaneous) and this   Article VIII (Termination) shall remain in full force and effect indefinitely notwithstanding such   termination, and, (ii) so long as the Investor owns any Shares, the covenants and agreements of   the Company contained in Article VI (Additional Covenants) shall remain in full force and   notwithstanding such termination for a period of six (6) months following such termination.   Notwithstanding anything in this Agreement to the contrary, no termination of this Agreement by   any party shall (i) become effective prior to the first Trading Day immediately following the   settlement date related to any pending Fixed Purchase Notice or any pending VWAP Purchase     39   4839-6950-8556\8 

 

     Notice (as applicable) that has not been fully settled in accordance with the terms and conditions   of this Agreement (it being hereby acknowledged and agreed that no termination of this Agreement   shall limit, alter, modify, change or otherwise affect any of the Company’s or the Investor’s rights   or obligations under the Transaction Documents with respect to any pending Fixed Purchase or   pending VWAP Purchase (as applicable), and that the parties shall fully perform their respective   obligations with respect to any such pending Fixed Purchase and any such pending VWAP   Purchase (as applicable) under the Transaction Documents, provided all of the conditions to the   settlement thereof set forth in Article VII are timely satisfied), (ii) limit, alter, modify, change or   otherwise affect the Company’s or the Investor’s rights or obligations under the Registration   Rights Agreement, all of which shall survive any such termination, (iii) affect the Document   Preparation Fee payable to the Investor’s counsel or the Investor Expenses Reimbursement   payable to the Investor, in each case all of which fees and expenses shall be non-refundable when  paid on the Closing Date pursuant to Section 10.1(i), regardless of whether any Fixed Purchases  or VWAP Purchases are made or settled hereunder or any subsequent termination of this  Agreement, or (iv) affect the Commitment Fee payable to the Investor pursuant to Section 10.1(ii),  which Commitment Fee shall be fully earned and non-refundable as of the Closing Date, regardless  of whether any Fixed Purchases or VWAP Purchases are made or settled hereunder or any  subsequent termination of this Agreement. Nothing in this Section 8.3 shall be deemed to release  the Company or the Investor from any liability for any breach or default under this Agreement or  any of the other Transaction Documents to which it is a party, or to impair the rights of the  Company and the Investor to compel specific performance by the other party of its obligations  under the Transaction Documents to which it is a party.                                     ARTICLE IX                                INDEMNIFICATION         Section 9.1. Indemnification of Investor. In consideration of the Investor’s execution   and delivery of this Agreement and acquiring the Shares hereunder and in addition to all of the   Company’s other obligations under the Transaction Documents to which it is a party, subject to   the provisions of this Section 9.1, the Company shall indemnify and hold harmless the Investor,   each of its directors, officers, shareholders, members, partners, employees, representatives, agents   and advisors (and any other Persons with a functionally equivalent role of a Person holding such   titles notwithstanding the lack of such title or any other title), each Person, if any, who controls the   Investor (within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange   Act), and the respective directors, officers, shareholders, members, partners, employees,   representatives, agents and advisors (and any other Persons with a functionally equivalent role of  a Person holding such titles notwithstanding the lack of such title or any other title) of such  controlling Persons (each, an “Investor Party”), from and against all losses, liabilities, obligations,   claims, contingencies, damages, costs and expenses (including all judgments, amounts paid in   settlement, court costs, reasonable attorneys’ fees and costs of defense and investigation)   (collectively, “Damages”) that any Investor Party may suffer or incur as a result of or relating to   (a) any breach of any of the representations, warranties, covenants or agreements made by the   Company in this Agreement or in the other Transaction Documents to which it is a party or (b)   any action, suit, claim or proceeding (including for these purposes a derivative action brought on   behalf of the Company) instituted against such Investor Party arising out of or resulting from the   execution, delivery, performance or enforcement of the Transaction Documents, other than claims   for indemnification within the scope of Section 6 of the Registration Rights Agreement; provided,     40   4839-6950-8556\8 

 

     however, that (x) the foregoing indemnity shall not apply to any Damages to the extent, but only   to the extent, that such Damages resulted directly and primarily from a breach of any of the  Investor’s representations, warranties, covenants or agreements contained in this Agreement or the  Registration Rights Agreement, and (y) the Company shall not be liable under subsection (b) of  this Section 9.1 to the extent, but only to the extent, that a court of competent jurisdiction shall  have determined by a final judgment (from which no further appeals are available) that such  Damages resulted directly and primarily from any acts or failures to act, undertaken or omitted to  be taken by such Investor Party through its fraud, bad faith, gross negligence, or willful or reckless  misconduct.         The Company shall reimburse any Investor Party promptly upon demand (with  accompanying presentation of documentary evidence) for all legal and other costs and expenses  reasonably incurred by such Investor Party in connection with (i) any action, suit, claim or  proceeding, whether at law or in equity, to enforce compliance by the Company with any provision  of the Transaction Documents or (ii) any other any action, suit, claim or proceeding, whether at  law or in equity, with respect to which it is entitled to indemnification under this Section 9.1;  provided that the Investor shall promptly reimburse the Company for all such legal and other costs   and expenses to the extent a court of competent jurisdiction determines that any Investor Party was   not entitled to such reimbursement.          An Investor Party’s right to indemnification or other remedies based upon the   representations, warranties, covenants and agreements of the Company set forth in the Transaction   Documents shall not in any way be affected by any investigation or knowledge of such Investor   Party. Such representations, warranties, covenants and agreements shall not be affected or deemed   waived by reason of the fact that an Investor Party knew or should have known that any   representation or warranty might be inaccurate or that the Company failed to comply with any   agreement or covenant. Any investigation by such Investor Party shall be for its own protection   only and shall not affect or impair any right or remedy hereunder.          To the extent that the foregoing undertakings by the Company set forth in this Section 9.1   may be unenforceable for any reason, the Company shall make the maximum contribution to the   payment and satisfaction of each of the Damages which is permissible under applicable law.          Section 9.2. Indemnification Procedures.  Promptly after an Investor Party receives   notice of a claim or the commencement of an action for which the Investor Party intends to seek  indemnification under Section 9.1, the Investor Party will notify the Company in writing of the  claim or commencement of the action, suit or proceeding; provided, however, that failure to notify   the Company will not relieve the Company from liability under Section 9.1, except to the extent it   has been materially prejudiced by the failure to give notice.  The Company will be entitled to   participate in the defense of any claim, action, suit or proceeding as to which indemnification is   being sought, and if the Company acknowledges in writing the obligation to indemnify the Investor   Party against whom the claim or action is brought, the Company may (but will not be required to)   assume the defense against the claim, action, suit or proceeding with counsel satisfactory to it.    After the Company notifies the Investor Party that the Company wishes to assume the defense of   a claim, action, suit or proceeding, the Company will not be liable for any further legal or other   expenses incurred by the Investor Party in connection with the defense against the claim, action,   suit or proceeding except that if, in the opinion of counsel to the Investor Party, it would be     41   4839-6950-8556\8 

 

     inappropriate under the applicable rules of professional responsibility for the same counsel to   represent both the Company and such Investor Party.  In such event, the Company will pay the   reasonable fees and expenses of no more than one separate counsel for all such Investor Parties   promptly as such fees and expenses are incurred. Each Investor Party, as a condition to receiving   indemnification as provided in Section 9.1, will cooperate in all reasonable respects with the   Company in the defense of any action or claim as to which indemnification is sought.  The   Company will not be liable for any settlement of any action effected without its prior written   consent, which consent shall not be unreasonably withheld, delayed or conditioned. The Company   will not, without the prior written consent of the Investor Party, effect any settlement of a pending   or threatened action with respect to which an Investor Party is, or is informed that it may be, made   a party and for which it would be entitled to indemnification, unless the settlement includes an   unconditional release of the Investor Party from all liability and claims which are the subject matter   of the pending or threatened action.          The remedies provided for in this Article IX are not exclusive and shall not limit any rights   or remedies which may otherwise be available to any Investor Party at law or in equity.                                     ARTICLE X                                 MISCELLANEOUS          Section 10.1. Certain Fees and Expenses; Commitment Fee; Commencement   Irrevocable Transfer Agent Instructions.                 (i)   Certain Fees and Expenses. Each party shall bear its own fees and   expenses related to the transactions contemplated by this Agreement; provided, however, that the   Company shall pay, on or prior to the Closing Date, by wire transfer of immediately available   funds (i) to an account designated by the Investor’s counsel on or prior to the date of this   Agreement, a non-accountable and non-refundable document preparation fee of up to $50,000,   exclusive of disbursements and out-of-pocket expenses (the “Document Preparation Fee”), in  connection with the preparation, negotiation, execution and delivery of the Transaction Documents  and legal due diligence of the Company, and (ii) to an account designated by the Investor on or  prior to the date of this Agreement, an amount up to $7,500 as reimbursement for the Investor’s  reasonable out-of-pocket expenses (other than the Investor’s legal fees referred to in clause (i)  above), in connection with the transaction contemplated by the Transaction Documents (the  “Investor Expense Reimbursement”). For the avoidance of doubt, the Document Preparation Fee  and the Investor Expense Reimbursement shall be non-refundable when paid on the Closing Date,  regardless of whether any Fixed Purchases or VWAP Purchases are made or settled hereunder or  any subsequent termination of this Agreement. The Company shall pay all U.S. federal, state and  local stamp and other similar transfer and other taxes and duties levied in connection with issuance  of the Shares pursuant hereto.               (ii)  Commitment Fee. In consideration for the Investor’s execution and   delivery of this Agreement on the Closing Date, on or prior to the Closing Date, by wire transfer   of immediately available funds to an account designated by the Investor on or prior to the date of   this Agreement, the Company shall pay to the Investor the Commitment Fee. For the avoidance of   doubt, the Commitment Fee shall be fully earned and non-refundable as of the Closing Date,      42   4839-6950-8556\8 

 

     regardless of whether any Fixed Purchases or VWAP Purchases are made or settled hereunder or   any subsequent termination of this Agreement.                (iii) Irrevocable Transfer Agent Instructions; Notice of Effectiveness. On   the Effective Date of the Initial Registration Statement and prior to Commencement, the Company   shall deliver or cause to be delivered to its transfer agent (and thereafter, shall deliver or cause to   be delivered to any subsequent transfer agent of the Company), (i) irrevocable instructions   executed by the Company and acknowledged in writing by the Company’s transfer agent (the   “Commencement Irrevocable Transfer Agent Instructions”) and (ii) the notice of effectiveness   in the form attached as an exhibit to the Registration Rights Agreement (the “Notice of   Effectiveness”) relating to the Initial Registration Statement executed by the Company’s outside   counsel, in each case directing the Company’s transfer agent to issue to the Investor or its   designated Broker-Dealer at which the account or accounts to be credited with the Shares being   purchased by Investor are maintained any Registrable Securities included in the Initial Registration   Statement as DWAC Shares, if and when such Registrable Securities are issued in accordance with   this Agreement and the Registration Rights Agreement. With respect to any post-effective   amendment to the Initial Registration Statement, any New Registration Statement or any post-  effective amendment to any New Registration Statement, in each case declared effective by the   Commission after the Commencement Date, the Company shall deliver or cause to be delivered to   its transfer agent (and thereafter, shall deliver or cause to be delivered to any subsequent transfer   agent of the Company) (i) irrevocable instructions in the form substantially similar to the   Commencement Irrevocable Transfer Agent Instructions executed by the Company and   acknowledged in writing by the Company’s transfer agent and (ii) the Notice of Effectiveness, in   each case modified as necessary to refer to such Registration Statement or post-effective   amendment and the Registrable Securities included therein, to issue the Registrable Securities  included therein as DWAC Shares in accordance with the terms of this Agreement and the   Registration Rights Agreement. For the avoidance of doubt, all Shares to be issued in respect of   any Fixed Purchase Notice and any VWAP Purchase Notice delivered to the Investor pursuant to  this Agreement shall be issued to the Investor in accordance with Section 3.3 by crediting the  Investor’s or its designated Broker-Dealer at which the account or accounts to be credited with the  Shares being purchased by Investor are maintained) account at DTC as DWAC Shares, and the  Company shall not take any action or give instructions to any transfer agent of the Company  otherwise. The Company represents and warrants to the Investor that, while this Agreement is  effective, no instruction other than those referred to in this Section 10.1(iii) will be given by the  Company to its transfer agent, or any successor transfer agent of the Company, with respect to the  Shares from and after Commencement, and the Registrable Securities covered by the Initial  Registration Statement or any post-effective amendment thereof, or any New Registration  Statement or post-effective amendment thereof, as applicable, shall otherwise be freely  transferable on the books and records of the Company and no stop transfer instructions shall be  maintained against the transfer thereof. The Company agrees that if the Company fails to fully  comply with the provisions of this Section 10.1(iii) within three (3) Trading  Days after the date  on which the Investor has provided the deliverables referred to above that the Investor is required   to provide to the Company or its transfer agent, the Company shall, at the Investor’s written   instruction, purchase from the Investor all shares of Common Stock purchased or acquired by the   Investor pursuant to this Agreement that contain the restrictive legend referred to in Section   10.1(iii) (or any similar restrictive legend) at the greater of (i) the purchase price paid for such     43   4839-6950-8556\8 

 

     shares of Common Stock (as applicable) and (ii) the Closing Sale Price of the Common Stock on   the date of the Investor’s written instruction.          Section 10.2. Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial.                (i)   The Company and the Investor acknowledge and 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  either party shall be entitled to an injunction or injunctions to prevent or cure breaches of the   provisions of this Agreement by the other party and to enforce specifically the terms and provisions   hereof (without the necessity of showing economic loss and without any bond or other security   being required), this being in addition to any other remedy to which either party may be entitled  by law or equity.               (ii)   Each of the Company and the Investor (a) hereby irrevocably submits to the   jurisdiction of the U.S. District Court and other courts of the United States sitting in the State of   New York for the purposes of any suit, action or proceeding arising out of or relating to this   Agreement, and (b) hereby waives, and agrees not to assert in any such suit, action or proceeding,   any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or   proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding   is improper. Each of the Company and the Investor consents to process being served in any such   suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices   to it under this Agreement and agrees that such service shall constitute good and sufficient service   of process and notice thereof. Nothing in this Section 10.2 shall affect or limit any right to serve   process in any other manner permitted by law.                (iii) EACH OF THE COMPANY AND THE INVESTOR HEREBY WAIVES   TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY   HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR   INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT   OR THE TRANSACTIONS CONTEMPLATED HEREBY OR DISPUTES RELATING   HERETO. EACH OF THE COMPANY AND THE INVESTOR (A) CERTIFIES THAT NO   REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS   REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD   NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER   AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN   TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL   WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.2.          Section 10.3. Entire Agreement. The Transaction Documents set forth the entire   agreement and understanding of the parties with respect to the subject matter hereof and supersedes   all prior and contemporaneous agreements, negotiations and understandings between the parties,   both oral and written, with respect to such matters. There are no promises, undertakings,   representations or warranties by either party relative to subject matter hereof not expressly set forth   in the Transaction Documents. The Disclosure Schedule and all exhibits to this Agreement are   hereby incorporated by reference in, and made a part of, this Agreement as if set forth in full herein.      44   4839-6950-8556\8 

 

           Section 10.4. Notices.  Any notice, demand, request, waiver or other communication   required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand   delivery or electronic mail delivery at the address or number designated below (if delivered on a   business day during normal business hours where such notice is to be received), or the first   business day following such delivery (if delivered other than on a business day during normal   business hours where such notice is to be received) or (b) on the second business day following  the date of mailing by express courier service, fully prepaid, addressed to such address, or upon  actual receipt of such mailing, whichever shall first occur. The address for such communications  shall be:         If to the Company:                           Independence Contract Drilling, Inc.                          20475 State Highway 249, Suite 300                          Houston, Texas 77070                          Telephone Number: (281) 598-1230                          Email: pchoyce@icdrilling.com                          Attention: Philip A. Choyce, Executive Vice President and                                     Chief Financial Officer                                  With a copy (which shall not constitute notice) to:                           Sidley Austin LLP                          1000 Louisiana Street, Suite 5900                          Houston, Texas 77002                          Telephone Number: (713) 495-4500                          Email: dbuck@sidley.com                          Attention: David C. Buck, Esq.                                  If to the Investor:                           Tumim Stone Capital LLC                          140 Broadway, 38th Floor                           New York, NY 10005                           Telephone Number: (646) 845-0040                           Email: mjtarlow@3ifund.com                           Attention: Maier Joshua Tarlow                                    With a copy (which shall not constitute notice) to:                            Dorsey & Whitney LLP                           51 West 52nd Street                           New York, NY 10019                           Telephone Number: (212) 415-9214                           Email: marsico.anthony@dorsey.com                           Attention: Anthony J. Marsico, Esq.                                45   4839-6950-8556\8 

 

     Either party hereto may from time to time change its address for notices by giving at least five (5)  days’ advance written notice of such changed address to the other party hereto.         Section 10.5. Waivers.  No provision of this Agreement may be waived by the parties   from and after the date that is one (1) Trading Day immediately preceding the filing of the Initial   Registration Statement with the Commission. Subject to the immediately preceding sentence, no   provision of this Agreement may be waived other than in a written instrument signed by the party   against whom enforcement of such waiver is sought. No failure or delay in the exercise of any   power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial   exercise of any such power, right or privilege preclude other or further exercises thereof or of any   other right, power or privilege.           Section 10.6. Amendments.  No provision of this Agreement may be amended by the   parties from and after the date that is one (1) Trading Day immediately preceding the filing of the   Initial Registration Statement with the Commission. Subject to the immediately preceding   sentence, no provision of this Agreement may be amended other than by a written instrument  signed by both parties hereto.          Section 10.7. Headings.  The article, section and subsection headings in this Agreement   are for convenience only and shall not constitute a part of this Agreement for any other purpose   and shall not be deemed to limit or affect any of the provisions hereof. Unless the context clearly   indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine,  neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words  of like import shall be construed broadly as if followed by the words “without limitation.”  The  terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement  instead of just the provision in which they are found.         Section 10.8. Construction. The parties agree that each of them and their respective   counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore,   the normal rule of construction to the effect that any ambiguities are to be resolved against the   drafting party shall not be employed in the interpretation of the Transaction Documents. In  addition, each and every reference to share prices (including the Fixed Purchase Threshold Price  and the VWAP Purchase Threshold Price) and number of shares of Common Stock in any  Transaction Document shall, in all cases, be subject to adjustment for any stock splits, stock  combinations, stock dividends, recapitalizations, reorganizations and other similar transactions  that occur on or after the date of this Agreement. Any reference in this Agreement to “Dollars” or  “$” shall mean the lawful currency of the United States of America. Any references to “Section”  or “Article” in this Agreement shall, unless otherwise expressly stated herein, refer to the  applicable Section or Article of this Agreement.         Section 10.9. Binding Effect.  This Agreement shall be binding upon and inure to the   benefit of the parties hereto and their respective successors. Neither the Company nor the Investor  may assign this Agreement or any of their respective rights or obligations hereunder to any Person.         Section 10.10. No Third Party Beneficiaries. Except as expressly provided in the   immediately preceding sentence and in Article IX, this Agreement is intended only for the benefit      46   4839-6950-8556\8 

 

     of the parties hereto and their respective successors, and is not for the benefit of, nor may any   provision hereof be enforced by, any other Person.          Section 10.11. Governing Law.  This Agreement shall be governed by and construed in   accordance with the internal procedural and substantive laws of the State of New York, without   giving effect to the choice of law provisions of such state that would cause the application of the   laws of any other jurisdiction.          Section 10.12. Survival.  The representations, warranties, covenants and agreements of the   Company and the Investor contained in this Agreement shall survive the execution and delivery   hereof until the termination of this Agreement; provided, however, that (i) the provisions of Article   V (Representations, Warranties and Covenants of the Company), Article VIII (Termination),   Article IX (Indemnification) and this Article X (Miscellaneous) shall remain in full force and effect   indefinitely notwithstanding such termination, and, (ii) so long as the Investor owns any Shares,  the covenants and agreements of the Company and the Investor contained in Article VI (Additional  Covenants), shall remain in full force and effect notwithstanding such termination for a period of  six months following such termination.         Section 10.13. Counterparts.  This Agreement may be executed in two or more identical   counterparts, all of which shall be considered one and the same agreement and shall become   effective when counterparts have been signed by each party and delivered to the other party;   provided that a facsimile signature or signature delivered by e-mail in a “.pdf” format data file,   including any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g.,   www.docusign.com, www.echosign.adobe.com, etc., shall be considered due execution and shall   be binding upon the signatory thereto with the same force and effect as if the signature were an   original signature.          Section 10.14. Publicity.  The Company shall afford the Investor and its counsel with a   reasonable opportunity to review and comment upon, shall consult with the Investor and its counsel  on the form and substance of, and shall give due consideration to all such comments from the  Investor or its counsel on, any press release, Commission filing or any other public disclosure   made by or on behalf of the Company relating to the Investor, its purchases hereunder or any aspect   of the Transaction Documents or the transactions contemplated thereby, prior to the issuance, filing   or public disclosure thereof. For the avoidance of doubt, the Company shall not be required to   submit for review any such disclosure (i) contained in periodic reports filed with the Commission   under the Exchange Act if it shall have previously provided the same disclosure to the Investor or  its counsel for review in connection with a previous filing or (ii) any Prospectus Supplement if it  contains disclosure that does not reference the Investor, its purchases hereunder or any aspect of  the Transaction Documents or the transactions contemplated thereby. The Company agrees and  acknowledges that its failure to comply with this provision in all material respects constitutes a  Material Adverse Effect for purposes of Section 7.2(xi).         Section 10.15. Severability.  The provisions of this Agreement are severable and, in the   event that any court of competent jurisdiction shall determine that any one or more of the   provisions or part of the provisions contained in this Agreement shall, for any reason, be held to   be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability   shall not affect any other provision or part of a provision of this Agreement, and this Agreement     47   4839-6950-8556\8 

 

   shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of  such provision, had never been contained herein, so that such provisions would be valid, legal and  enforceable to the maximum extent possible.         Section 10.16. Further Assurances.  From and after the Closing Date, upon the request of  the Investor or the Company, each of the Company and the Investor shall execute and deliver such  instrument, documents and other writings as may be reasonably necessary or desirable to confirm  and carry out and to effectuate fully the intent and purposes of this Agreement.                               [Signature Pages Follow]     48  4839-6950-8556\8 

 

 

           IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly  executed by their respective authorized officer as of the date first above written.                                                                                INDEPENDENCE CONTRACT DRILLING:                                        By:                                         Name:                                       Title:                                                                                TUMIM STONE CAPITAL LLC:                                        By:                                                                                         Name: Maier J Tarlow                                       Title: Managing Partner    4839-6950-8556\8 

 

                                 ANNEX I TO THE                   COMMON STOCK PURCHASE AGREEMENT                                  DEFINITIONS         “Affiliate” means any Person that, directly or indirectly through one or more  intermediaries, controls, is controlled by, or is under common control with a Person, as such terms  are used in and construed under Rule 144.  With respect to the Investor, without limitation, any  Person owning, owned by, or under common ownership with the Investor, and any investment  fund or managed account that is managed on a discretionary basis by the same investment manager  as the Investor will be deemed to be an Affiliate.         “Aggregate Limit” shall have the meaning assigned to such term in Section 2.1.         “Agreement” shall have the meaning assigned to such term in the preamble of this  Agreement.         “Bankruptcy Law” means Title 11, U.S. Code, or any similar U.S. federal or state law for  the relief of debtors.         “Base Price” shall have the meaning assigned to such term in Section 3.4(b).         “Beneficial Ownership Limitation” shall have the meaning assigned to such term in  Section 3.5.         “BHCA” shall have the meaning assigned to such term in Section 5.39.         “Bloomberg” means Bloomberg, L.P.         “Bring Down Opinion” shall have the meaning assigned to such term in Section 6.15.         “Broker-Dealer” shall have the meaning assigned to such term in Section 6.13.         “Bylaws” shall have the meaning assigned to such term in Section 5.3.         “Charter” shall have the meaning assigned to such term in Section 5.3.         “Closing” shall have the meaning assigned to such term in Section 2.2.         “Closing Date” means the date of this Agreement.         “Closing Sale Price” means, for the Common Stock as of any date, the last closing trade  price for the Common Stock on the Trading Market, as reported by Bloomberg, or, if the Trading  Market begins to operate on an extended hours basis and does not designate the closing trade price  for the Common Stock, then the last trade price for the Common Stock prior to 4:00 p.m., New  York City time, as reported by Bloomberg, or, if the foregoing do not apply, the last trade price  for the Common Stock in the over-the-counter market on the electronic bulletin board for the  Common Stock as reported by Bloomberg, or, if no last trade price is reported for the Common  Stock by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market                                        I-1  4839-6950-8556\8 

 

     makers for such security as reported by OTC Markets Group Inc. All such determinations shall be   appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations   or other similar transactions during such period.          “Code” means the Internal Revenue Code of 1986, as amended.          “Commencement” shall have the meaning assigned to such term in Section 3.1.         “Commencement Date” shall have the meaning assigned to such term in Section 3.1.         “Commencement Irrevocable Transfer Agent Instructions” shall have the meaning  assigned to such term in Section 10.1(iii).         “Commission” means the U.S. Securities and Exchange Commission or any successor  entity.         “Commission Documents” shall mean (1) all reports, schedules, registrations, forms,  statements, information and other documents filed with or furnished to the Commission by the  Company pursuant to the reporting requirements of the Exchange Act, including all material filed  with or furnished to the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange  Act, since December 31, 2019, including, without limitation, the Annual Report on Form 10-K  filed by the Company for its fiscal year ended December 31, 2019 (the “2019 Form 10-K”), and  which hereafter shall be filed with or furnished to the Commission by the Company, including,  without limitation, the Current Report, (2) each Registration Statement, as the same may be  amended from time to time, the Prospectus contained therein and each Prospectus Supplement  thereto and (3) all information contained in such filings and all documents and disclosures that  have been and heretofore shall be incorporated by reference therein.         “Commitment Fee” shall mean an amount in cash equal to 2% of the Total Commitment.         “Common Stock” shall have the meaning assigned to such term in the recitals of this  Agreement.         “Common Stock Equivalents” means any securities of the Company or its Subsidiaries  which entitle the holder thereof to acquire at any time Common Stock, including, without  limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any  time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to  receive, Common Stock.         “Company” shall have the meaning assigned to such term in the preamble of this  Agreement.         “Compliance Certificate” shall have the meaning assigned to such term in Section 7.2(ii).         “Current Report” shall have the meaning assigned to such term in Section 2.3.         “Cover Price” shall have the meaning assigned to such term in Section 3.3.                                          I-2   4839-6950-8556\8 

 

         “Critical Accounting Policies” shall have the meaning assigned to such term in Section  5.6(f).         “Custodian” shall mean any receiver, trustee, assignee, liquidator or similar official under  any Bankruptcy Law.         “Damages” shall have the meaning assigned to such term in Section 9.1.         “Disclosure Schedule” shall have the meaning assigned to such term in the preamble to  Article V.         “Disqualification Event” shall have the meaning assigned to such term in Section 5.41.         “Document Preparation Fee” shall have the meaning assigned to such term in Section  10.1(i).         “DTC” means The Depository Trust Company, a subsidiary of The Depository Trust &  Clearing Corporation, or any successor thereto.         “DWAC” shall have the meaning assigned to such term in Section 5.33.         “DWAC Shares” means shares of Common Stock issued pursuant to this Agreement that  are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on  resale and without stop transfer instructions maintained against the transfer thereof  and (iii) timely  credited by the Company to the Investor’s or its designated Broker-Dealer at which the account or  accounts to be credited with the Shares being purchased by Investor are maintained specified  DWAC account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any  similar program hereafter adopted by DTC performing substantially the same function.         “EDGAR” means the Commission’s Electronic Data Gathering, Analysis and Retrieval  System.         “Effective Date” means, with respect to the Initial Registration Statement filed pursuant to  Section 2(a) of the Registration Rights Agreement (or any post-effective amendment thereto) or  any New Registration Statement filed pursuant to Section 2(c) of the Registration Rights  Agreement (or any post-effective amendment thereto), as applicable, the date on which the Initial  Registration Statement (or any post-effective amendment thereto) or any New Registration  Statement (or any post-effective amendment thereto) is declared effective by the Commission.         “Effectiveness Deadline” shall have the meaning assigned to such term in the Registration  Rights Agreement.         “Eligible Market” means The Nasdaq Capital Market, The Nasdaq Global Market, The  Nasdaq Global Select Market, the NYSE American, the NYSE Arca, or the OTCQX Best Market  or OTCQB Venture Market operated by OTC Markets Group Inc. (or any nationally recognized  successor to any of the foregoing).                                         I-3  4839-6950-8556\8 

 

         “Environmental Laws” shall have the meaning assigned to such term in Section 5.18  hereof.         “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.         “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules  and regulations of the Commission thereunder.         “Exchange Cap” shall have the meaning assigned to such term in Section 3.4(a)(i) hereof.         “Exempt Issuance” means the issuance of (a) Common Stock, options or other equity  incentive awards to employees, officers, directors or vendors of the Company pursuant to any  equity incentive plan duly adopted for such purpose, by the Company’s Board of Directors or a  majority of the members of a committee of the Board of Directors established for such purpose,  (b) (1) any Shares issued to the Investor pursuant to this Agreement, (2) any securities issued upon  the exercise or exchange of or conversion of any shares of Common Stock or Common Stock  Equivalents held by the Investor at any time, or (3) any securities issued upon the exercise or  exchange of or conversion of any Common Stock Equivalents issued and outstanding on the date  of this Agreement, provided that such securities referred to in this clause (3) have not been  amended since the date of this Agreement to increase the number of such securities or to decrease  the exercise price, exchange price or conversion price of such securities, (c) securities issued  pursuant to acquisitions, divestitures, licenses, partnerships, collaborations or strategic  transactions approved by the Company’s Board of Directors or a majority of the members of a  committee of directors established for such purpose, which acquisitions, divestitures, licenses,  partnerships, collaborations or strategic transactions can have a Variable Rate Transaction  component, provided that any such issuance shall only be to a Person (or to the equity holders of  a Person) which is, itself or through its subsidiaries, an operating company or an asset in a business  synergistic with the business of the Company and shall provide to the Company additional benefits  in addition to the investment of funds, but shall not include a transaction in which the Company is  issuing securities primarily for the purpose of raising capital or to an entity whose primary business  is investing in securities, or (d) Common Stock issued by the Company by any method deemed to  be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act, exclusively  to or through B. Riley Securities, Inc., as the Company’s sales agent, pursuant to one or more  written agreements between the Company and B. Riley Securities, Inc.         “FCPA” shall have the meaning assigned to such term in Section 5.35.         “Federal Reserve” shall have the meaning assigned to such term in Section 5.39.        “Filing Deadline” shall have the meaning assigned to such term in the Registration Rights  Agreement.         “FINRA” means the Financial Industry Regulatory Authority.        “Fixed Purchase” shall have the meaning assigned to such term in Section 3.1.        “Fixed Purchase Date” means, with respect to a Fixed Purchase made pursuant to Section  3.1, the Trading Day on which the Investor receives, after 4:00 p.m., New York City time, but                                        I-4  4839-6950-8556\8 

 

   prior to 5:00 p.m., New York City time, on such Trading Day, a valid Fixed Purchase Notice for  such Fixed Purchase in accordance with this Agreement.         “Fixed Purchase Maximum Amount” means, (i) with respect to a Fixed Purchase made  pursuant to Section 3.1 on a Trading Day on which the Common Stock is listed on the Trading  Market, a number of shares of Common Stock equal to 10% of the average daily trading volume  in the Common Stock on the Trading Market for the thirty (30) Trading Day period ending on (and  including) the applicable Fixed Purchase Date for such Fixed Purchase, and (ii) with respect to a  Fixed Purchase made pursuant to Section 3.1 on a Trading Day on which the Common Stock is  listed on an Eligible Market, a number of shares of Common Stock equal to 10% of the average  daily trading volume in the Common Stock on such Eligible Market for the thirty (30) Trading  Day period (or, in the event the Common Stock has not been listed on such Eligible Market for  thirty (30) Trading Days, such shorter period during which the Common Stock is listed on such  Eligible Market) ending on (and including) the applicable Fixed Purchase Date for such Fixed  Purchase.         “Fixed Purchase Notice” means, with respect to a Fixed Purchase pursuant to Section 3.1,  an irrevocable written notice delivered by the Company to the Investor directing the Investor to  purchase a Fixed Purchase Share Amount (such specified Fixed Purchase Share Amount subject  to adjustment as set forth in Section 3.1 as necessary to give effect to the Fixed Purchase Maximum  Amount), at the applicable Fixed Purchase Price therefor on the applicable Fixed Purchase Date  for such Fixed Purchase in accordance with this Agreement.         “Fixed Purchase Price” means, with respect to a Fixed Purchase made pursuant to Section  3.1, the purchase price per Share to be purchased by the Investor in such Fixed Purchase equal to  the lower of: (i) the lowest Sale Price on the applicable Fixed Purchase Date for such Fixed  Purchase and (ii) the arithmetic average of the three (3) lowest Closing Sale Prices for the Common  Stock during the ten (10) consecutive Trading-Day period ending on the Trading Day immediately  preceding such Fixed Purchase Date for such Fixed Purchase (in each case, to be appropriately  adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar  transaction that occurs on or after the date of this Agreement).         “Fixed Purchase Share Amount” means, with respect to a Fixed Purchase made pursuant  to Section 3.1, the number of Shares to be purchased by the Investor in such Fixed Purchase as  specified by the Company in the applicable Fixed Purchase Notice, which number of Shares shall  not exceed the applicable Fixed Purchase Maximum Amount (calculated as of the applicable Fixed  Purchase Date).         “Fixed Purchase Threshold Price” means, with respect to a Fixed Purchase made pursuant  to Section 3.1, $1.00, which shall be appropriately adjusted for any reorganization,  recapitalization, non-cash dividend, stock split or other similar transaction and, effective upon the  consummation of any such reorganization, recapitalization, non-cash dividend, stock split or other  similar transaction, the “Fixed Purchase Threshold Price” shall mean the lower of (i) the adjusted  price and (ii) $1.00.         “Fundamental Transaction” means that (i) the Company shall, directly or indirectly, in  one or more related transactions, (1) consolidate or merge with or into (whether or not the                                        I-5  4839-6950-8556\8 

 

     Company is the surviving corporation) another Person, with the result that the holders of the   Company’s capital stock immediately prior to such consolidation or merger together beneficially   own less than 50% of the outstanding voting power of the surviving or resulting corporation, or   (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of   the properties or assets of the Company to another Person, or (3) take action to facilitate a purchase,  tender or exchange offer by another Person that is accepted by the holders of more than 50% of  the outstanding shares of Common Stock (excluding any shares of Common Stock held by the  Person or Persons making or party to, or associated or affiliated with the Persons making or party  to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase  agreement or other business combination (including, without limitation, a reorganization,  recapitalization, spin-off or scheme of arrangement) with another Person whereby such other  Person acquires more than 50% of the outstanding shares of Common Stock (not including any  shares of Common Stock held by the other Person or other Persons making or party to, or  associated or affiliated with the other Persons making or party to, such stock or share purchase  agreement or other business combination), or (5) reorganize, recapitalize or reclassify its Common  Stock, or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and  14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3  under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power  represented by issued and outstanding Common Stock.         “GAAP” shall have the meaning assigned to such term in Section 5.6(b).         “Indebtedness” shall have the meaning assigned to such term in Section 5.11.         “Initial Registration Statement” shall have the meaning assigned to such term in the  Registration Rights Agreement.         “Investment Period” means the period commencing on the Effective Date of the Initial  Registration Statement and expiring on the date this Agreement is terminated pursuant to Article  VIII.         “Investor” shall have the meaning assigned to such term in the preamble of this Agreement.         “Investor Expense Reimbursement” shall have the meaning assigned to such term in  Section 10.1(i) hereof.         “Investor Party” shall have the meaning assigned to such term in Section 9.1.         “Issuer Covered Person” shall have the meaning assigned to such term in Section 5.41.         “IT Systems” shall have the meaning assigned to such term in Section 5.40.         “Knowledge” means the actual knowledge of the Company’s Chief Executive Officer and  Chief Financial Officer, after reasonable inquiry of all officers, directors and employees of the  Company and its Subsidiaries under their direct supervision who would reasonably be expected to  have knowledge or information with respect to the matter in question.                                          I-6   4839-6950-8556\8 

 

           “Material Adverse Effect” means (i) any condition, occurrence, state of facts or event   having, or insofar as reasonably can be foreseen would likely have, any material adverse effect on   the legality, validity or enforceability of the Transaction Documents or the transactions  contemplated thereby, (ii) any condition, occurrence, state of facts or event having, or insofar as  reasonably can be foreseen would likely have, any effect on the business, operations, properties or  financial condition of the Company that is material and adverse to the Company and its  Subsidiaries, taken as a whole, and/or (iii) any condition, occurrence, state of facts or event that   would, or insofar as reasonably can be foreseen would likely, prohibit or otherwise materially  interfere with or delay the ability of the Company to perform any of its obligations under any of  the Transaction Documents to which it is a party; provided, however, that no facts, circumstances,   changes or effects exclusively and directly resulting from, relating to or arising out of the  following, individually or in the aggregate, shall be taken into account in determining whether a  Material Adverse Effect has occurred or insofar as reasonably can be foreseen would likely occur:  (a) changes in conditions in the U.S. or global capital, credit or financial markets generally,  including changes in the availability of capital or currency exchange rates, provided such changes  shall not have affected the Company in a materially disproportionate manner as compared to other  similarly situated companies; (b) changes generally affecting the industries in which the Company  and its Subsidiaries operate, provided such changes shall not have affected the Company and its  Subsidiaries, taken as a whole, in a materially disproportionate manner as compared to other  similarly situated companies; (c) any effect of the announcement of, or the consummation of the  transactions contemplated by, this Agreement and the other Transaction Documents on the  Company’s relationships, contractual or otherwise, with customers, suppliers, vendors, bank  lenders, strategic venture partners or employees; (d) changes arising in connection with  earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or  material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions  existing as of the date hereof; (e) any action taken by the Investor, its affiliates or its or their  successors and assigns with respect to the transactions contemplated by this Agreement; and (f)  the effect of any changes in applicable laws or accounting rules, provided such changes shall not  have affected the Company in a materially disproportionate manner as compared to other similarly  situated companies.         “Material Agreements” shall have the meaning assigned to such term in Section 5.19.         “Minimum Price” shall have the meaning assigned to such term in Section 3.4(b).         “Money Laundering Laws” shall have the meaning assigned to such term in Section 5.36.         “MPA Period” means the period commencing at 9:30 a.m., New York City time, on the  Trading Day immediately prior to the Trading Day on which the Company makes a public  disclosure of material information concerning the Company, its business or its securities (whether  via issuance of a press release, filing of a Commission Document with the Commission, or  otherwise), and ending at 9:30 a.m., New York City time, on the fourth (4th) Trading Day   immediately following the Trading Day on which the Company has made such public disclosure   of material information.          “New Registration Statement” shall have the meaning assigned to such term in the  Registration Rights Agreement.                                         I-7   4839-6950-8556\8 

 

         “Notice of Effectiveness” shall have the meaning assigned to such term in Section 10.1(iii).         “PEA Period” means the period commencing at 9:30 a.m., New York City time, on the  fifth (5th) Trading Day immediately prior to the filing of any post-effective amendment to the  Initial Registration Statement or any New Registration Statement, and ending at 9:30 a.m., New  York City time, on the Trading Day immediately following, the Effective Date of such post- effective amendment.         “Person” means any person or entity, whether a natural person, trustee, corporation,  partnership, limited partnership, limited liability company, trust, unincorporated organization,  business association, firm, joint venture, governmental agency or authority.         “Personal Data” shall have the meaning assigned to such term in Section 5.40.         “Plan” shall have the meaning assigned to such term in Section 5.24.         “Prospectus” means the prospectus in the form included in a Registration Statement, as  supplemented from time to time by any Prospectus Supplement, including the documents  incorporated by reference therein.         “Prospectus Supplement” means any prospectus supplement to the Prospectus filed with  the Commission from time to time pursuant to Rule 424(b) under the Securities Act, including the  documents incorporated by reference therein.         “Registrable Securities” shall have the meaning assigned to such term in the Registration  Rights Agreement.         “Registration Rights Agreement” shall have the meaning assigned to such term in the  recitals hereof.         “Registration Statement” shall have the meaning assigned to such term in the Registration  Rights Agreement.         “Regulation D” shall have the meaning assigned to such term in the recitals of this  Agreement.         “Restricted Period” shall have the meaning assigned to such term in Section 6.9(i).         “Restricted Person” shall have the meaning assigned to such term in Section 6.9(i).         “Restricted Persons” shall have the meaning assigned to such term in Section 6.9(i).         “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities  Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter  adopted by the Commission having substantially the same effect.                                         I-8  4839-6950-8556\8 

 

         “Sale Price” means any trade price for a share of Common Stock on the Trading Market,  or if the Common Stock is then traded on an Eligible Market, on such Eligible Market, as reported  by Bloomberg.         “Sarbanes-Oxley Act” shall have the meaning assigned to such term in Section 5.6(e).         “Section 4(a)(2)” shall have the meaning assigned to such term in the recitals of this  Agreement.         “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and  regulations of the Commission thereunder.         “Shares” shall mean the shares of Common Stock that are and/or may be purchased by the  Investor under this Agreement pursuant to one or more Fixed Purchase Notices and VWAP  Purchase Notices.         “Short Sales” shall mean “short sales” as defined in Rule 200 promulgated under  Regulation SHO under the Exchange Act.         “Significant Subsidiary” means any Subsidiary of the Company that would constitute a  “significant subsidiary” of the Company within the meaning of Rule 1-02 of Regulation S-X of  the Commission.         “Subsidiary” shall mean any corporation or other entity of which at least a majority of the  securities or other ownership interest having ordinary voting power for the election of directors or  other persons performing similar functions are at the time owned directly or indirectly by the  Company and/or any of its other Subsidiaries.         “Total Commitment” shall have the meaning assigned to such term in Section 2.1.         “Trading Day” shall mean a full trading day (beginning at 9:30:01 a.m., New York City  time, and ending at 4:00 p.m., New York City time) on the Trading Market or, if the Common  Stock is then listed on an Eligible Market, on such Eligible Market.         “Trading Market” means the New York Stock Exchange (or any nationally recognized  successor thereto).         “Transaction Documents” means, collectively, this Agreement (as qualified by the  Disclosure Schedule) and the exhibits hereto, the Registration Rights Agreement and each of the  other agreements, documents, certificates and instruments entered into or furnished by the parties  hereto in connection with the transactions contemplated hereby and thereby.         “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells  any equity or debt securities that are convertible into, exchangeable or exercisable for, or include  the right to receive additional shares of Common Stock or Common Stock Equivalents either (A)  at a conversion price, exercise price, exchange rate or other price that is based upon and/or varies  with the trading prices of or quotations for the Common Stock at any time after the initial issuance  of such equity or debt securities, or (B) with a conversion, exercise or exchange price that is subject                                        I-9  4839-6950-8556\8 

 

   to being reset at some future date after the initial issuance of such equity or debt security or upon  the occurrence of specified or contingent events directly or indirectly related to the business of the  Company or the market for the Common Stock (including, without limitation, any “full ratchet”  or “weighted average” anti-dilution provisions, but not including any standard anti-dilution  protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar  transaction), (ii) issues or sells any equity or debt securities, including without limitation, Common  Stock or Common Stock Equivalents, either (A) at a price that is subject to being reset at some  future date after the initial issuance of such debt or equity security or upon the occurrence of  specified or contingent events directly or indirectly related to the business of the Company or the  market for the Common Stock (other than standard anti-dilution protection for any reorganization,  recapitalization, non-cash dividend, stock split or other similar transaction), or (B) that are subject  to or contain any put, call, redemption, buy-back, price-reset or other similar provision or  mechanism (including, without limitation, a “Black-Scholes” put or call right, other than in  connection with a “fundamental transaction”) that provides for the issuance of additional equity  securities of the Company or the payment of cash by the Company, or (iii) enters into any  agreement, including, but not limited to, an “equity line of credit” or “at the market offering” or  other continuous offering or similar offering of Common Stock or Common Stock Equivalents,  whereby the Company may sell Common Stock or Common Stock Equivalents at a future  determined price.         “VWAP” means, for the Common Stock as of any date, the dollar volume-weighted  average price for the Common Stock on the Trading Market during the period beginning at 9:30:01  a.m., New York City time, and ending at 4:00 p.m., New York City time, as reported by Bloomberg  through its “AQR” function or, if the foregoing does not apply, the dollar volume-weighted  average price of the Common Stock in the over-the-counter market on the electronic bulletin board  for the Common Stock during the period beginning at 9:30:01 a.m., New York City time, and  ending at 4:00 p.m., New York City time, as reported by Bloomberg, or, if no dollar volume- weighted average price is reported for the Common Stock by Bloomberg for such hours, the  average of the highest closing bid price and the lowest closing ask price of any of the market  makers for such security as reported by OTC Markets Group Inc. All such determinations shall be  appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or  other similar transaction during such period.         “VWAP Purchase” shall have the meaning assigned to such term in Section 3.2.         “VWAP Purchase Confirmation” shall have the meaning assigned to such term in Section  3.2.         “VWAP Purchase Commencement Time” means, with respect to a VWAP Purchase made  pursuant to Section 3.2, 9:30:01 a.m., New York City time, on the applicable VWAP Purchase  Date, or such other time publicly announced by the Trading Market as the official open (or  commencement) of trading on the Trading Market on such applicable VWAP Purchase Date.         “VWAP Purchase Date” means, with respect to a VWAP Purchase made pursuant to  Section 3.2, the Trading Day immediately following the applicable Fixed Purchase Date with  respect to the corresponding Fixed Purchase referred to in clause (i) of the second sentence of  Section 3.2.                                        I-10  4839-6950-8556\8 

 

           “VWAP Purchase Maximum Amount” means, with respect to a VWAP Purchase made   pursuant to Section 3.2, a number of shares of Common Stock equal to the lesser of (i) 200% of   the number of Shares directed by the Company to be purchased by the Investor pursuant to the  corresponding Fixed Purchase Notice for the corresponding Fixed Purchase referred to in clause  (i) of the second sentence of Section 3.2 (which number of Shares shall not exceed the applicable  Fixed Purchase Maximum Amount) and (ii) a number of Shares equal to (A) the VWAP Purchase  Share Percentage multiplied by (B) the total number (or volume) of shares of Common Stock  traded on the Trading Market during the applicable VWAP Purchase Period on the applicable  VWAP Purchase Date for such VWAP Purchase.         “VWAP Purchase Minimum Price Threshold” means, with respect to a VWAP Purchase  made pursuant to Section 3.2, seventy-five percent (75%) of the Closing Sale Price of the Common  Stock on the Trading Day on which the Company properly delivered the applicable VWAP  Purchase Notice to the Investor simultaneously with a Fixed Purchase Notice for the Maximum  Fixed Purchase Amount with respect to the corresponding Fixed Purchase referred to in clause (i)  of the second sentence of Section 3.2 in accordance with the Agreement.         “VWAP Purchase Notice” means, with respect to a VWAP Purchase made pursuant to  Section 3.2, an irrevocable written notice delivered by the Company to the Investor directing the  Investor to purchase a VWAP Purchase Share Amount (such specified VWAP Purchase Share  Amount subject to adjustment as set forth in Section 3.2 as necessary to give effect to the VWAP  Purchase Maximum Amount), at the applicable VWAP Purchase Price therefor on the applicable  VWAP Purchase Date for such VWAP Purchase in accordance with this Agreement.         “VWAP Purchase Period” means, with respect to a VWAP Purchase made pursuant to  Section 3.2, the period on the applicable VWAP Purchase Date for such VWAP Purchase  beginning at the applicable VWAP Purchase Commencement Time and ending at the applicable  VWAP Purchase Termination Time.         “VWAP Purchase Price” means, with respect to a VWAP Purchase made pursuant to  Section 3.2, the purchase price per Share to be purchased by the Investor in such VWAP Purchase  equal to the lower of (i) ninety-four percent (94%) of the VWAP for the applicable VWAP  Purchase Period during the applicable VWAP Purchase Date for such VWAP Purchase, and (ii)  the Closing Sale Price of the Common Stock on such applicable VWAP Purchase Date for such  VWAP Purchase (to be appropriately adjusted for any reorganization, recapitalization, non-cash  dividend, stock split, reverse stock split or other similar transaction).         “VWAP Purchase Share Amount” means, with respect to a VWAP Purchase made  pursuant to Section 3.2, the number of Shares to be purchased by the Investor in such VWAP  Purchase as specified by the Company in the applicable VWAP Purchase Notice, which number  of Shares shall not exceed the applicable VWAP Purchase Maximum Amount.         “VWAP Purchase Share Percentage” means, with respect to a VWAP Purchase made  pursuant to Section 3.2, twenty percent (20%).         “VWAP Purchase Share Volume Maximum” means, with respect to a VWAP Purchase  made pursuant to Section 3.2, a number of shares of Common Stock equal to (i) the number of                                         I-11   4839-6950-8556\8 

 

   Shares specified by the Company in the applicable VWAP Purchase Notice as the VWAP Purchase  Share Amount to be purchased by the Investor in such VWAP Purchase, divided by (ii) the VWAP  Purchase Share Percentage (to be appropriately adjusted for any reorganization, recapitalization,  non-cash dividend, stock split, reverse stock split or other similar transaction).         “VWAP Purchase Termination Time” means, with respect to a VWAP Purchase made  pursuant to Section 3.2, the earliest of (i) 4:00:00 p.m., New York City time, on the applicable  VWAP Purchase Date, or such other time publicly announced by the Trading Market as the official  close of trading on the Trading Market on such applicable VWAP Purchase Date, (ii) such time,  from and after the VWAP Purchase Commencement Time for such VWAP Purchase, that the total  number (or volume) of shares of Common Stock traded on the Trading Market has exceeded the  applicable VWAP Purchase Share Volume Maximum, and (iii) such time, from and after the  VWAP Purchase Commencement Time for such VWAP Purchase, that the Sale Price has fallen  below the applicable VWAP Purchase Minimum Price Threshold.         (b) “VWAP Purchase Threshold Price” means $1.35, which shall be appropriately  adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar  transaction and, effective upon the consummation of any such reorganization, recapitalization,  non-cash dividend, stock split or other similar transaction, the “VWAP Purchase Floor Price” shall  mean the lower of (i) such adjusted price and (ii) $1.00.                                                          I-12  4839-6950-8556\8 

 

                                  EXHIBIT A TO THE                   COMMON STOCK PURCHASE AGREEMENT                                                                    [TO BE FURNISHED SEPARATELY]                                               A-1  4839-6950-8556\8 

 

                                  EXHIBIT B TO THE                    COMMON STOCK PURCHASE AGREEMENT                         CERTIFICATE OF THE COMPANY                               CLOSING CERTIFICATE                                  November [●], 2020          The undersigned, the Executive Vice President, Chief Financial Officer, Treasurer and   Secretary of Independence Contract Drilling, Inc., a Delaware corporation (the “Company”),   delivers this certificate in connection with the Common Stock Purchase Agreement, dated as of   November 11, 2020 (the “Agreement”), by and between the Company and Tumim Stone Capital   LLC, a Delaware limited liability company (the “Investor”), and hereby certifies on the date hereof   that (capitalized terms used herein without definition have the meanings assigned to them in the   Agreement):          1.    Attached hereto as Exhibit A is a true, complete and correct copy of the Certificate   of Incorporation of the Company, as amended through the date hereof, as filed with the Secretary   of State of the State of Delaware. The Certificate of Incorporation of the Company has not been   further amended or restated, and no document with respect to any amendment to the Certificate of   Incorporation of the Company has been filed in the office of the Secretary of State of the State of   Delaware since the date shown on the face of the state certification relating to the Company’s   Certificate of Incorporation, which is in full force and effect on the date hereof, and no action has   been taken by the Company in contemplation of any such amendment or the dissolution, merger   or consolidation of the Company.          2.    Attached hereto as Exhibit B is a true and complete copy of the Bylaws of the   Company, as amended and restated through, and as in full force and effect on, the date hereof, and  no proposal for any amendment, repeal or other modification to the Bylaws of the Company has  been taken or is currently pending before the Board of Directors or stockholders of the Company.         3.    The Board of Directors of the Company has approved the transactions contemplated  by the Transaction Documents; said approval has not been amended, rescinded or modified and  remains in full force and effect as of the date hereof. Attached hereto as Exhibit C are true, correct  and complete copies of the resolutions duly adopted by the Board of Directors of the Company via  unanimous written consent on November 9, 2020.           4.    Each person who, as an officer of the Company, or as attorney-in-fact of an officer  of the Company, signed the Transaction Documents to which the Company is a party, was duly  elected, qualified and acting as such officer or duly appointed and acting as such attorney-in-fact,  and the signature of each such person appearing on any such document is his genuine signature.         IN WITNESS WHEREOF, I have signed my name as of the date first above written.                                                                               Name:                                       Title:                                        B-1   4839-6950-8556\8 

 

                                    EXHIBIT C TO THE                      COMMON STOCK PURCHASE AGREEMENT                             COMPLIANCE CERTIFICATE         The undersigned, the Executive Vice President, Chief Financial Officer, Treasurer and Secretary  of Independence Contract Drilling, Inc., a Delaware corporation (the “Company”), delivers this certificate  in connection with the Common Stock Purchase Agreement, dated as of November 11, 2020 (the  “Agreement”), by and between the Company and Tumim Stone Capital LLC, a Delaware limited liability  company (the “Investor”), and hereby certifies on the date hereof that, to the best of his knowledge after  reasonable investigation, on behalf of the Company (capitalized terms used herein without definition have  the meanings assigned to them in the Agreement):         1.     The undersigned is the duly appointed Executive Vice President, Chief Financial Officer,  Treasurer and Secretary of the Company.         2.     Except as set forth in the attached Disclosure Schedule, the representations and warranties  of the Company set forth in Article V of the Agreement (i) that are not qualified by “materiality” or  “Material Adverse Effect” are true and correct in all material respects as of [the Commencement Date] [the  date hereof] with the same force and effect as if made on [the Commencement Date] [the date hereof],  except to the extent such representations and warranties are as of another date, in which case, such  representations and warranties are true and correct in all material respects as of such other date and (ii) that  are qualified by “materiality” or “Material Adverse Effect” are true and correct as of [the Commencement  Date] [the date hereof] with the same force and effect as if made on [the Commencement Date] [the date  hereof], except to the extent such representations and warranties are as of another date, in which case, such  representations and warranties are true and correct as of such other date.         3.     The Company has performed, satisfied and complied in all material respects with all  covenants, agreements and conditions required by the Agreement and the Registration Rights Agreement  to be performed, satisfied or complied with by the Company [at or prior to Commencement][on or prior to  the date hereof].         4.     The Shares issuable in respect of each Fixed Purchase Notice and each VWAP Purchase  Notice effected pursuant to the Agreement shall be delivered to the Investor electronically as DWAC  Shares, and shall be freely tradable and transferable and without restriction on resale and without any stop  transfer instructions maintained against such Shares.          5.     As of [the Commencement Date][the date hereof], the Company does not possess any  material non-public information.         6.     As of [the Commencement Date][the date hereof], the Company has reserved out of its  authorized and unissued Common Stock, [●] shares of Common Stock solely for the purpose of effecting  Fixed Purchases and VWAP Purchases under the Agreement.          7.    No stop order suspending the effectiveness of the Registration Statement or the use of the  Prospectus under the Securities Act has been issued and no proceedings for such purpose or pursuant to  Section 8A of the Securities Act are pending before or, to the knowledge of the Company, threatened by  the Commission.          The undersigned has executed this Certificate this [●] day of [●], 20[●].                                                    By:                                              C-1  4839-6950-8556\8 

 

                                                                 Name:                                                                 Title:                                                                   C-2  4839-6950-8556\8 

 

                                                                         DISCLOSURE SCHEDULE                       RELATING TO THE COMMON STOCK             PURCHASE AGREEMENT, DATED AS OF NOVEMBER 11, 2020      BETWEEN INDEPENDENT CONTRACT DRILLING, INC. AND TUMIM STONE                                   CAPITAL LLC          This disclosure schedule is made and given pursuant to Article V of the Common Stock   Purchase Agreement, dated as of November 11, 2020 (the “Agreement”), by and between  Independent Contract Drilling, Inc., a Delaware corporation (the “Company”), and Tumim Stone  Capital LLC, a Delaware limited liability company. Unless the context otherwise requires, all  capitalized terms are used herein as defined in the Agreement.  The numbers below correspond to  the section numbers of representations and warranties in the Agreement most directly modified by  the below exceptions.              4839-6950-8556\8 

 

             FORM OF OPINION OF OUTSIDE COUNSEL TO BE DELIVERED PURSUANT TO                                 SECTION 7.1(iv)                           [Company Counsel’s Letterhead]   Capitalized terms herein not otherwise defined herein will have the meaning given to such terms  in the Common Stock Purchase Agreement, dated as of November 11, 2020, by and between  Independence Contract Drilling, Inc. and Tumim Stone Capital LLC (the “Purchase Agreement”).      1.    The Company is validly existing and in good standing as a corporation under the laws           of the State of Delaware.        2.    The Company has  all necessary corporate power and authority (i) to execute, deliver           and perform its obligations under the Purchase Agreement and the Registration Rights           Agreement, and (ii) to own, lease and operate its properties and to conduct its business           in all material respects as such business is described in the Commission Documents.           The Company is duly qualified as a foreign corporation for the transaction of business           under the laws of the State of Texas.      3.    The execution and delivery by the Company of the Purchase Agreement and the           Registration Rights Agreement, and the consummation by the Company of the           transactions contemplated thereby (including, without limitation, the issuance and sale           of the Shares, subject to the limitations and Company conditions set forth in the           Purchase Agreement, and in an amount not less than the par value of such Shares and           equal to or greater than any minimum purchase price, and within any other parameters,           established by the Company’s board of directors or applicable committee thereof,           including the Board resolutions dated November 9, 2020) have been duly and validly           authorized by all necessary corporate action on part of the Company.      4.    Each of the Purchase Agreement and the Registration Rights Agreement has been duly           executed and delivered by the Company and constitutes a valid and binding obligation           of the Company, enforceable against the Company in accordance with its respective           terms, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent           conveyance, fraudulent transfer and other similar laws relating to or affecting creditors’           rights generally and to general equitable principles (regardless of whether considered           in a proceeding in equity or at law), including concepts of commercial reasonableness,           good faith and fair dealing and the possible unavailability of specific performance or           injunctive relief.      5.    The execution, delivery and performance by the Company of the Purchase Agreement           and the Registration Rights Agreement, including the issuance and sale of the Shares           by the Company under the Purchase Agreement, do not: (i) violate the Company’s           certificate of incorporation or bylaws each as currently in effect (the “Governing           Documents”); (ii) violate any terms or provisions of Applicable Laws (as defined           below); (iii) result in a breach of, or constitute a default (or an event which with notice           or lapse of time or both would become a default) under, any material agreement,    4839-6950-8556\8 

 

            mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or           obligation to which the Company is a party or is bound that has been filed as an exhibit           to the 2019 Form 10-K or any other Commission Document filed after the 2019 Form           10-K and prior to the date on which this opinion is given (an “Existing SEC-Filed           Material Agreement”) listed in Schedule I hereto; or (iv) violate any judgment, order           or decree listed in Schedule II hereto.  “Applicable Laws” means (A) the General           Corporation Law of the State of Delaware (the “DGCL”), and (B) the federal laws of          the United States of America and the state laws of the State of Texas which, in our          experience and without independent investigation, are normally applicable to          transactions of the type contemplated by the Purchase Agreement; provided, that the           term “Applicable Laws” shall not include federal or state securities or blue sky laws           (including, without limitation, the 1933 Act, the Securities Exchange Act of 1934, as           amended the “1934 Act”), the Trust Indenture Act of 1939, as amended, or the           Investment Company Act of 1940, as amended (the “1940 Act”)), antifraud laws,           pension or employee benefit laws or in each case any rules or regulations thereunder,           or similar matters.      6.    No consent, approval, authorization or other order of any federal regulatory body,           federal administrative agency or other federal governmental body of the United States           of America or any state regulatory body, state administrative agency or other state           governmental body of the State of Delaware or Texas that has not been obtained or           made and is not in full force and effect was or is required under Applicable Laws for           (i) the execution, delivery and performance of the Purchase Agreement and the           Registration Rights Agreement by the Company, or (ii) the issuance and sale of the           Shares by the Company to the Investor pursuant to the Purchase Agreement.      7.    Assuming the accuracy of the representations and warranties made by the Investor in           the Purchase Agreement and the Investor’s compliance with the covenants made by the           Investor in the Purchase Agreement and the Registration Rights Agreement, in each           case at all relevant times, both on and after the Closing Date, it is not necessary, in           connection with the offer, sale and issuance of the Shares by the Company to the           Investor in accordance with the Purchase Agreement, to register the Shares under the           1933 Act.      8.    When each Share is issued and delivered by the Company and paid for in accordance           with the Purchase Agreement (in an amount not less than the par value of such Share           and equal to or greater than any minimum purchase price, and within any other           parameters, established by the Company’s board of directors or applicable committee           thereof, including each of the limitations set forth in the Purchase Agreement), each of           the Shares will be duly authorized and validly issued, fully paid and non-assessable;           and the issuance and sale of the Shares pursuant to the Purchase Agreement is not           subject to any preemptive rights of any securityholder of the Company arising under           the DGCL as currently in effect, the Company’s Governing Documents, each as           currently in effect, or any Existing SEC-Filed Material Agreement.      9.    The execution and delivery of the Purchase Agreement and the Registration Rights           Agreement by the Company do not, and the performance by the Company of its    4839-6950-8556\8 

 

            obligations thereunder shall not, give rise to any rights of any other person that exist           and are in effect as of the date of the Closing under any Existing SEC-Filed Material           Agreement, for the registration under the Securities Act of any shares of Common           Stock or other securities of the Company which have not been waived.       10.   The Company is not, and, after giving effect to the offering and sale of the Shares and           the application of the proceeds thereof as described in the Company’s draft Current           Report on Form 8-K dated November 12, 2020 (a copy of which has been provided to           you and to us to be filed November 12, 2020][Commission Documents]] will not be           required to be registered as, an “investment company” as defined in the 1940 Act.    4839-6950-8556\8 

 

         FORM OF OPINION OF OUTSIDE COUNSEL TO BE DELIVERED ON THE   COMMENCEMENT DATE PURSUANT TO SECTION 7.2(xv) AND FORM OF “BRING          DOWN OPINION” TO BE DELIVERED PURSUANT TO SECTION 6.15                             [Company Counsel’s Letterhead]   1.     Any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner        and within the time period required by such Rule.   2.    The statements under the caption "Description of Capital Stock" included in the Prospectus,         to the extent that such statements purport to describe certain provisions of the DGCL as         currently in effect or of the Company’s certificate of incorporation or bylaws as currently         in effect, accurately describe such provisions in all material respects, subject to the        qualifications and assumptions stated therein, except that we express no opinion in this         paragraph with respect to any statements regarding the number of outstanding shares of        Common Stock, to the effect that any shares of Common Stock have been or will be duly        authorized, validly issued, fully paid or non-assessable or regarding preemptive or similar        rights.   3.     No facts have come to our attention that cause us to believe that any of the opinions        expressed in our opinion letter to you dated [●], 20[●] are not true and correct as of the        date hereof.         In acting as special counsel to the Company in connection with the transactions described  in the first paragraph above, we have participated in conferences with officers and other  representatives of the Company, the independent public accountants for the Company, your  counsel and your representatives, at which conferences certain contents of the Registration  Statement and the Prospectus and related matters were discussed. Although we are not passing  upon or assuming responsibility for the accuracy, completeness or fairness of the statements  included or incorporated by reference in or omitted from the Registration Statement, the  Prospectus or the Incorporated Documents and have made no independent check or verification  thereof (except as provided in paragraph 2 above), based upon our participation in such  conferences, no facts have come to our attention that have caused us to believe that, insofar as is  relevant to the offering of the Registrable Securities (as defined in the Registration Rights  Agreement):        (A)         the Registration Statement, at the time it was first declared effective,  contained an untrue statement of a material fact or omitted to state a material fact required to be  stated therein or necessary to make the statements therein not misleading; or         (B)         the Prospectus, as of the date of the Prospectus ]or on the date hereof,  included or includes an untrue statement of a material fact or omitted or omits to state a material  fact necessary in order to make the statements therein, in the light of the circumstances under  which they were made, not misleading,         except in each case that we express no belief and make no statement with respect to (A)  the financial statements and schedules and other financial, accounting or statistical data included  or incorporated by reference in or omitted from the Registration Statement, the Prospectus or the     4839-6950-8556\8 

 

     Incorporated Documents, including any assessments of, or reports on, the effectiveness of internal  control over financial reporting, and (B) representations and warranties and other statements of  fact included in the exhibits to the Registration Statement or to the Incorporated Documents.         In rendering the statement set forth in clause (A) of the immediately preceding paragraph,  we have assumed that [______, 2020] was the earlier of the date on which the Prospectus was first  used and the time of the first contract of sale of the Registrable Securities within the meaning of  Rule 430B(f)(1) of the Rules and Regulations         Based solely on our review of the Commission’s EDGAR website, we advise you that the  Registration Statement became effective under the Securities Act on [____, 20__].  In addition,  based solely on our review of the information made available by the Commission at  http://www.sec.gov/litigation/stoporders.shtml, we confirm that the Commission has not issued  any stop order suspending the effectiveness of the Registration Statement.  To our knowledge,  based solely on our participation in the conferences mentioned above regarding the Registration  Statement and our review of the information made available by the SEC at  http://www.sec.gov/litigation/stoporders.shtml, no proceedings for that purpose are pending or  have been instituted or threatened by the Commission.         “Incorporated Documents,” when used with respect to the Registration Statement or the  Prospectus as of any date, means the documents incorporated or deemed to be incorporated by  reference in the Registration Statement, or the Prospectus, as the case may be, as of such date  pursuant to General Instruction VII to Form S-1.                4839-6950-8556\8registrationrightsagreem

                                                               Execution Version                          REGISTRATION RIGHTS AGREEMENT          This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of   November 11, 2020, is by and between Tumim Stone Capital LLC, a Delaware limited liability   company (the “Investor”), and Independence Contract Drilling, Inc., a Delaware corporation (the   “Company”).                                     RECITALS          A.    The Company and the Investor have entered into that certain Common Stock   Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”), pursuant to which   the Company may issue, from time to time, to the Investor up to the lesser of (i) $5,000,000 in   aggregate gross purchase price of newly issued shares of the Company’s common stock, par value   $0.01 per share (“Common Stock”), and (ii) the Exchange Cap (to the extent applicable under   Section 3.4 of the Purchase Agreement), as provided for therein.          B.    Pursuant to the terms of, and in consideration for the Investor entering into, the   Purchase Agreement, and to induce the Investor to execute and deliver the Purchase Agreement,   the Company has agreed to provide the Investor with certain registration rights with respect to the   Registrable Securities (as defined herein) as set forth herein.                                    AGREEMENT          NOW, THEREFORE, in consideration of the representations, warranties, covenants and   agreements contained herein and in the Purchase Agreement, and for other good and valuable   consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally   bound hereby, the Company and the Investor hereby agree as follows:    1. Definitions.          Capitalized terms used herein and not otherwise defined herein shall have the respective   meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms   shall have the following meanings:          (a)   “Agreement” shall have the meaning assigned to such term in the preamble of this  Agreement                (b)   “Allowable Grace Period” shall have the meaning assigned to such term in  Section 3(p).                (c)   “Blue Sky Filing” shall have the meaning assigned to such term in Section 6(a).           (d)   “Business Day” means any day other than Saturday, Sunday or any other day on  which commercial banks in New York, New York are authorized or required by law to remain  closed.         (e)   “Claims” shall have the meaning assigned to such term in Section 6(a).     4846-9840-0972\6 

 

       (f)   “Closing Date” shall mean the date of this Agreement.          (g)   “Commission” means the U.S. Securities and Exchange Commission or any   successor entity.          (h)   “Common Stock” shall have the meaning assigned to such term in the recitals to   this Agreement.           (i)   “Company” shall have the meaning assigned to such term in the preamble of this   Agreement.           (j)   “Effective Date” means the date that the applicable Registration Statement has been   declared effective by the Commission.          (k)   “Effectiveness Deadline” means (i) with respect to the Initial Registration   Statement required to be filed to pursuant to Section 2(a), the earlier of (A) the 90th calendar day   after the date of this Agreement, if such Registration Statement is subject to review by the   Commission, and (B) the 60th calendar day after the date of this Agreement, if the Company is   notified (orally or in writing, whichever is earlier) by the Commission that such Registration  Statement will not be reviewed and (ii) with respect to any New Registration Statements that may  be required to be filed by the Company pursuant to this Agreement, the earlier of (A) the 60th  calendar day following the date on which the Company was required to file such additional  Registration Statement, if such Registration Statement is subject to review by the Commission,  and (B) the 30th calendar day following the date on which the Company was required to file such   New Registration Statement, if the Company is notified (orally or in writing, whichever is earlier)   by the Commission that such Registration Statement will not be reviewed.          (l)   “Filing Deadline” means (i) with respect to the Initial Registration Statement   required to be filed to pursuant to Section 2(a), the 10th Business Day after the date of this   Agreement and (ii) with respect to any New Registration Statements that may be required to be   filed by the Company pursuant to this Agreement, the 20th Business Day following the sale of   substantially all of the Registrable Securities included in the Initial Registration Statement or the   most recent prior New Registration Statement, as applicable, or such other date as permitted by   the Commission.          (m)   “Indemnified Damages” shall have the meaning assigned to such term in Section   6(a).          (n)   “Initial Registration Statement” shall have the meaning assigned to such term in   Section 2(a).          (o)   “Investor” shall have the meaning assigned to such term in the preamble of this   Agreement.           (p)   “Investor Party” and “Investor Parties” shall have the meaning assigned to such   terms in Section 6(a).            (q)   “Legal Counsel” shall have the meaning assigned to such term in Section 2(b).       4846-9840-0972\6                      2 

 

       (r)   “New Registration Statement” shall have the meaning assigned to such term in   Section 2(c).          (s)   “Person” means any person or entity, whether a natural person, trustee, corporation,   partnership, limited partnership, limited liability company, trust, unincorporated organization,   business association, firm, joint venture, governmental agency or authority.          (t)   “Prospectus” means the prospectus in the form included in the Registration   Statement, as supplemented from time to time by any Prospectus Supplement, including the   documents incorporated by reference therein.          (u)   “Prospectus Supplement” means any prospectus supplement to the Prospectus   filed with the Commission from time to time pursuant to Rule 424(b) under the Securities Act,   including the documents incorporated by reference therein.          (v)   “Purchase Agreement” shall have the meaning assigned to such term in the recitals   to this Agreement.           (w)   “register,” “registered,” and “registration” refer to a registration effected by   preparing and filing one or more Registration Statements in compliance with the Securities Act   and pursuant to Rule 415 and the declaration of effectiveness of such Registration Statement(s) by   the Commission.          (x)   “Registrable Securities” means all of the Shares, and any capital stock of the   Company issued or issuable with respect to the Shares, including, without limitation, (i) as a result  of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (ii)  shares of capital stock of the Company into which the shares of Common Stock are converted or  exchanged and shares of capital stock of a successor entity into which the shares of Common Stock  are converted or exchanged, in each case until such time as such securities cease to be Registrable  Securities pursuant to Section 2(f).         (y)   “Registration Statement” means a registration statement or registration statements  of the Company filed under the Securities Act covering the resale by the Investor of Registrable  Securities, as such registration statement or registration statements may be amended and  supplemented from time to time, including all documents filed as part thereof or incorporated by  reference therein.         (z)   “Registration Period” shall have the meaning assigned to such term in Section 3(a).          (aa)  “Rule 144” means Rule 144 promulgated by the Commission under the Securities   Act, as such rule may be amended from time to time, or any other similar or successor rule or  regulation of the Commission that may at any time permit the Investor to sell securities of the   Company to the public without registration.          (bb)  “Rule 415” means Rule 415 promulgated by the Commission under the Securities   Act, as such rule may be amended from time to time, or any other similar or successor rule or   regulation of the Commission providing for offering securities on a delayed or continuous basis.     4846-9840-0972\6                      3 

 

       (cc)  “Staff” shall have the meaning assigned to such term in Section 2(e).          (dd)  “Violations” shall have the meaning assigned to such term in Section 6(a).     2. Registration.          (a)   Mandatory Registration.  The Company shall prepare and, as soon as practicable,   but in no event later than the Filing Deadline, file with the Commission an initial Registration   Statement on Form S-1 (or any successor form) covering the resale by the Investor of the maximum   number of Registrable Securities as shall be permitted to be included thereon in accordance with   applicable Commission rules, regulations and interpretations so as to permit the resale of such   Registrable Securities by the Investor under Rule 415 under the Securities Act at then prevailing   market prices (and not fixed prices) (the “Initial Registration Statement”). Such initial  Registration Statement shall contain the “Selling Stockholder” and “Plan of Distribution” sections  in substantially the form attached hereto as Exhibit B. The Company shall use its commercially   reasonable efforts to have the Initial Registration Statement declared effective by the Commission   as soon as reasonably practicable, but in no event later than the applicable Effectiveness Deadline.          (b)   Legal Counsel.  Subject to Section 5 hereof, the Investor shall have the right to   select one legal counsel to review and oversee, solely on its behalf, any registration pursuant to   this Section 2 (“Legal Counsel”), which shall be Dorsey & Whitney LLP, or such other counsel   as thereafter designated by the Investor. Except as provided under Section 10.1(i) of the Purchase  Agreement, the Company shall have no obligation to reimburse the Investor for any and all legal  fees and expenses of the Legal Counsel incurred in connection with the transactions contemplated  hereby.         (c)    Sufficient Number of Shares Registered. If at any time all Registrable Securities   are not covered by the Initial Registration Statement filed pursuant to Section 2(a) as a result of   Section 2(e) or otherwise, the Company shall use its commercially reasonable efforts to file with   the Commission one or more additional Registration Statements so as to cover all of the   Registrable Securities not covered by such initial Registration Statement, in each case, as soon as   practicable (taking into account any position of the staff of the Commission (“Staff”) with respect  to the date on which the Staff will permit such additional Registration Statement(s) to be filed with  the Commission and the rules and regulations of the Commission) (each such additional  Registration Statement, a “New Registration Statement”), but in no event later than the applicable  Filing Deadline for such New Registration Statement(s). The Company shall use its commercially  reasonable efforts to cause each such New Registration Statement to become effective as soon as  practicable following the filing thereof with the Commission, but in no event later than the  applicable Effectiveness Deadline for such New Registration Statement.         (d)    No Inclusion of Other Securities. In no event shall the Company include any   securities other than Registrable Securities on any Registration Statement pursuant to Section 2(a)   or Section 2(c) without consulting the Investor and Legal Counsel prior to filing such Registration   Statement with the Commission.           (e)  Offering. If the Staff or the Commission seeks to characterize any offering pursuant   to a Registration Statement filed pursuant to this Agreement as constituting an offering of     4846-9840-0972\6                      4 

 

 securities that does not permit such Registration Statement to become effective and be used for   resales by the Investor on a delayed or continuous basis under Rule 415 at then-prevailing market   prices (and not fixed prices), or if after the filing of any Registration Statement pursuant to Section  2(a) or Section 2(c), the Company is otherwise required by the Staff or the Commission to reduce  the number of Registrable Securities included in such Registration Statement, then the Company  shall reduce the number of Registrable Securities to be included in such Registration Statement  (after consultation with the Investor and Legal Counsel as to the specific Registrable Securities to  be removed therefrom) until such time as the Staff and the Commission shall so permit such  Registration Statement to become effective and be used as aforesaid. Notwithstanding anything in   this Agreement to the contrary, if after giving effect to the actions referred to in the immediately   preceding sentence, the Staff or the Commission does not permit such Registration Statement to   become effective and be used for resales by the Investor on a delayed or continuous basis under   Rule 415 at then-prevailing market prices (and not fixed prices), the Company shall not request   acceleration of the Effective Date of such Registration Statement, the Company shall promptly   (but in no event later than 48 hours) request the withdrawal of such Registration Statement   pursuant to Rule 477 under the Securities Act, and the Effectiveness Deadline shall automatically   be deemed to have elapsed with respect to such Registration Statement at such time as the Staff or   the Commission has made a final and non-appealable determination that the Commission will not   permit such Registration Statement to be so utilized (unless prior to such time the Company has   received assurances from the Staff or the Commission that a New Registration Statement filed by   the Company with the Commission promptly thereafter may be so utilized). In the event of any   reduction in Registrable Securities pursuant to this paragraph, the Company shall use its   commercially reasonable efforts to file one or more New Registration Statements with the   Commission in accordance with Section 2(c) until such time as all Registrable Securities have   been included in Registration Statements that have been declared effective and the Prospectuses   contained therein are available for use by the Investor.          (f)   Any Registrable Security shall cease to be a “Registrable Security” at the earliest   of the following: (i) when a Registration Statement covering such Registrable Security becomes   or has been declared effective by the Commission and such Registrable Security has been sold or   disposed of pursuant to such effective Registration Statement; (ii) when such Registrable Security   is held by the Company or one of its subsidiaries; and (iii) the date that is the later of (A) the first   (1st) anniversary of the date of termination of the Purchase Agreement in accordance with Article   VIII of the Purchase Agreement and (B) the first (1st) anniversary of the date of the last sale of any  Registrable Securities to the Investor pursuant to the Purchase Agreement.   3. Related Obligations.          The Company shall use its commercially reasonable efforts to effect the registration of the   Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant   thereto, the Company shall have the following obligations:         (a)    The Company shall promptly prepare and file with the Commission the Initial   Registration Statement pursuant to Section 2(a) hereof and one or more New Registration   Statements pursuant to Section 2(c) hereof with respect to the Registrable Securities, but in no   event later than the applicable Filing Deadline therefor, and the Company use its commercially   reasonable efforts to cause each such Registration Statement to become effective as soon as     4846-9840-0972\6                      5 

 

 practicable after such filing, but in no event later than the applicable Effectiveness Deadline   therefor. Subject to Allowable Grace Periods, the Company shall keep each Registration Statement   effective (and the Prospectus contained therein available for use) pursuant to Rule 415 for resales   by the Investor on a continuous basis at then-prevailing market prices (and not fixed prices) at all  times until the earlier of (i) the date on which the Investor shall have sold all of the Registrable  Securities covered by such Registration Statement and (ii) the date of termination of the Purchase   Agreement if as of such termination date the Investor holds no Registrable Securities (or, if   applicable, the date on which such securities cease to be Registrable Securities after the date of   termination of the Purchase Agreement) (the “Registration Period”). Notwithstanding anything to   the contrary contained in this Agreement (but subject to the provisions of Section 3(q) hereof), the   Company shall ensure that, when filed and at all times while effective, each Registration Statement   (including, without limitation, all amendments and supplements thereto) and the Prospectus   (including, without limitation, all amendments and supplements thereto) used in connection with   such Registration Statement shall 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 therein (in   the case of Prospectuses, in the light of the circumstances in which they were made) not   misleading. The Company shall submit to the Commission, as soon as reasonably practicable after   the date that the Company learns that no review of a particular Registration Statement will be made   by the Staff or that the Staff has no further comments on a particular Registration Statement (as   the case may be), a request for acceleration of effectiveness of such Registration Statement to a   time and date as soon as reasonably practicable in accordance with Rule 461 under the Securities   Act.          (b)   Subject to Section 3(q) of this Agreement, the Company shall use its commercially   reasonable efforts to prepare and file with the Commission such amendments (including, without   limitation, post-effective amendments) and supplements to each Registration Statement and the   Prospectus used in connection with each such Registration Statement, which Prospectus is to be   filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep each  such Registration Statement effective (and the Prospectus contained therein current and available  for use) at all times during the Registration Period for such Registration Statement, and, during  such period, comply with the provisions of the Securities Act with respect to the disposition of all  Registrable Securities of the Company required to be covered by such Registration Statement until  such time as all of such Registrable Securities shall have been disposed of in accordance with the  intended methods of disposition by the Investor. Without limiting the generality of the foregoing,  the Company covenants and agrees that (i) at or before 8:30 a.m. (New York City time) on the   Trading Day immediately following the Effective Date of the Initial Registration Statement and   any New Registration Statement (or any post-effective amendment thereto), the Company shall  file with the Commission in accordance with Rule 424(b) under the Securities Act the final   Prospectus to be used in connection with sales pursuant to such Registration Statement (or post-  effective amendment thereto), and (ii) if the transactions contemplated by any Fixed Purchase and   related VWAP Purchase (as applicable) are material to the Company (individually or collectively   with all other prior Fixed Purchases and VWAP Purchases, the consummation of which have not   previously been reported in any Prospectus Supplement filed with the Commission under Rule   424(b) under the Securities Act or in any report, statement or other document filed by the Company   with the Commission under the Exchange Act), or if otherwise required under the Securities Act   (or the interpretations of the Commission thereof), in each case as reasonably determined by the   Company and the Investor, then, at or before 8:30 a.m., New York City time, on the first (1st)    4846-9840-0972\6                      6 

 

 Trading Day immediately following the Fixed Purchase Date with respect to such Fixed Purchase,   or the first (1st) Trading Day immediately following the VWAP Purchase Date, if a VWAP   Purchase Notice was properly delivered to the Investor hereunder in connection with such Fixed   Purchase, the Company shall file with the Commission a Prospectus Supplement pursuant to Rule   424(b) under the Securities Act with respect to the applicable Fixed Purchase(s) and VWAP   Purchase(s) (as applicable), disclosing the total number of Shares that are to be (and, if applicable,   have been) issued and sold to the Investor pursuant to such Fixed Purchase(s), the total purchase  price for the Shares subject to such Fixed Purchase(s) and VWAP Purchase(s) (as applicable), the  applicable purchases price(s) for such Shares and the net proceeds that are to be (and, if applicable,  have been) received by the Company from the sale of such Shares. To the extent not previously  disclosed in the Prospectus or a Prospectus Supplement, the Company shall disclose in its  Quarterly Reports on Form 10-Q and in its Annual Reports on Form 10-K the information  described in the immediately preceding sentence relating to all Fixed Purchase(s) and VWAP   Purchase(s) consummated during the relevant fiscal quarter and shall file such Quarterly Reports   and Annual Reports with the Commission within the applicable time period prescribed for such   report under the Exchange Act. In the case of amendments and supplements to any Registration   Statement on Form S-1 or Prospectus related thereto which are required to be filed pursuant to this   Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the Company   filing a report on Form 8-K, Form 10-Q or Form 10-K or any analogous report under the Exchange   Act, the Company shall have incorporated such report by reference into such Registration   Statement and Prospectus, if applicable, or shall file such amendments or supplements to the   Registration Statement or Prospectus with the Commission on the same day on which the   Exchange Act report is filed which created the requirement for the Company to amend or   supplement such Registration Statement or Prospectus, for the purpose of including or   incorporating such report into such Registration Statement and Prospectus. The Company consents   to the use of the Prospectus (including, without limitation, any supplement thereto) included in   each Registration Statement in accordance with the provisions of the Securities Act and with the   securities or “Blue Sky” laws of the jurisdictions in which the Registrable Securities may be sold   by the Investor, in connection with the resale of the Registrable Securities and for such period of   time thereafter as such Prospectus (including, without limitation, any supplement thereto) (or in  lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) is required by the  Securities Act to be delivered in connection with resales of Registrable Securities.         (c)    The Company shall (A) permit Legal Counsel an opportunity to review and  comment upon (i) each Registration Statement at least two (2) Business Days prior to its filing  with the Commission and (ii) all amendments and supplements to each Registration Statement  (including, without limitation, the Prospectus contained therein) (except for Annual Reports on  Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or  successor reports or Prospectus Supplements the contents of which is limited to that set forth in  such reports) within a reasonable number of days prior to their filing with the Commission, and  (B) shall reasonably consider any comments of the Investor and Legal Counsel on any such  Registration Statement or amendment or supplement thereto or to any Prospectus contained  therein. The Company shall promptly furnish to Legal Counsel, without charge, (i) electronic   copies of any correspondence from the Commission or the Staff to the Company or its   representatives relating to each Registration Statement (which correspondence shall be redacted to   exclude any material, non-public information regarding the Company or any of its Subsidiaries),   (ii) after the same is prepared and filed with the Commission, one (1) electronic copy of each    4846-9840-0972\6                      7 

 

 Registration Statement and any amendment(s) and supplement(s) thereto, including, without   limitation, financial statements and schedules, all documents incorporated therein by reference, if   requested by the Investor, and all exhibits and (iii) upon the effectiveness of each Registration   Statement, one (1) electronic copy of the Prospectus included in such Registration Statement and  all amendments and supplements thereto; provided, however, the Company shall not be required  to furnish any document (other than the Prospectus, which may be provided in .PDF format) to  Legal Counsel to the extent such document is available on EDGAR).         (d)    Without limiting any obligation of the Company under the Purchase Agreement,  the Company shall promptly furnish to the Investor, without charge, (i) after the same is prepared  and filed with the Commission, at least one (1) electronic copy of each Registration Statement and  any amendment(s) and supplement(s) thereto, including, without limitation, financial statements  and schedules, all documents incorporated therein by reference, if requested by the Investor, all  exhibits thereto, (ii) upon the effectiveness of each Registration Statement, one (1) electronic copy  of the Prospectus included in such Registration Statement and all amendments and supplements  thereto (or such other number of copies as the Investor may reasonably request from time to time)  and (iii) such other documents, including, without limitation, copies of any final Prospectus and  any Prospectus Supplement thereto, as the Investor may reasonably request from time to time in  order to facilitate the disposition of the Registrable Securities owned by the Investor; provided,  however, the Company shall not be required to furnish any document (other than the Prospectus,  which may be provided in .PDF format) to the Investor to the extent such document is available  on EDGAR).         (e)    The Company shall take such action as is reasonably necessary to (i) register and  qualify, unless an exemption from registration and qualification applies, the resale by the Investor  of the Registrable Securities covered by a Registration Statement under such other securities or  “Blue Sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those  jurisdictions, such amendments (including, without limitation, post-effective amendments) and  supplements to such registrations and qualifications as may be necessary to maintain the  effectiveness thereof during the Registration Period, (iii) take such other actions as may be  reasonably necessary to maintain such registrations and qualifications in effect at all times during  the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify  the Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not   be required in connection therewith or as a condition thereto to (x) qualify to do business in any   jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject   itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process  in any such jurisdiction.  The Company shall promptly notify Legal Counsel and the Investor of  the receipt by the Company of any notification with respect to the suspension of the registration  or qualification of any of the Registrable Securities for sale under the securities or “Blue Sky” laws  of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening  of any proceeding for such purpose.         (f)    The Company shall notify Legal Counsel and the Investor in writing of the   happening of any event, as promptly as reasonably practicable after becoming aware of such event,   as a result of which the Prospectus included in a Registration Statement, as then in effect, includes  an untrue statement of a material fact or omission to state a material fact required to be stated  therein or necessary to make the statements therein, in the light of the circumstances under which     4846-9840-0972\6                      8 

 

 they were made, not misleading (provided that in no event shall such notice contain any material,   non-public information regarding the Company or any of its Subsidiaries), and, subject to Section  3(q), promptly prepare a supplement or amendment to such Registration Statement and such  Prospectus contained therein to correct such untrue statement or omission and deliver one (1)  electronic copy of such supplement or amendment to Legal Counsel and the Investor (or such other  number of copies as Legal Counsel or the Investor may reasonably request). The Company shall  also promptly notify Legal Counsel and the Investor in writing (i) when a Prospectus or any  Prospectus Supplement or post-effective amendment has been filed, when a Registration Statement  or any post-effective amendment has become effective (notification of such effectiveness shall be  delivered to Legal Counsel and the Investor by facsimile or e-mail on the same day of such  effectiveness and by overnight mail), and when the Company receives written notice from the  Commission that a Registration Statement or any post-effective amendment will be reviewed by  the Commission, (ii) of any request by the Commission for amendments or supplements to a  Registration Statement or related Prospectus or related information, (iii) of the Company’s  reasonable determination that a post-effective amendment to a Registration Statement would be  appropriate and (iv) of the receipt of any request by the Commission or any other federal or state  governmental authority for any additional information relating to the Registration Statement or  any amendment or supplement thereto or any related Prospectus.  The Company shall respond as  promptly as reasonably practicable to any comments received from the Commission with respect  to a Registration Statement or any amendment thereto. Nothing in this Section 3(f) shall limit any  obligation of the Company under the Purchase Agreement.         (g)    The Company shall (i) use its commercially reasonable efforts to prevent the  issuance of any stop order or other suspension of effectiveness of a Registration Statement or the  use of any Prospectus contained therein, or the suspension of the qualification, or the loss of an  exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and,  if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at  the earliest possible time and (ii) notify Legal Counsel and the Investor of the issuance of such  order and the resolution thereof or its receipt of actual notice of the initiation or threat of any  proceeding.         (h)    The Company shall hold in confidence and not make any disclosure of information  concerning the Investor provided to the Company unless (i) disclosure of such information is  necessary to comply with federal or state securities laws, (ii) the disclosure of such information is  necessary to avoid or correct a misstatement or omission in any Registration Statement or is  otherwise required to be disclosed in such Registration Statement pursuant to the Securities Act,  (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable  order from a court or governmental body of competent jurisdiction, or (iv) such information has  been made generally available to the public other than by disclosure in violation of this Agreement  or any other Transaction Document. The Company agrees that it shall, upon learning that  disclosure of such information concerning the Investor is sought in or by a court or governmental  body of competent jurisdiction or through other means, give prompt written notice to the Investor  and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent  disclosure of, or to obtain a protective order for, such information.         (i)    Without limiting any obligation of the Company under the Purchase Agreement,  the Company shall use its commercially reasonable efforts either to (i) cause all of the Registrable     4846-9840-0972\6                      9 

 

 Securities covered by each Registration Statement to be listed on the Trading Market, (ii) secure   designation and quotation of all of the Registrable Securities covered by each Registration   Statement on another Eligible Market, or (iii) if, despite the Company’s commercially reasonable   efforts to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in satisfying the   preceding clauses (i) or (ii), without limiting the generality of the foregoing, to use its   commercially reasonable efforts to arrange for at least two market makers to register with the   Financial Industry Regulatory Authority (“FINRA”) as such with respect to such Registrable   Securities.  In addition, the Company shall reasonably cooperate with the Investor and any Broker-  Dealer through which the Investor proposes to sell its Registrable Securities in effecting a filing   with FINRA pursuant to FINRA Rule 5110 as requested by the Investor. The Company shall pay   all fees and expenses in connection with satisfying its obligation under this Section 3(i).          (j)  The Company shall cooperate with the Investor and, to the extent applicable,   facilitate the timely preparation and delivery of Registrable Securities, as DWAC Shares, to be  offered pursuant to a Registration Statement and enable such DWAC Shares to be in such  denominations or amounts (as the case may be) as the Investor may reasonably request from time  to time and registered in such names as the Investor may request. Investor hereby agrees that it   shall cooperate with the Company, its counsel and Transfer Agent in connection with any issuances   of the DWAC Shares, and hereby represents, warrants and covenants to the Company that that it   will resell such Shares only pursuant to the Registration Statement in which such DWAC Shares  are included, in a manner described under the caption “Plan of Distribution” in such Registration   Statement, and in a manner in compliance with all applicable U.S. federal and state securities laws,   rules and regulations, including, without limitation, any applicable prospectus delivery  requirements of the Securities Act.  DWAC Shares shall be free from all restrictive legends may   be transmitted by the transfer agent to the Investor by crediting an account at DTC as directed in   writing by the Investor.          (k)   Upon the written request of the Investor, the Company shall as soon as reasonably   practicable after receipt of notice from the Investor and subject to Section 3(p) hereof, (i)   incorporate in a Prospectus Supplement or post-effective amendment such information as the   Investor reasonably requests to be included therein relating to the sale and distribution of   Registrable Securities, including, without limitation, information with respect to the number of   Registrable Securities being offered or sold, the purchase price being paid therefor and any other   terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required   filings of such Prospectus Supplement or post-effective amendment after being notified of the   matters to be incorporated in such Prospectus Supplement or post-effective amendment; and (iii)   supplement or make amendments to any Registration Statement or Prospectus contained therein if   reasonably requested by the Investor.          (l)   The Company shall use its commercially reasonable efforts to cause the Registrable   Securities covered by a Registration Statement to be registered with or approved by such other   governmental agencies or authorities as may be necessary to consummate the disposition of such   Registrable Securities.          (m)  The Company shall make generally available to its security holders (which may be   satisfied by making such information available on EDGAR) as soon as practical, but not later than   ninety (90) days after the close of the period covered thereby, an earnings statement (in form     4846-9840-0972\6                      10 

 

 complying with, and in the manner provided by, the provisions of Rule 158 under the Securities   Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal   quarter next following the applicable Effective Date of each Registration Statement.         (n)    The Company shall otherwise use its commercially reasonable efforts to comply  with all applicable rules and regulations of the Commission in connection with any registration  hereunder.         (o)    Within one (1) Business Day after each Registration Statement which covers  Registrable Securities is declared effective by the Commission, the Company shall deliver, and  shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable  Securities (with copies to the Investor) confirmation that such Registration Statement has been  declared effective by the Commission in the form attached hereto as Exhibit A.          (p)  Notwithstanding anything to the contrary contained herein (but subject to the last   sentence of this Section 3(p)), at any time after the Effective Date of a particular Registration   Statement, the Company may, upon written notice to Investor, suspend Investor’s use of any   prospectus that is a part of any Registration Statement (in which event the Investor shall   discontinue sales of the Registrable Securities pursuant to such Registration Statement  contemplated by this Agreement, but shall settle any previously made sales of Registrable  Securities) if the Company (x) is pursuing an acquisition, merger, tender offer, reorganization,  disposition or other similar transaction and the Company determines in good faith that (A) the  Company’s ability to pursue or consummate such a transaction would be materially adversely  affected by any required disclosure of such transaction in such Registration Statement or other  registration statement or (B) such transaction renders the Company unable to comply with  Commission requirements, in each case under circumstances that would make it impractical or  inadvisable to cause any Registration Statement (or such filings) to be used by Investor or to  promptly amend or supplement any Registration Statement contemplated by this Agreement on a  post effective basis, as applicable, or (y) has experienced some other material non-public event the  disclosure of which at such time, in the good faith judgment of the Company, would materially  adversely affect the Company (each, an “Allowable Grace Period”); provided, however, that in no  event shall the Investor be suspended from selling Registrable Securities pursuant to any  Registration Statement for a period that exceeds 20 consecutive Trading Days or an aggregate of  60 days in any 365-day period; and provided, further, the Company shall not effect any such  suspension during (A) the first 10 consecutive Trading Days after the Effective Date of the  particular Registration Statement or (B) the five-Trading Day period following each settlement  date for a Fixed Purchase or VWAP Purchase. Upon disclosure of such information or the  termination of the condition described above, the Company shall provide prompt notice, but in any  event within one Business Day of such disclosure or termination, to the Investor and shall promptly  terminate any suspension of sales it has put into effect and shall take such other reasonable actions  to permit registered sales of Registrable Securities as contemplated in this Agreement (including  as set forth in the first sentence of Section 3(f) with respect to the information giving rise thereto  unless such material, non-public information is no longer applicable). Notwithstanding anything  to the contrary contained in this Section 3(p), the Company shall cause its transfer agent to deliver  DWAC Shares to a transferee of the Investor in accordance with the terms of the Purchase  Agreement in connection with any sale of Registrable Securities with respect to which (i) the  Company has made a sale to Investor and (ii) the Investor has entered into a contract for sale, and     4846-9840-0972\6                      11 

 

 delivered a copy of the Prospectus included as part of the particular Registration Statement to the   extent applicable, in each case prior to the Investor’s receipt of the notice of an Allowable Grace   Period and for which the Investor has not yet settled.    4.    Obligations of the Investor.          (a)  At least five (5) Business Days prior to the first anticipated filing date of each   Registration Statement (or such shorter period to which the parties agree), the Company shall  notify the Investor in writing of the information the Company requires from the Investor with  respect to such Registration Statement. It shall be a condition precedent to the obligations of the  Company to complete the registration pursuant to this Agreement with respect to the Registrable  Securities of the Investor that the Investor shall furnish to the Company such information regarding  itself, the Registrable Securities held by it and the intended method of disposition of the Registrable  Securities held by it, as shall be reasonably required to effect and maintain the effectiveness of the  registration of such Registrable Securities and shall execute such documents in connection with  such registration as the Company may reasonably request.         (b)    The Investor, by its acceptance of the Registrable Securities, agrees to cooperate  with the Company as reasonably requested by the Company in connection with the preparation  and filing of each Registration Statement hereunder, unless the Investor has notified the Company  in writing of the Investor’s election to exclude all of the Investor’s Registrable Securities from  such Registration Statement.         (c)   The Investor agrees that, upon receipt of any notice from the Company of the  happening of any event of the kind described in Section 3(p) or the first sentence of 3(f), the  Investor shall immediately discontinue disposition of Registrable Securities pursuant to any  Registration Statement(s) covering such Registrable Securities until the Investor’s receipt of the  copies of the supplemented or amended Prospectus contemplated by Section 3(p) or the first  sentence of Section 3(f) or receipt of notice that no supplement or amendment is required.   Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer  agent to deliver DWAC Shares to a transferee of the Investor in accordance with the terms of the  Purchase Agreement in connection with any sale of Registrable Securities with respect to which  the Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the  Company of the happening of any event of the kind described in Section 3(p) or the first sentence  of Section 3(f) and for which the Investor has not yet settled.         (d)    The Investor covenants and agrees that it shall comply with the prospectus delivery  and other requirements of the Securities Act as applicable to it in connection with sales of  Registrable Securities pursuant to a Registration Statement.   5.     Expenses of Registration.          All reasonable expenses of the Company, other than sales or brokerage commissions and   fees and disbursements of counsel for, and other expenses of, the Investor, incurred in connection  with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without  limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees  and disbursements of counsel for the Company, shall be paid by the Company.     4846-9840-0972\6                      12 

 

 6. Indemnification.          (a)   In the event any Registrable Securities are included in any Registration Statement   under this Agreement, to the fullest extent permitted by law, the Company will, and hereby does,   indemnify, hold harmless and defend the Investor, each of its directors, officers, shareholders,   members, partners, employees, agents, advisors, representatives (and any other Persons with a   functionally equivalent role of a Person holding such titles notwithstanding the lack of such title   or any other title) and each Person, if any, who controls the Investor within the meaning of the   Securities Act or the Exchange Act and each of the directors, officers, shareholders, members,   partners, employees, agents, advisors, representatives (and any other Persons with a functionally   equivalent role of a Person holding such titles notwithstanding the lack of such title or any other   title) of such controlling Persons (each, an “Investor Party” and collectively, the “Investor   Parties”), against any losses, obligations, claims, damages, liabilities, contingencies, judgments,   fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’   fees, costs of defense and investigation), amounts paid in settlement or expenses, joint or several,   (collectively, “Claims”) reasonably incurred in investigating, preparing or defending any action,   claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any   court or governmental, administrative or other regulatory agency, body or the Commission,   whether pending or threatened, whether or not an Investor Party is or may be a party thereto  (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or   actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are   based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration   Statement or any post-effective amendment thereto or in any filing made in connection with the  qualification of the offering under the securities or other “Blue Sky” laws of any jurisdiction in   which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission   to state a material fact required to be stated therein or necessary to make the statements therein not   misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in   any Prospectus (as amended or supplemented) or in any Prospectus Supplement or the omission   or alleged omission to state therein any material fact necessary to make the statements made   therein, in light of the circumstances under which the statements therein were made, not misleading   (the matters in the foregoing clauses (i) and (ii) being, collectively, “Violations”). Subject to   Section 6(c), the Company shall reimburse the Investor Parties, promptly as such expenses are   incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them   in connection with investigating or defending any such Claim. Notwithstanding anything to the   contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall   not apply to a Claim by an Investor Party arising out of or based upon a Violation which occurs in   reliance upon and in conformity with information furnished in writing to the Company by such   Investor Party for such Investor Party expressly for use in connection with the preparation of such   Registration Statement, Prospectus or Prospectus Supplement or any such amendment thereof or   supplement thereto (it being hereby acknowledged and agreed that the written information set forth   on Exhibit C attached hereto is the only written information furnished to the Company by or on   behalf of the Investor expressly for use in any Registration Statement, Prospectus or Prospectus   Supplement); (ii) shall not be available to the Investor to the extent such Claim is based on a failure   of the Investor to deliver or to cause to be delivered the Prospectus (as amended or supplemented)   made available by the Company (to the extent applicable), including, without limitation, a   corrected Prospectus, if such Prospectus (as amended or supplemented) or corrected Prospectus   was timely made available by the Company pursuant to Section 3(d) and then only if, and to the    4846-9840-0972\6                      13 

 

 extent that, following the receipt of the corrected Prospectus no grounds for such Claim would   have existed; and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement  is effected without the prior written consent of the Company, which consent shall not be  unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless   of any investigation made by or on behalf of the Investor Party and shall survive the transfer of   any of the Registrable Securities by the Investor pursuant to Section 9.          (b)   In connection with any Registration Statement in which the Investor is   participating, the Investor agrees to severally and not jointly indemnify, hold harmless and defend,   to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its   directors, each of its officers who signs the Registration Statement and each Person, if any, who  controls the Company within the meaning of the Securities Act or the Exchange Act (each, an   “Company Party”), against any Claim or Indemnified Damages to which any of them may become   subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or   Indemnified Damages arise out of or are based upon any Violation, in each case, to the extent, and   only to the extent, that such Violation occurs in reliance upon and in conformity with written   information relating to the Investor furnished to the Company by the Investor expressly for use in   connection with such Registration Statement, the Prospectus included therein or any Prospectus   Supplement thereto (it being hereby acknowledged and agreed that the written information set   forth on Exhibit C attached hereto is the only written information furnished to the Company by or   on behalf of the Investor expressly for use in any Registration Statement, Prospectus or Prospectus   Supplement); and, subject to Section 6(c) and the below provisos in this Section 6(b), the Investor   shall reimburse a Company Party any legal or other expenses reasonably incurred by such   Company Party in connection with investigating or defending any such Claim; provided, however,   the indemnity agreement contained in this Section 6(b) and the agreement with respect to   contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if   such settlement is effected without the prior written consent of the Investor, which consent shall   not be unreasonably withheld or delayed; and provided, further that the Investor shall be liable   under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed   the net proceeds to the Investor as a result of the applicable sale of Registrable Securities pursuant   to such Registration Statement, Prospectus or Prospectus Supplement. Such indemnity shall  remain in full force and effect regardless of any investigation made by or on behalf of such  Company Party and shall survive the transfer of any of the Registrable Securities by the Investor   pursuant to Section 9.          (c)   Promptly after receipt by an Investor Party or Company Party (as the case may be)   under this Section 6 of notice of the commencement of any action or proceeding (including,   without limitation, any governmental action or proceeding) involving a Claim, such Investor Party   or Company Party (as the case may be) shall, if a Claim in respect thereof is to be made against   any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of   the commencement thereof, and the indemnifying party shall have the right to participate in, and,   to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly   noticed, to assume control of the defense thereof with counsel mutually satisfactory to the   indemnifying party and the Investor Party or the Company Party (as the case may be); provided,   however, an Investor Party or Company Party (as the case may be) shall have the right to retain its   own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if:   (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the     4846-9840-0972\6                      14 

 

 indemnifying party shall have failed promptly to assume the defense of such Claim and to employ   counsel reasonably satisfactory to such Investor Party or Company Party (as the case may be) in   any such Claim; or (iii) the named parties to any such Claim (including, without limitation, any   impleaded parties) include both such Investor Party or Company Party (as the case may be) and   the indemnifying party, and such Investor Party or such Company Party (as the case may be) shall  have been advised by counsel that a conflict of interest is likely to exist if the same counsel were  to represent such Investor Party or such Company Party and the indemnifying party (in which case,  if such Investor Party or such Company Party (as the case may be) notifies the indemnifying party  in writing that it elects to employ separate counsel at the expense of the indemnifying party, then  the indemnifying party shall not have the right to assume the defense thereof on behalf of the  indemnified party and such counsel shall be at the expense of the indemnifying party, provided   further that in the case of clause (iii) above the indemnifying party shall not be responsible for the   reasonable fees and expenses of more than one (1) separate legal counsel for all Investor Parties   or Company Parties (as the case may be). The Company Party or Investor Party (as the case may   be) shall reasonably cooperate with the indemnifying party in connection with any negotiation or   defense of any such action or Claim by the indemnifying party and shall furnish to the   indemnifying party all information reasonably available to the Company Party or Investor Party   (as the case may be) which relates to such action or Claim. The indemnifying party shall keep the   Company Party or Investor Party (as the case may be) reasonably apprised at all times as to the   status of the defense or any settlement negotiations with respect thereto. No indemnifying party   shall be liable for any settlement of any action, claim or proceeding effected without its prior   written consent; provided, however, the indemnifying party shall not unreasonably withhold, delay   or condition its consent.  No indemnifying party shall, without the prior written consent of the   Company Party or Investor Party (as the case may be), consent to entry of any judgment or enter   into any settlement or other compromise which does not include as an unconditional term thereof   the giving by the claimant or plaintiff to such Company Party or Investor Party (as the case may   be) of a release from all liability in respect to such Claim or litigation, and such settlement shall   not include any admission as to fault on the part of the Company Party. For the avoidance of doubt,   the immediately preceding sentence shall apply to Sections 6(a) and 6(b) hereof. Following   indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights   of the Company Party or Investor Party (as the case may be) with respect to all third parties, firms   or corporations relating to the matter for which indemnification has been made. The failure to   deliver written notice to the indemnifying party within a reasonable time of the commencement of   any such action shall not relieve such indemnifying party of any liability to the Investor Party or   Company Party (as the case may be) under this Section 6, except to the extent that the indemnifying   party is materially and adversely prejudiced in its ability to defend such action.          (d)   No Person involved in the sale of Registrable Securities who is guilty of fraudulent   misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with   such sale shall be entitled to indemnification from any Person involved in such sale of Registrable   Securities who is not guilty of fraudulent misrepresentation.          (e)  The indemnification required by this Section 6 shall be made by periodic payments   of the amount thereof during the course of the investigation or defense, as and when bills are   received or Indemnified Damages are incurred; provided that any Person receiving any payment   pursuant to this Section 6 shall promptly reimburse the Person making such payment for the     4846-9840-0972\6                      15 

 

 amount of such payment to the extent a court of competent jurisdiction determines that such Person   receiving such payment was not entitled to such payment.          (f)  The indemnity and contribution agreements contained herein shall be in addition to   (i) any cause of action or similar right of the Company Party or Investor Party against the   indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to   pursuant to the law.    7. Contribution.          To the extent any indemnification by an indemnifying party is prohibited or limited by law,   the indemnifying party agrees to make the maximum contribution with respect to any amounts for   which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided,   however: (i) no contribution shall be made under circumstances where the maker would not have   been liable for indemnification under the fault standards set forth in Section 6 of this Agreement,   (ii) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent   misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with   such sale shall be entitled to contribution from any Person involved in such sale of Registrable   Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller   of Registrable Securities shall be limited in amount to the amount of net proceeds received by such   seller from the applicable sale of such Registrable Securities pursuant to such Registration   Statement. Notwithstanding the provisions of this Section 7, the Investor shall not be required to   contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually   received by the Investor from the applicable sale of the Registrable Securities subject to the Claim   exceeds the amount of any damages that the Investor has otherwise been required to pay, or would   otherwise be required to pay under Section 6(b), by reason of such untrue or alleged untrue   statement or omission or alleged omission.    8.    Reports Under the Exchange Act.          With a view to making available to the Investor the benefits of Rule 144, the Company  agrees to:         (a)   use its reasonable best efforts to make and keep public information available, as   those terms are understood and defined in Rule 144;          (b)  use its reasonable best efforts to file with the Commission in a timely manner all   reports and other documents required of the Company under the Securities Act and the Exchange   Act so long as the Company remains subject to such requirements (it being understood that nothing   herein shall limit any of the Company’s obligations under the Purchase Agreement) and the filing   of such reports and other documents is required for the applicable provisions of Rule 144;          (c)   furnish to the Investor so long as the Investor owns Registrable Securities, promptly   upon request, (i) a written statement by the Company, if true, that it has complied with the   reporting, submission and posting requirements of Rule 144 and the Exchange Act, (ii) a copy of   the most recent annual or quarterly report of the Company and such other reports and documents   so filed by the Company with the Commission if such reports are not publicly available via     4846-9840-0972\6                      16 

 

 EDGAR, and (iii) such other information as may be reasonably requested to permit the Investor to   sell such securities pursuant to Rule 144 without registration; and          (d)   take such additional action as is reasonably requested by the Investor to enable the   Investor to sell the Registrable Securities pursuant to Rule 144, including, without limitation,   delivering all such legal opinions, consents, certificates, resolutions and instructions to the   Company’s Transfer Agent as may be reasonably requested from time to time by the Investor and   otherwise fully cooperate with Investor and Investor’s broker to effect such sale of securities   pursuant to Rule 144.    9.    Assignment of Registration Rights.          Neither the Company nor the Investor shall assign this Agreement or any of their respective   rights or obligations hereunder.    10.   Amendment or Waiver.          No provision of this Agreement may be amended or waived by the parties from and after  the date that is one (1) Trading Day immediately preceding the filing of the Initial Registration  Statement with the Commission. Subject to the immediately preceding sentence, no provision of  this Agreement may be (i) amended other than by a written instrument signed by both parties  hereto or (ii) waived other than in a written instrument signed by the party against whom  enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under  this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not  operate as a waiver thereof.   11. Miscellaneous.          (a)  Solely for purposes of this Agreement, a Person is deemed to be a holder of   Registrable Securities whenever such Person owns or is deemed to own of record such Registrable   Securities.  If the Company receives conflicting instructions, notices or elections from two or more  Persons with respect to the same Registrable Securities, the Company shall act upon the basis of  instructions, notice or election received from such record owner of such Registrable Securities.         (b)   Any notices, consents, waivers or other communications required or permitted to  be given under the terms of this Agreement shall be given in accordance with Section 10.4 of the  Purchase Agreement.         (c)    Failure of any party to exercise any right or remedy under this Agreement or  otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver  thereof.  The Company and the Investor acknowledge and 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 either party shall  be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this  Agreement by the other party and to enforce specifically the terms and provisions hereof (without  the necessity of showing economic loss and without any bond or other security being required),  this being in addition to any other remedy to which either party may be entitled by law or equity.     4846-9840-0972\6                      17 

 

       (d)   All questions concerning the construction, validity, enforcement and interpretation   of this Agreement shall be governed by the internal laws of the State of New York, without giving  effect to any choice of law or conflict of law provision or rule (whether of the State of New York  or any other jurisdictions) that would cause the application of the laws of any jurisdictions other  than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of  the federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of  any dispute hereunder or in connection herewith or with any transaction contemplated hereby or  discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or  proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that   such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit,   action or proceeding is improper. Each party hereby irrevocably waives personal service of process   and consents to process being served in any such suit, action or proceeding by mailing a copy   thereof to such party at the address for such notices to it under this Agreement and agrees that such   service shall constitute good and sufficient service of process and notice thereof. Nothing   contained herein shall be deemed to limit in any way any right to serve process in any manner   permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any   jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the   remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision   of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES   ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR   THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH   OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED   HEREBY.          (e)  The Transaction Documents set forth the entire agreement and understanding of the   parties solely with respect to the subject matter thereof and supersedes all prior and   contemporaneous agreements, negotiations and understandings between the parties, both oral and   written, solely with respect to such matters. There are no promises, undertakings, representations   or warranties by either party relative to subject matter hereof not expressly set forth in the   Transaction Documents. Notwithstanding anything in this Agreement to the contrary and without   implication that the contrary would otherwise be true, nothing contained in this Agreement shall   limit, modify or affect in any manner whatsoever (i) the conditions precedent to a Fixed Purchase   and a VWAP Purchase contained in Article VII of the Purchase Agreement or (ii) any of the   Company’s obligations under the Purchase Agreement.          (f)  This Agreement shall inure to the benefit of and be binding upon the parties hereto   and their respective successors. This Agreement is not for the benefit of, nor may any provision   hereof be enforced by, any Person, other than the parties hereto, their respective successors and   the Persons referred to in Sections 6 and 7 hereof.          (g)   The headings in this Agreement are for convenience of reference only and shall not   limit or otherwise affect the meaning hereof. Unless the context clearly indicates otherwise, each   pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural   forms thereof. The terms “including,” “includes,” “include” and words of like import shall be   construed broadly as if followed by the words “without limitation.” The terms “herein,”   “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the   provision in which they are found.     4846-9840-0972\6                      18 

 

      (h)  This Agreement may be executed in two or more identical counterparts, all of which  shall be considered one and the same agreement and shall become effective when counterparts  have been signed by each party and delivered to the other party; provided that a facsimile signature  or signature delivered by e-mail in a “.pdf” format data file, including any electronic signature  complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com,  www.echosign.adobe.com, etc., shall be considered due execution and shall be binding upon the  signatory thereto with the same force and effect as if the signature were an original signature.         (i)   Each party shall do and perform, or cause to be done and performed, all such further  acts and things, and shall execute and deliver all such other agreements, certificates, instruments  and documents as any other party may reasonably request in order to carry out the intent and  accomplish the purposes of this Agreement and the consummation of the transactions  contemplated hereby.         (j)  The language used in this Agreement will be deemed to be the language chosen by  the parties to express their mutual intent and no rules of strict construction will be applied against  any party.                               [Signature Pages Follow]    4846-9840-0972\6                      19 

 

 

                                                                                      IN WITNESS WHEREOF, Investor and the Company have caused their respective  signature page to this Registration Rights Agreement to be duly executed as of the date first written  above.                                    INVESTOR:                                                                      TUMIM STONE CAPITAL LLC                                                                         By:                                                                             Name: Maier J Tarlow                                   Title: Managing Partner                                                                                  21  4846-9840-0972\6 

 

                                                                                                                                                     EXHIBIT A                        FORM OF NOTICE OF EFFECTIVENESS                          OF REGISTRATION STATEMENT        American Stock Transfer & Trust Company, LLC   6201 15th Avenue   Brooklyn, NY  11219                        Re:   Independence Contract Drilling, Inc.    Ladies and Gentlemen:          We are special counsel to Independence Contract Drilling, Inc., a Delaware corporation (the   “Company”), and have represented the Company in connection with that certain Common Stock   Purchase Agreement, dated November 11, 2020 (the “Purchase Agreement”), entered into by and   among the Company and the Investor named therein (the “Holder”) pursuant to which the Company   will issue to the Holder from time to time shares of the Company’s common stock, par value $0.01 per   share (the ”Common Stock”). Pursuant to the Purchase Agreement, the Company also has entered into  a Registration Rights Agreement, dated November 11, 2020, with the Holder (the “Registration Rights   Agreement”), pursuant to which the Company agreed, among other things, to register the offer and   sale by the Holder of the Registrable Securities (as defined in the Registration Rights Agreement) under   the Securities Act of 1933, as amended (the “Securities Act”). In connection with the Company’s   obligations under the Registration Rights Agreement, on November [●], 2020, the Company filed a   Registration Statement on Form S-1 (File No. 333-[●]) (the “Registration Statement”) with the   Securities and Exchange Commission (the “Commission”) relating to the Registrable Securities which   names the Holder as an underwriter and a selling stockholder thereunder.          In connection with the foregoing, based solely on our review of the Commission’s EDGAR   website, we advise you that the Registration Statement became effective under the Securities Act   on [____, 20__].  In addition, based solely on our review of the information made available by the   Commission at http://www.sec.gov/litigation/stoporders.shtml, we confirm that the Commission   has not issued any stop order suspending the effectiveness of the Registration Statement.  To our   knowledge, based solely on our participation in the conferences mentioned above regarding the   Registration Statement and our review of the information made available by the Commission at   http://www.sec.gov/litigation/stoporders.shtml, no proceedings for that purpose are pending or   have been instituted or threatened by the Commission.           [This letter shall serve as our standing [opinion] to you that the shares of Common Stock   are freely transferable by the Holder pursuant to the Registration Statement, provided the   Registration Statement remains effective.]          This [opinion] letter is limited to the federal securities laws of the United States of America.    We express no opinion as to matters relating to state securities laws or Blue Sky laws.     4846-9840-0972\6 

 

                                                                                      We assume no obligation to update or supplement this [opinion] letter to reflect any facts  or circumstances which may hereafter come to our attention with respect to the [opinion and]  statements expressed above, including any changes in applicable law that may hereafter occur.         This [opinion] letter is being delivered solely for the benefit of the person to whom it is  addressed; accordingly, it may not be quoted, filed with any governmental authority or other  regulatory agency or otherwise circulated or utilized for any purposes without our prior written  consent.                                             Very truly yours,                                             [ISSUER’S COUNSEL]                                             By:_____________________  cc:  Tumim Stone Capital LLC                                                                                    4846-9840-0972\6 

 

                                                                                                                                                   EXHIBIT B                            SELLING STOCKHOLDER         This prospectus relates to the possible resale from time to time by Tumim Stone Capital of  any or all of the shares of common stock that may be issued by us to Tumim Stone Capital under  the Purchase Agreement. For additional information regarding the issuance of common stock  covered by this prospectus, see the section titled “Tumim Stone Capital Committed Equity  Financing” above. We are registering the shares of common stock pursuant to the provisions of  the Registration Rights Agreement we entered into with Tumim Stone Capital on November 11,  2020 in order to permit the selling stockholder to offer the shares for resale from time to time.  Except for the transactions contemplated by the Purchase Agreement and the Registration Rights  Agreement, Tumim Stone Capital has not had any material relationship with us within the past  three years. As used in this prospectus, the term “selling stockholder” means Tumim Stone Capital,  LLC.         The table below presents information regarding the selling stockholder and the shares of  common stock that it may offer from time to time under this prospectus.  This table is prepared  based on information supplied to us by the selling stockholder, and reflects holdings as of [●],  2020.  The number of shares in the column “Maximum Number of Shares of Common Stock to be  Offered Pursuant to this Prospectus” represents all of the shares of common stock that the selling  stockholder may offer under this prospectus. The selling stockholder may sell some, all or none of  its shares in this offering.  We do not know how long the selling stockholder will hold the shares  before selling them, and we currently have no agreements, arrangements or understandings with  the selling stockholder regarding the sale of any of the shares.         Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the  SEC under the Exchange Act, and includes shares of common stock with respect to which the  selling stockholder has voting and investment power. The percentage of shares of common stock  beneficially owned by the selling stockholder prior to the offering shown in the table below is  based on an aggregate of [●] shares of our common stock outstanding on [●], 2020. Because the  purchase price of the shares of common stock issuable under the Purchase Agreement is  determined on each Fixed Purchase Date, with respect to a Fixed Purchase, and on each VWAP  Purchase Date, with respect to a VWAP Purchase, the number of shares that may actually be sold  by the Company under the Purchase Agreement may be fewer than the number of shares being  offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the  selling stockholder pursuant to this prospectus.        4846-9840-0972\6 

 

                                                                                                                      Number of Shares of Maximum Number of   Number of Shares of                              Common Stock Owned  Shares of Common Stock Common Stock Owned   Name of Selling Stockholder   Prior to Offering to be Offered Pursuant to After Offering                                                     this Prospectus                               Number(1) Percent(2)                    Number(3) Percent(2)   Tumim Stone Capital LLC(4)                                 0 --                    [●] 0 --                                                                                            (1)  In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares     beneficially owned prior to the offering all of the shares that Tumim Stone Capital may be required to purchase     under the Purchase Agreement, because the issuance of such shares is solely at our discretion and is subject to     conditions contained in the Purchase Agreement, the satisfaction of which are entirely outside of Tumim Stone     Capital’s control, including the registration statement that includes this prospectus becoming and remaining     effective. Furthermore, the Fixed Purchases and VWAP Purchases of common stock are subject to certain agreed     upon maximum amount limitations set forth in the Purchase Agreement. Also, the Purchase Agreement prohibits     us from issuing and selling any shares of our common stock to Tumim Stone Capital to the extent such shares,     when aggregated with all other shares of our common stock then beneficially owned by Tumim Stone Capital,     would cause Tumim Stone Capital’s beneficial ownership of our common stock to exceed the 4.99% Beneficial     Ownership Cap. The Purchase Agreement also prohibits us from issuing or selling shares of our common stock     under the Purchase Agreement in excess of the 19.99% Exchange Cap, unless we obtain stockholder approval to     do so, or unless sales of common stock are made at a price equal to or greater than $[●] per share, such that the     Exchange Cap limitation would not apply under applicable NYSE rules. Neither the Beneficial Ownership     Limitation nor the Exchange Cap (to the extent applicable under NYSE rules) may be amended or waived under     the Purchase Agreement. We have reserved only an aggregate of 1,500,000 shares of common stock for issuance     under the Purchase Agreement and will not issue more than an aggregate of 1,500,000 shares of our common     stock unless otherwise approved by our board of directors.  (2)  Applicable percentage ownership is based on [●] shares of our common stock outstanding as of [●], 20[●].  (3)  Assumes the sale of all shares being offered pursuant to this prospectus.  (4)  The business address of Tumim Stone Capital LLC is 140 Broadway, 38th Floor, New York, NY 10005. Tumim     Stone Capital LLC’s principal business is that of a private investor.  Maier Joshua Tarlow is the manager of 3i     Management, LLC, the general partner of 3i, LP, which is the sole member of Tumim Stone Capital, LLC, and     has sole voting control and investment discretion over securities beneficially owned directly by Tumim Stone     Capital LLC and indirectly by 3i Management, LLC and 3i, LP. 3i Management, LLC is also the manager of     Tumim Stone Capital LLC. We have been advised that none of Mr. Tarlow, 3i Management, LLC, 3i, LP or     Tumim Stone Capital LLC is a member of the Financial Industry Regulatory Authority, or FINRA, or an     independent broker-dealer, or an affiliate or associated person of a FINRA member or independent broker-dealer.     The foregoing should not be construed in and of itself as an admission by Mr. Tarlow as to beneficial ownership     of the securities beneficially owned directly by Tumim Stone Capital LLC and indirectly by 3i Management, LLC     and 3i, LP.    4846-9840-0972\6 

 

                                                                                                             PLAN OF DISTRIBUTION          The shares of common stock offered by this prospectus are being offered by the selling   stockholder, Tumim Stone Capital.  The shares may be sold or distributed from time to time by   the selling stockholder directly to one or more purchasers or through brokers, dealers, or   underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices   related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be   changed. The sale of the common stock offered by this prospectus could be effected in one or more   of the following methods:            ordinary brokers’ transactions;             transactions involving cross or block trades;             through brokers, dealers, or underwriters who may act solely as agents;             “at the market” into an existing market for the common stock;             in other ways not involving market makers or established business markets, including            direct sales to purchasers or sales effected through agents;             in privately negotiated transactions; or             any combination of the foregoing.           In order to comply with the securities laws of certain states, if applicable, the shares may   be sold only through registered or licensed brokers or dealers. In addition, in certain states, the  shares may not be sold unless they have been registered or qualified for sale in the state or an  exemption from the state’s registration or qualification requirement is available and complied with.         Tumim Stone Capital is an “underwriter” within the meaning of Section 2(a)(11) of the  Securities Act.         Tumim Stone Capital has informed us that it intends to use one or more registered broker- dealers to effectuate all sales, if any, of our common stock that it has acquired and may in the  future acquire from us pursuant to the Purchase Agreement.  Such sales will be made at prices and  at terms then prevailing or at prices related to the then current market price.  Each such registered  broker-dealer will be an underwriter within the meaning of Section 2(a)(11) of the Securities  Act.  Tumim Stone Capital has informed us that each such broker-dealer will receive commissions  from Tumim Stone Capital that will not exceed customary brokerage commissions.         Brokers, dealers, underwriters or agents participating in the distribution of the shares of  our common stock offered by this prospectus may receive compensation in the form of  commissions, discounts, or concessions from the purchasers, for whom the broker-dealers may act  as agent, of the shares sold by the selling stockholder through this prospectus. The compensation  paid to any such particular broker-dealer by any such purchasers of shares of our common stock  sold by the selling stockholder may be less than or in excess of customary commissions.  Neither     4846-9840-0972\6 

 

                                                                                  we nor the selling stockholder can presently estimate the amount of compensation that any agent   will receive from any purchasers of shares of our common stock sold by the selling stockholder.          We know of no existing arrangements between the selling stockholder or any other   stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares of  our common stock offered by this prospectus.         We may from time to time file with the SEC one or more supplements to this prospectus  or amendments to the registration statement of which this prospectus forms a part to amend,  supplement or update information contained in this prospectus, including, if and when required   under the Securities Act, to disclose certain information relating to a particular sale of shares   offered by this prospectus by the selling stockholder, including the names of any brokers, dealers,   underwriters or agents participating in the distribution of such shares by the selling stockholder,   any compensation paid by the selling stockholder to any such brokers, dealers, underwriters or   agents, and any other required information.          We will pay the expenses incident to the registration under the Securities Act of the offer   and sale of the shares of our common stock covered by this prospectus by the selling stockholder.   As consideration for its irrevocable commitment to purchase our common stock under the Purchase   Agreement, we have agreed to pay Tumim Stone Capital a commitment fee of $100,000,   representing 2.0% of Tumim Stone Capital’s $5,000,000 total commitment under the Purchase   Agreement. We also have agreed to reimburse Tumim Stone Capital for the fees and disbursements   of its counsel, payable upon execution of the Purchase Agreement, in an amount not to exceed   $50,000, and to reimburse Tumim Stone Capital for its reasonable, documented out-of-pocket   expenses (other than legal fees and disbursements of its counsel) incurred in connection with the   transactions contemplated by the Purchase Agreement, in an amount not to exceed $7,500.          We also have agreed to indemnify Tumim Stone Capital and certain other persons against   certain liabilities in connection with the offering of shares of our common stock offered hereby,   including liabilities arising under the Securities Act or, if such indemnity is unavailable, to   contribute amounts required to be paid in respect of such liabilities.  Tumim Stone Capital has   agreed to indemnify us against liabilities under the Securities Act that may arise from certain   written information furnished to us by Tumim Stone Capital specifically for use in this prospectus   or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such   liabilities. Insofar as indemnification for liabilities arising under the Securities Act may be   permitted to our directors, officers, and controlling persons, we have been advised that in the   opinion of the SEC this indemnification is against public policy as expressed in the Securities Act   and is therefore, unenforceable.          We have entered into an agreement with B. Riley Securities, Inc., or B. Riley, a registered   broker-dealer and member of the Financial Industry Regulatory Authority, Inc., or FINRA,   pursuant to which B. Riley agreed to act as the placement agent in connection with the transactions   contemplated by the Purchase Agreement with the Investor, or the Placement Agent Agreement.   Pursuant to the Placement Agent Agreement, we have agreed to pay B. Riley a cash placement fee   of $180,000, representing 3.6% of Tumim Stone Capital’s $5,000,000 total commitment under the   Purchase Agreement. B. Riley shall not be entitled to any other compensation upon the closing of   any subsequent stock sales effected pursuant to the Purchase Agreement and, accordingly, B. Riley     4846-9840-0972\6 

 

                                                                                  shall not be deemed a “participating member” (as such term is defined in FINRA Rule 5110(j)(15))   in connection with any subsequent sales of stock pursuant to this prospectus. We have also agreed   to provide indemnification and contribution to B. Riley with respect to certain civil liabilities,   including liabilities under the Securities Act.          We estimate that the total expenses for the offering, including compensation payable to B.  Riley under the terms of the Placement Agency Agreement, will be approximately $[●].          Tumim Stone Capital has represented to us that at no time prior to the date of the Purchase   Agreement has Tumim Stone Capital or its agents, representatives or affiliates engaged in or   effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined   in Rule 200 of Regulation SHO of the Exchange Act) of our common stock or any hedging  transaction, which establishes a net short position with respect to our common stock.  Tumim Stone  Capital has agreed that during the term of the Purchase Agreement, neither Tumim Stone Capital,  nor any of its agents, representatives or affiliates will enter into or effect, directly or indirectly, any  of the foregoing transactions.         We have advised the selling stockholder that it is required to comply with Regulation M  promulgated under the Exchange Act. With certain exceptions, Regulation M precludes the selling  stockholder, any affiliated purchasers, and any broker-dealer or other person who participates in  the distribution from bidding for or purchasing, or attempting to induce any person to bid for or  purchase any security which is the subject of the distribution until the entire distribution is  complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price  of a security in connection with the distribution of that security. All of the foregoing may affect  the marketability of the securities offered by this prospectus.         This offering will terminate on the date that all shares of our common stock offered by this  prospectus have been sold by the selling stockholder.         Our common stock is currently listed on the New York Stock Exchange under the symbol  “ICD”.      4846-9840-0972\6 

 

                                                                                                                                                     EXHIBIT C                                                                                                                                                                     The business address of Tumim Stone Capital LLC is 140 Broadway, 38th Floor, New York, NY  10005. Tumim Stone Capital LLC’s principal business is that of a private investor.  Maier Joshua  Tarlow is the manager of 3i Management, LLC, the general partner of 3i, LP, which is the sole   member of Tumim Stone Capital, LLC, and has sole voting control and investment discretion over   securities beneficially owned directly by Tumim Stone Capital LLC and indirectly by 3i   Management, LLC and 3i, LP. 3i Management, LLC is also the manager of Tumim Stone Capital   LLC. None of Mr. Tarlow, 3i Management, LLC, 3i, LP or Tumim Stone Capital LLC is a member   of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer, or an   affiliate or associated person of a FINRA member or independent broker-dealer. The foregoing   should not be construed in and of itself as an admission by Mr. Tarlow as to beneficial ownership   of the securities beneficially owned directly by Tumim Stone Capital LLC and indirectly by 3i   Management, LLC and 3i, LP.     4846-9840-0972\6

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