Exhibit
3.1
Certificate of Designation of
Preferences, Rights and Limitations of Series A Convertible
Preferred Stock filed with Delaware Secretary of State on December
23, 2020
MOBILESMITH, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
OF
SERIES A CONVERTIBLE PREFERRED STOCK
PURSUANT
TO SECTION 151(g) OF THE
DELAWARE
GENERAL CORPORATION LAW
The
undersigned, Jerry Lepore and Gleb Mikhailov, do hereby certify
that:
1.They
are the President and Secretary, respectively, of MobileSmith,
Inc., a Delaware corporation (the “Corporation”).
2.
The Corporation is authorized to issue 5,000,000 shares of
preferred stock, none of which have been issued.
3.
The following resolutions were duly adopted by the board of
directors of the Corporation (the “Board of
Directors”):
WHEREAS,
the certificate of incorporation of the Corporation provides for a
class of its authorized stock known as preferred stock, consisting
of 5,000,000 shares, $0.001 par value per share, issuable from time
to time in one or more series;
WHEREAS,
the Board of Directors is authorized to fix the dividend rights,
dividend rate, voting rights, conversion rights, rights and terms
of redemption and liquidation preferences of any wholly unissued
series of preferred stock and the number of shares constituting any
Series A Preferred Stock and the designation thereof, of any of
them; and
WHEREAS,
it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to a series of the
preferred stock, which shall consist of up to 1,750,000 shares of
the preferred stock which the Corporation has the authority to
issue, as follows:
NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby
provide for the issuance of a series of preferred stock for cash or
exchange of other securities, rights or property and does hereby
fix and determine the rights, preferences, restrictions and other
matters relating to such series of preferred stock as
follows:
TERMS OF PREFERRED STOCK
Section
1. Definitions.
For the purposes hereof, the following terms shall have the
following meanings:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 of the Securities Act.
“Agent” means the
individual designated by the Requisite Holders to perform the
functions described herein and agrees to perform such functions in
writing.
“Automatic Conversion
Notice” shall have the meaning set forth in Section
5(c).
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of North Carolina are authorized or
required by law or other governmental action to close.
“Commission”
means the United States Securities and Exchange
Commission.
“Common Stock” means the
Corporation’s common stock, par value $0.001 per share, and
stock of any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Corporation or the Subsidiaries which
would 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.
“Conversion Date” shall
have the meaning set forth in Section 5(a).
“Conversion Ratio” means
thirty (30) shares of Common Stock for each share of Series A
Preferred Stock, subject to adjustment as set forth
herein.
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Series A Preferred Stock in accordance with the
terms hereof.
“Debentures” means the
debt instruments set forth on Exhibit A of the Series A
Exchange Agreement.
“DGCL” means the Delaware
General Corporation Law.
“Dividend Date” shall have
the meaning set forth in Section 3(b).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Fundamental Transaction”
means in the event the Corporation (i) directly or indirectly, in
one or more related transactions effects any merger or
consolidation of the Corporation with or into another Person, (ii)
directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Corporation or another
Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders
of 50% or more of the outstanding Common Stock, (iv) directly or
indirectly, in one or more related transactions effects any
reclassification, reorganization or recapitalization of the Common
Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) directly or indirectly, in one
or more related transactions consummates a stock or share exchange
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 exchange
or other business combination).
“Holder” shall have the
meaning given such term in Section 2.
“Liquidation Event” means,
whether in a single transaction or series of transactions, the
voluntary or involuntary liquidation, dissolution or winding up of
the Corporation or such Subsidiaries the assets of which constitute
all or substantially all of the assets of the business of the
Corporation and its Subsidiaries, taken as a whole.
“North Carolina Courts”
shall have the meaning set forth in Section 9(d).
“Notice of Conversion”
shall have the meaning set forth in Section 5(a).
“Original Issue Date”
means the date of the first issuance of any shares of the Preferred
Stock regardless of the number of transfers of any particular
shares of Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Preferred
Stock.
“Payment-in-Kind” shall
have the meaning set forth in Section 3(c).
“Permitted Assigns” means
the Persons identified in the Series A Exchange Agreement to whom
Series A Preferred Stock will be issued contemporaneously with the
issuance of Series A Preferred Stock pursuant to the Series A
Exchange Agreement.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Requisite Holders” means
the written consent or approval of at least two-thirds (2/3rds) of
the then outstanding Series A Preferred Stock.
“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 as such Rule.
“Securities” means the
Series A Preferred Stock and the Conversion Shares.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Series A Exchange
Agreement” means the
Series A Exchange Agreement entered into simultaneously with the
Original Issue Date among the Corporation and the holders of the
Corporation’s outstanding Debentures for the issuance
of 9,778 shares of
Series A Preferred Stock, as amended,
modified or supplemented from time to time in accordance with its
terms.
“Series A Preferred Stock”
shall have the meaning set forth in Section 2.
“Series A Preferred Stock
Value” means the Stated Value multiplied by the then
number of outstanding shares of Series A Preferred
Stock.
“Share Delivery Date”
shall have the meaning set forth in Section 5(c).
“Stated Value” shall have
the meaning set forth in Section 2.
“Subsidiaries” means any
subsidiaries of the Corporation as set forth on Schedule 4.1(a)) of the Series
A Exchange Agreement and shall, where applicable, also include any
direct or indirect subsidiary of the Corporation formed or acquired
after the date of the Series A Exchange Agreement.
“Trading Day” means a day
on which the principal Trading Market is open for
business.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the North Carolina Stock Exchange,
OTCQB, OTCQX or OTC Pink (or any successors to any of the
foregoing).
“Transaction Documents”
means this Certificate of Designation, the Series A Exchange
Agreement and all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the
transactions contemplated pursuant to the Series A Exchange
Agreement.
“Transfer Agent” means
Issuer Direct Corporation, the current transfer agent of the
Corporation, with a mailing address of 1 Glenwood Avenue, Suite
1001, Raleigh, North Carolina 27603, and any successor transfer
agent of the Corporation.
Section
2. Designation,
Amount and Par Value. The series of preferred stock shall be
designated as its Series A Convertible Preferred Stock (the
“Series A Preferred
Stock”) and the number of shares so designated shall
be up to 1,750,000 (which shall not be subject to increase without
the written consent of the holders of a majority of the then
outstanding Series A Preferred Stock (each, a “Holder” and collectively,
the “Holders”)). Each share of
Series A Preferred Stock shall have a par value of $0.001 per share
and a stated value equal to $42.90 (the “Stated
Value”).
Section
3. Dividends.
a) Dividend Preference. The
Holders of each share of the Series A Preferred Stock then
outstanding shall be entitled to receive an annual dividend equal
to $3.43, subject to proration described below, out of any funds
and assets of the Corporation legally available therefor, prior and
in preference to any declaration or payment of any dividend payable
on the Common Stock, payable bi-annually during the months of
January and July each year (each, a “Dividend Date”). Such
dividends shall accrue and be prorated with respect to each share
of Series A Preferred Stock from the date on which such share is
issued and outstanding and thereafter shall be deemed to accrue
from day to day whether or not earned or declared and whether or
not there exists profits, surplus, or other funds legally available
for the payment of dividends, and shall be cumulative so that, if
such dividends on the Series A Preferred Stock shall not have been
paid, or declared and set apart for payment, the deficiency shall
be fully paid or declared and set apart for payment before any
dividend shall be paid or declared or set apart for the Common
Stock.
b) Payment of Dividends. Each
dividend shall be paid either in shares of Series A Preferred Stock
(“Payment-in-Kind”) or in
cash, at the option of the Corporation, on the respective Dividend
Date. For Payment-in-Kind dividends, each Holder on the record date
for such dividend will receive that number of shares of Series A
Preferred equal to (i) $3.43 divided by (ii) the Stared Value and
(iii) multiplied by the number of shares of Series A Preferred
Stock held by such Holder. No fractional shares shall be issued
upon payment of such dividends pursuant to this Section 3(c) and
the number of shares to be issued upon payment of such dividends
will be rounded up to the nearest whole share based on the
aggregate number of shares of Series A Preferred Stock held by such
Holder.
Section
4. Voting
and Other Rights.
a)
Voting Rights. The
Holders of Series A Preferred Stock shall have no voting rights
with respect to any matters to be voted on by the stockholders of
the Corporation. Holders of the Series A Preferred Stock shall be
entitled to written notice of all stockholder meetings or written
consents (and copies of proxy materials and other information sent
to stockholders) with respect to which they would be entitled by
vote, which notice would be provided pursuant to the
Corporation’s bylaws and the DGCL.
b)
Board Observation
Rights. So long as any shares
of Series A Preferred Stock are outstanding, the Corporation shall
invite a representative of the Agent to attend all meetings of its
Board and any committee thereof in a nonvoting observer capacity
and, in this respect, shall give the representative of the Agent
copies of all notices, minutes, consents, and other materials that
it provides to its directors at the same time and in the same
manner as provided to such directors; provided,
however, that such
representative shall agree in writing to hold in confidence and
trust and to act in a fiduciary manner with respect to all
information so provided; and provided
further, that the Corporation
reserves the right to withhold any information and to exclude such
representative from any meeting or portion thereof if access to
such information or attendance at such meeting could adversely
affect the attorney-client privilege between the Corporation and
its counsel or result in disclosure of trade secrets or a conflict
of interest, or if such holder or its representative is a
competitor of the Corporation. The Corporation shall reimburse the
representative of the Agent with board observation rights pursuant
hereto for all reasonable out-of-pocket travel expenses incurred
(consistent with the Corporation’s travel policy) in
connection with attending meetings of the
Board.
c)
Inspection Rights.
The Corporation shall permit the Agent
and its representatives to visit and inspect the
Corporation’s properties; examine its books of account and
records; and discuss the Corporation’s affairs, finances, and
accounts with its officers, during normal business hours of the
Corporation as may be reasonably requested by the Agent;
provided,
however, that the Corporation
shall not be obligated pursuant to this Section 4(c) to provide
access to any information that it reasonably considers to be a
trade secret or confidential information (unless covered by an
enforceable confidentiality agreement, in form acceptable to the
Corporation) or the disclosure of which would adversely affect the
attorney-client privilege between the Corporation and its counsel.
The Corporation shall reimburse the Agent for all reasonable
out-of-pocket travel expenses incurred (consistent with the
Corporation’s travel policy) in connection with the exercise
of its inspection rights under this Section
4(c).
d)
Agent of the
Holders. The Corporation may
look solely to the Agent with respect to any matters relating to
the giving or receipt of notices, consents or waivers from the
Holders under this Certificate of Designation.
e) Rights
and Duties of Agent.
(i) In
acting under this Certificate of Designation and in connection with
the Series A Preferred Stock, the Agent is acting solely as agent
of the Holders and does not assume any obligation or relationship
of agency or trust for or with the Corporation or any stockholder
of the Corporation.
(ii) The
Agent may consult with counsel satisfactory to it, and the advice
of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the advice of
such counsel.
(iii)
The
Agent shall be protected and shall incur no liability for or in
respect of any action taken or thing suffered by it in reliance
upon any notice, direction, consent, certificate, affidavit,
statement or other paper or document reasonably believed by it to
be genuine and to have been presented or signed by the Holders, or
any of them. The Agent will not have any liability to any Holder or
other person as a result of its inability to perform any of its
obligations under this Certificate of Designation by reason of any
preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation.
(iv)
The
Agent shall be obligated to perform only such duties as are herein
and no implied duties or obligations shall be read into this
Certificate of Designation against the Agent. The Agent shall not
be under any obligation to take any action hereunder or thereunder
which may tend to involve it in any expense or liability for which
it does not receive indemnity. The Agent shall have no duty or
responsibility in case of any default by the Corporation in the
performance of its covenants or agreements contained herein except
as directed by the Requisite Holders, including any duty or
responsibility to initiate or attempt to initiate any proceedings
at law or otherwise.
(v)
The
Agent shall not be accountable with respect to the validity or
value of any Conversion Shares or of any securities or property
which may at any time be issued or delivered upon conversion of the
Conversion Shares and it makes no representation with respect
thereto. The Agent shall not be responsible for any failure of the
Corporation to comply with any of the covenants of the Corporation
contained in this Certificate of Designation.
(vi)
The
Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from
taking any action or actions which it may be able to take under or
in respect of, this Certificate of Designation, unless the Agent
shall have been instructed by the Requisite Holders to refrain from
exercising such rights or to take or refrain from taking such
action. The Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any officer, director, or manager of any Holder, and
to apply to such officers, directors or managers for advice or
instructions in connection with its duties, and shall not be liable
to such Holder for any action taken or suffered to be taken by it
in good faith in accordance with instructions of any such officer,
director or manager or in good faith reliance upon any statement
signed by any one of such officers, directors or managers of the
Holders with respect to any fact or matter (unless other evidence
in respect thereof is herein specifically prescribed) which may be
deemed to be conclusively proved and established by such signed
statement.
(vii)
Nothing
herein shall preclude the Agent from acting in any other capacity
for any Holder or for any other legal entity.
(viii)
The
Agent shall not be responsible for and makes no representation as
to the validity or adequacy of this Certificate of Designation or
the Series A Preferred Stock and it shall not be responsible for
any statement in this Certificate of Designation or the Series A
Preferred Stock other than its signature thereon as a Holder and
with respect to representations made in such capacity.
(ix)
The
Corporation agrees to reimburse the Agent upon request for all
reasonable out of pocket expenses incurred by it, including the
reasonable expenses of the Agent’s agents and counsel. Each
of the Holders shall indemnify (to the extent not reimbursed by the
Corporation) pro rata according to their respective aggregate
number of Series A Preferred Stock held and hold harmless the Agent
against any loss, liability or reasonable expense (including
reasonable agents’ and attorneys’ fees and expenses)
incurred by it without willful misconduct, gross negligence or bad
faith on its part arising out of or in connection with the
acceptance or performance of its duties under this Certificate of
Designation. The Agent shall notify the Holders promptly of any
claim for which it may seek indemnity and the failure to provide
such notice shall not prejudice the Agent’s right to
indemnity hereunder unless and to the extent that the
Holders’ ability to defend any such claim shall have been
compromised as a result of such failure to notify. The Corporation
need not reimburse any expense and the Holders shall not be
obligated to indemnify against any loss or liability incurred by
the Agent through willful misconduct, gross negligence or bad
faith. The obligations pursuant to this Section
4(d)(i) shall survive regardless of whether any shares of
Series A Preferred Stock remain outstanding.
(x)
The Agent may at any time resign by giving written
notice to the Holders of such intention on its part, specifying the
date on which its desired resignation shall become
effective; provided,
however, that such date shall not be less than 30
days after the date on which such notice is given, unless the
Holders otherwise agree. Such resignation under this Section
4(e)(x) shall take effect upon the appointment by the
(remaining) Holders as hereinafter provided of a successor Agent
and the acceptance of such appointment by such successor Agent. Any
successor Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and to the Holders an instrument
accepting such appointment hereunder, and thereupon such successor
Agent, without any further act, deed or conveyance, shall become
vested with all the rights and obligations of such predecessor with
like effect as if originally named as Agent hereunder. As soon as
practicable after appointment of the successor Agent, the Holders
shall cause written notice of the change in the Agent to be given
to the Corporation. Failure to give any notice provided for in
this Section 4(d)(i) or any defect therein, shall not affect
the legality or validity of the appointment of a successor Agent,
as the case may be.
f)
Matters Requiring Agent
Approval. So long as any of shares of the Series A Preferred
Stock remain outstanding, the Company will not, without the
approval of the Agent:
(i) make any loan or advance to, or
own any stock or other securities of, any subsidiary or other
corporation, partnership, or
other entity unless it is wholly owned by the Company;
(ii) make any loan or advance to any
person, except advances and similar expenditures in the ordinary
course of business or under the terms of an employee stock or
option plan approved by the Company’s Board of
Directors;
(iii)
guarantee any
indebtedness except for trade accounts of the Company or any
subsidiary arising in the ordinary course of business;
(iv)
make any investment
other than investments in prime commercial paper, money market
funds, certificates of deposit in any United States bank having a
net worth in excess of $100,000,000 or obligations issued or
guaranteed by the United States of America, in each case having a
maturity not in excess of two years;
(v)
incur any
indebtedness in excess of $25,000 individually or in the aggregate,
other than trade credit incurred in the ordinary course of
business;
(vi)
increase or approve
the compensation of the named executive officers, including
benefits, bonuses and issuances of equity compensation; provided,
however, that approval by the Agent of a pool of compensation
benefits to be allocated by the Company will constitute approval of
each specific allocation of such benefits by the
Company;
(vii)
change the
principal business of the Company, enter new lines of business, or
exit the current line of business;
(viii)
sell, transfer,
exclusively license, pledge or encumber any material Intellectual
Property of the Company, except in the ordinary course of
business;
(ix)
create or authorize
the creation of or issue any other security convertible into or
exercisable for any equity security of the Company, other than
issuances to officers, directors, employees, consultants or
advisors pursuant to equity compensation plans approved by the
Company’s Board of Directors;
(x)
purchase or redeem
or pay any dividend on any capital stock, other than stock
repurchased from former employees or consultants in connection with
the cessation of their employment or consulting services, at the
lower of fair market value or cost; or
(xi)
increase the
number of shares authorized for issuance to officers, directors,
employees, consultants and advisors pursuant to equity incentive
plans or other similar compensatory agreements or
arrangement.
Section
5. Conversion
of Series A Preferred Stock.
a) Conversions
at Option of the Holder. Subsequent to the Original Issuance
Date, each share of Series A Preferred Stock shall be convertible,
at any time and from time to time, at the option of the Holder
thereof, into that number of shares of Common Stock equal to the
then effective Conversion Ratio. Holders shall effect conversions
by providing the Corporation with the form of conversion notice
attached hereto as Annex
A (a “Notice
of Conversion”). Each Notice of Conversion shall
specify the number of shares of Series A Preferred Stock to be
converted, the number of shares of Series A Preferred Stock owned
prior to the conversion at issue, the number of shares of Series A
Preferred Stock owned subsequent to the conversion at issue and the
date on which such conversion is to be effected, which date may not
be prior to the date the applicable Holder delivers by facsimile
such Notice of Conversion to the Corporation (such date, the
“Conversion
Date”). If no Conversion Date is specified in a Notice
of Conversion, the Conversion Date shall be the date that such
Notice of Conversion to the Corporation is deemed delivered
hereunder. No ink-original Notice of Conversion shall be required,
nor shall any medallion guarantee (or other type of guarantee or
notarization) of any Notice of Conversion form be
required. The
calculations and entries set forth in the Notice of Conversion
shall control in the absence of manifest or mathematical error. To
effect conversions of shares of Series A Preferred Stock, a Holder
shall not be required to surrender the certificate(s) representing
the shares of Series A Preferred Stock to the Corporation unless
all of the shares of Series A Preferred Stock represented thereby
are so converted, in which case such Holder shall deliver the
certificate representing such shares of Series A Preferred Stock
promptly following the Conversion Date at issue. Shares of Series A
Preferred Stock converted into Common Stock or redeemed in
accordance with the terms hereof shall be canceled and shall not be
reissued.
b)
Mechanics of
Conversion.
i. Delivery of Conversion Shares Upon
Conversion. Not later than seven (7) Trading Days after each
Conversion Date (the “Share Delivery Date”),
the Corporation shall deliver, or cause to be delivered, to the
converting Holder (A) Conversion Shares representing the number of
Conversion Shares being acquired upon the conversion of the Series
A Preferred Stock and (B) a bank check in the amount of accrued and
unpaid dividends, if any, payable at the next Dividend Date to
occur.
ii. Failure to Deliver Conversion
Shares. If, in the case of any Notice of Conversion, such
Conversion Shares are not delivered to or as directed by the
applicable Holder by the Share Delivery Date, the Holder shall be
entitled to elect by written notice to the Corporation at any time
on or before its receipt of such Conversion Shares, to rescind such
Conversion, in which event the Corporation shall promptly return to
the Holder any original Series A Preferred Stock certificate
delivered to the Corporation and the Holder shall promptly return
to the Corporation the Conversion Shares issued to such Holder
pursuant to the rescinded Conversion Notice.
iii. Reservation
of Shares Issuable Upon Conversion. The Corporation
covenants that it will at all times reserve and keep available out
of its authorized and unissued shares of Common Stock for the sole
purpose of issuance upon conversion of the Series A Preferred
Stock, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holder (and the other
holders of the Series A Preferred Stock), not less than such
aggregate number of shares of the Common Stock as shall (subject to
the terms and conditions set forth in the Series A Exchange
Agreement) be issuable (taking into account the adjustments and
restrictions of Section 6) upon the conversion of the then
outstanding shares of Series A Preferred Stock. The initial number
of shares of Common Stock reserved for conversions of the Series A
Preferred Stock and each increase in the number of shares so
reserved shall be allocated pro rata among the Holders based on the
number of Preferred Shares held by each Holder on the Original
Issuance Date or increase in the number of reserved shares (as the
case may be) (the “Authorized Share
Allocation”). In the event a Holder shall sell or
otherwise transfer any of such Holder’s Series A Preferred
Stock, each transferee shall be allocated a pro rata portion of
such Holder’s Authorized Share Allocation. Any shares of
Common Stock reserved and allocated to any Person which ceases to
hold any Series A Preferred Stock shall be allocated to the
remaining Holders of Series A Preferred Stock, pro rata based on
the number of Series A Preferred Stock then held by such Holders.
If, notwithstanding this Section 5(b)(iii) and not in limitation
thereof, at any time while any of the Series A Preferred Stock
remain outstanding the Corporation does not have a sufficient
number of authorized and unissued shares of Common Stock to satisfy
its obligation to have available for issuance upon conversion of
the Series A Preferred Stock at least a number of shares of Common
Stock equal to 100% of the Conversion Shares (an
“Authorized Share
Failure”), then the Corporation shall immediately take
all reasonable action (within its control) to increase the
Corporation’s authorized shares of Common Stock to an amount
sufficient to allow the Corporation to reserve and have available
the Conversion Shares for all of the Series A Preferred Stock then
outstanding. Without limiting the generality of the foregoing
sentence, as soon as practical after the date of the occurrence of
an Authorized Share Failure, the Corporation shall hold a meeting
of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock or obtain the approval of its
stockholders for such increase through a written consent if
appropriate under applicable law. In connection with such meeting,
the Corporation shall provide each stockholder with a proxy
statement and shall use its best efforts to solicit its
stockholders’ approval of such increase in authorized shares
of Common Stock. Nothing contained in this Section 5(c)(iii) shall
limit any obligations of the Corporation under any provision of the
Purchase Agreement. The Corporation covenants that all shares of
Common Stock that shall be issuable upon conversion of Series A
Preferred Stock shall, upon issue, be duly authorized, validly
issued, fully paid and nonassessable.
iv. Fractional Shares. No
fractional shares or scrip representing fractional shares shall be
issued upon the conversion of the Series A Preferred Stock. As to
any fraction of a share which the Holder would otherwise be
entitled to purchase upon such conversion, the Corporation shall at
its election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Stated Value or round up to the next whole share.
c)
Automatic
Conversion. Subsequent to the Original Issuance Date and
immediately prior to the occurrence of a Fundamental Transaction,
the then outstanding shares of Series A Preferred Stock shall be
automatically converted into shares of Common Stock equal to the
then effective Conversion Ratio by delivering to a Holder of Series
A Stock written notice by the Company no less than ten (10) Trading
Days prior to the consummation of a Fundamental Transaction to
effect such automatic conversion (the “Automatic Conversion
Notice”).
d)
Procedural Requirement for
Automatic Conversion. Each Holder of Series A Preferred
Stock or the Agent shall be sent the Automatic Conversion Notice
indicating the time and the place for the automatic conversion of
all such shares of Series A Preferred Stock pursuant to Section
5(d). Upon receipt of such notice, each Holder of shares of Series
A Preferred Stock in certificated form shall surrender his, her or
its certificate or certificates for all such shares (or, if such
Holder alleges that such certificate has been lost, stolen or
destroyed, a lost certificate affidavit and agreement reasonably
acceptable to the Corporation to indemnify the Corporation against
any claim that may be made against the Corporation on account of
the alleged loss, theft or destruction of such certificate) to the
Corporation at the place designated in such notice. If so required
by the Corporation, any certificates surrendered for conversion
shall be endorsed or accompanied by written instrument or
instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered Holder or by his, her or its
attorney duly authorized in writing. All rights with respect to the
Series A Preferred Stock converted pursuant to Section 5(c),
including the rights, if any, to receive notices and vote (other
than as a Holder of Common Stock), will terminate upon the
automatic conversion (notwithstanding the failure of the Holder or
Holders thereof to surrender any certificates at or prior to such
time of automatic conversion), except only the rights of the
Holders thereof, upon surrender of any certificate or certificates
of such Holders (or lost certificate affidavit and agreement)
therefor, to receive the items provided for in the next sentence of
this Section 5(d). As soon as practicable after the automatic
conversion and, if applicable, the surrender of any certificate or
certificates (or lost certificate affidavit and agreement) for
Series A Preferred Stock, the Corporation shall issue and deliver
to such Holder, or to his, her or its nominees, a certificate or
certificates for the number of full shares of Common Stock issuable
on such conversion in accordance with the provisions hereof Such
converted Series A Preferred Stock shall be retired and cancelled
and may not be reissued as shares of such series, and the
Corporation may thereafter take such appropriate action (without
the need for stockholder action) as may be necessary to reduce the
authorized number of shares of Series A Preferred Stock
accordingly.
Section
6. Certain
Adjustments.
a) Stock Splits. If the
Corporation, at any time while this Series A Preferred Stock is
outstanding: (i) subdivides outstanding shares of Common Stock into
a larger number of shares, (ii) combines (including by way of a
reverse stock split) outstanding shares of Common Stock into a
smaller number of shares, or (iii) issues, in the event of a
reclassification of shares of the Common Stock, any shares of
capital stock of the Corporation, then the Conversion Ratio shall
be adjusted on an identical basis. Any adjustment made pursuant to
this Section 6(a) shall become effective immediately after the
record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) Calculations. All calculations
under this Section 6 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 6, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding any treasury shares of
the Corporation) issued and outstanding.
c) Notice to the
Holders.
i. Adjustment to Conversion Ratio.
Whenever the Conversion Ratio is adjusted pursuant to any provision
of this Section 6, the Corporation shall promptly deliver to each
Holder or the Agent a notice setting forth the Conversion Ratio
after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
ii. Notice to Allow Conversion by
Holder. If (A) the Corporation shall declare a dividend (or
any other distribution in whatever form) on the Common Stock, (B)
the Corporation shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock, (C) the Corporation shall
authorize the granting to all holders of the Common Stock of rights
or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any
stockholders of the Corporation shall be required in connection
with any reclassification of the Common Stock, any consolidation or
merger to which the Corporation is a party, any sale or transfer of
all or substantially all of the assets of the Corporation, or any
compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property or (E) the Corporation shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs
of the Corporation, then, in each case, the Corporation shall cause
to be filed at each office or agency maintained for the purpose of
conversion of this Series A Preferred Stock, and shall cause to be
delivered to each Holder or the Agent at its last address as it
shall appear upon the stock books of the Corporation, at least ten
(10) calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange, provided that the failure to
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material,
non-public information regarding the Corporation or any of the
Subsidiaries, the Corporation shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K as
such rules are applicable to the Corporation at the time that such
notice filing is required hereunder.
Section
7. Vote
to Change the Terms of or Issue Series A Preferred Stock. In
addition to any other rights provided by law, except where the vote
or written consent of the holders of a greater number of shares is
required by law or by another provision of the Certificate of
Incorporation, without first obtaining either the affirmative vote
at a meeting duly called for such purpose or the written consent
without a meeting of the Requisite Holders, voting together as a
single class, the Corporation shall not: (a) amend or repeal any
provision of, or add any provision to, its Certificate of
Incorporation or bylaws, file any certificate of designations or
certificate of amendment, or issue or agree to issue any security
or debt instrument if such action would adversely alter or change
in any respect the preferences, rights, privileges or powers, or
restrictions provided for the benefit, of the Holders of Series A
Preferred Stock, regardless of whether any such action shall be by
means of amendment to the Certificate of Incorporation or by
merger, consolidation or otherwise; or (b) without limiting any
provision of Section 5, whether or not prohibited by the terms of
the Series A Preferred Stock, circumvent a right of the Series A
Preferred Stock.
Section
8. Noncircumvention.
The Corporation hereby covenants and agrees that the Corporation
will not, by amendment of its Certificate of Incorporation, bylaws
or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this
Certificate of Designations, and will at all times in good faith
carry out all the provisions of this Certificate of Designations
and take all action as may be required to protect the rights of the
Holders.
Section
9. Miscellaneous.
a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holders
hereunder including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by email, or sent
by a nationally recognized overnight courier service, addressed to
the Corporation, at 5400 Trinity Road, Suite 208, Raleigh,
North Carolina 27607 Attention: Legal Department, email address
legal@mobilesmith.com or such other
email address or address as the Corporation may specify for such
purposes by notice to the Holders delivered in accordance with this
Section 9(a). Any and all notices or other communications or
deliveries to be provided by the Corporation hereunder shall be in
writing and delivered personally, by facsimile or e-mail, or
sent by a nationally recognized overnight courier service addressed
to each Holder or the Agent at the facsimile number or address of
such Holder or the Agent appearing on the books of the Corporation,
or if no such facsimile number or e-mail address or address appears on the
books of the Corporation, at the principal place of business of
such Holder or the Agent, as set forth in the Series A Exchange
Agreement. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number or e-mail
attachment at the e-mail address set forth in this Section 9(a)
prior to 5:30 p.m. (North Carolina time) on any date, (ii) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
e-mail attachment at the e-mail address set forth in this Section
9(a) on a day that is not a Trading Day or later than 5:30 p.m.
(North Carolina time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be
given.
b) Absolute Obligation. Except as
expressly provided herein, no provision of this Certificate of
Designation shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay liquidated
damages and accrued dividends, as applicable, on the shares of
Series A Preferred Stock at the time, place, and rate, and in the
coin or currency, herein prescribed.
c) Lost or Mutilated Series A Preferred
Stock Certificate. If a Holder’s Series A Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed,
the Corporation shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate,
or in lieu of or in substitution for a lost, stolen or destroyed
certificate, a new certificate for the shares of Series A Preferred
Stock so mutilated, lost, stolen or destroyed, but only upon
receipt of evidence of such loss, theft or destruction of such
certificate, and of the ownership hereof reasonably satisfactory to
the Corporation.
d) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Certificate of Designation shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal
proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the Transaction
Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the
City of Raleigh, North Carolina (the “North Carolina Courts”).
Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the North Carolina Courts for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such North Carolina Courts, or such
North Carolina Courts are improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Certificate of Designation and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
applicable law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to
this Certificate of Designation or the transactions contemplated
hereby. If any party shall commence an action or proceeding to
enforce any provisions of this Certificate of Designation, then the
prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs
and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding.
e) Waiver. Any waiver by the
Corporation or a Holder or the Agent of a breach of any provision
of this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or
of any breach of any other provision of this Certificate of
Designation or a waiver by any other Holders. The failure of the
Corporation or a Holder or the Agent to insist upon strict
adherence to any term of this Certificate of Designation on one or
more occasions shall not be considered a waiver or deprive that
party (or any other Holder) of the right thereafter to insist upon
strict adherence to that term or any other term of this Certificate
of Designation on any other occasion. Any waiver by the Corporation
or a Holder must be in writing.
f) Severability. If any provision
of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any
Person or circumstance, it shall nevertheless remain applicable to
all other Persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law.
g) Next Business Day. Whenever any
payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next
succeeding Business Day.
h) Headings. The headings
contained herein are for convenience only, do not constitute a part
of this Certificate of Designation and shall not be deemed to limit
or affect any of the provisions hereof.
i) Status of Converted or Redeemed Series
A Preferred Stock. Shares of Series A Preferred Stock may
only be issued pursuant to this Certificate of Designation and the
Series A Exchange Agreement. If any shares of Series A Preferred
Stock shall be converted, redeemed or reacquired by the
Corporation, such shares shall resume the status of authorized but
unissued shares of preferred stock and shall no longer be
designated as Series A Convertible Preferred Stock.
*****************
RESOLVED, FURTHER,
that the Chairman, the chief executive officer, the president or
any vice-president, and the secretary or any assistant secretary,
of the Corporation be and they hereby are authorized and directed
to prepare and file this Certificate of Designation of Preferences,
Rights and Limitations in accordance with the foregoing resolution
and the provisions of Delaware law.
IN
WITNESS WHEREOF, the undersigned have executed this Certificate
this 23rd day of December, 2020.
|
/s/
Jerry Lepore_______________________
Name:
Jerry Lepore
Title:
President
|
/s/
Gleb Mikhailov__________________________
Name:
Gleb Mikhailov
Title:
Secretary
|
ANNEX A
NOTICE
OF CONVERSION
(TO BE
EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF
SERIES A PREFERRED STOCK)
The
undersigned hereby elects to convert the number of shares of Series
A Convertible Preferred Stock indicated below into shares of common
stock, par value $0.001 per share (the “Common Stock”), of
MobileSmith, Inc., a Delaware corporation (the “Corporation”), according
to the conditions hereof, as of the date written below. If shares
of Common Stock are to be issued in the name of a Person other than
the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such
certificates as may be required by the Corporation in accordance
with the Series A Exchange Agreement. No fee will be charged to the
Holders for any conversion, except for any such transfer
taxes.
Conversion
calculations:
|
Date to
Effect Conversion:
_____________________________________________
|
|
Number
of shares of Series A Preferred Stock owned prior to Conversion:
_______________
|
|
Number
of shares of Series A Preferred Stock to be Converted:
________________________
|
|
Stated
Value of shares of Series A Preferred Stock to be Converted:
____________________
|
|
Number
of shares of Common Stock to be Issued:
___________________________
|
|
Applicable
Conversion
Ration:____________________________________________
|
|
Number
of shares of Series A Preferred Stock subsequent to Conversion:
________________
|
|
Address
for Delivery: ______________________
or
DWAC
Instructions:
Broker
no: _________
Account
no: ___________
HOLDER
By:___________
Name:
Title:
|
Exhibit
10.1
Form of Series A Exchange Agreement between MobileSmith, Inc. and
various entities.
SERIES A EXCHANGE AGREEMENT
THIS
SERIES A EXCHANGE AGREEMENT (this “Agreement”), dated as of
December 23, 2020 (the “Closing Date”), is
entered into by and between MobileSmith, Inc., a Delaware
corporation (the “Company”), and the
parties identified as “Holder(s)” on the signature page
hereto (the “Holder(s)”).
BACKGROUND
WHEREAS, the
Company and the Holders have entered into various convertible and
non-convertible promissory note agreements (the “Note Agreements”) whereby
the Company has issued to the Holders various convertible and
non-convertible promissory notes (the “Notes”);
WHEREAS, the
outstanding Note Agreements and the Notes held by Holders,
including all amendments thereto, are set forth on Exhibit A that is attached
hereto and incorporated herein by reference, which include certain
documents related to the Note Agreements and the Notes including
but not limited to certain security agreements relating to a
secured interest in all of the Company’s assets
(collectively, the “Note Transaction
Documents”); and
WHEREAS, pursuant
and subject to the terms herein, the Company and Holders have
agreed to exchange the Notes (including all outstanding but unpaid
principal and interest) for new securities of the
Company.
AGREEMENT
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the
Holder hereby agrees as follows:
1. Incorporation
of Preliminary Statements and Acknowledgement; Definitions.
The preliminary statements set forth above by this reference hereto
are hereby incorporated into this Agreement. Terms used as defined
terms herein and not otherwise defined shall have the meanings
provided therefor in the Purchase Agreement. In addition, the
following terms shall have the following meanings:
“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Common Stock” means the
Company’s common stock, par value $0.001 per share, and stock
of any other class of securities into which such securities may
hereafter be reclassified or changed.
“Exchange
Act” means the Securities
Exchange Act of 1934, as amended.
“Exchange Transaction
Documents” means this Agreement and the Certificate of
Designation (as defined in Section 2 below).
“Lien”
means a lien, charge pledge, security interest, encumbrance, right
of first refusal, preemptive right or other
restriction.
“Material Adverse Effect”
shall have the meaning assigned to such term in Section
4(a).
“Person”
means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any
kind.
“Proceeding”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.
“Securities” means the
Series A Preferred Stock (as defined in Section 2 below) and the
Underlying Shares.
“Securities
Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
“Trading Day” means a day
on which the principal Trading Market is open for
trading.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE MKT,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange, the OTC Bulletin
Board, the OTCQB or the OTCQX (or any successors to any of the
foregoing).
“Underlying Shares” means
the shares of Common Stock issued and issuable upon conversion of
the Series A Preferred Stock.
2. Exchange. Subject to the
conversion election set forth in this Section 2, the Company agrees
to issue to the Holder 695,728 shares of Series A Convertible
Preferred Stock of the Company (the “Series A Preferred
Stock”) with the terms set forth in the certificate of
designation of preferences, rights and limitations (the
“Certificate of
Designation”) that is attached hereto as Exhibit B and incorporated
herein by reference, in exchange for the Notes (including all
outstanding but unpaid principal and interest). On the Closing
Date, the Company shall file the Certificate of Designation with
the State of Delaware and shall deliver to the Agent (as defined in
the Certificate of Designation) evidence of such filing and the
acceptance thereof by the State of Delaware, which shall be
reasonably satisfactory to the Agent, and shall deliver to the
Holder an original Series A Preferred Stock certificate dated as of
the Closing Date in the name and denomination of shares of Series A
Preferred Stock set forth on the signature page hereto within ten
Trading Days from the Closing Date. Provided, however, a Holder may
within two Trading Days after the Closing Date provide a written
notice to the Company that such Holder is electing to convert all
or part of the Note(s) held by such Holder pursuant to the terms of
such Note. In the event a Holder elects to convert all or a portion
of such Holder’s Notes, such Holder shall not be entitled to
any shares of Series A Preferred Stock with respect to the portion
of the Notes so converted and this Agreement shall be deemed null,
void and of no further force or effect with respect to the portion
of the Notes so converted.
3. Cancellation of the Notes. The
Company and the Holder agree that, upon issuance of the Series A
Preferred Stock, the Note Transaction Documents shall be cancelled
in full and of no further force or effect and will destroy all
certificates and/or documents with the Company’s original
signature evidencing the Note Transaction Documents. The Holder
agrees that, upon issuance and delivery by the Company of the
Series A Preferred Stock, all executory and other provisions of the
Note Transaction Documents (including all agreements and documents
relating to any amendments and exchanges thereto) shall be deemed
cancelled in full and of no further force or effect with respect to
the Company or the Holder. Additionally, simultaneously with the
issuance and delivery by the Company of the Series A Preferred
Stock, the Holder, or in the alternative the Company, shall cause
the filing of UCC-3’s to terminate all of the UCC-1’s
filed pursuant to the Note Transaction Documents.
4. Representations and Warranties.
Except as otherwise described in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019 (and any
amendments thereto filed at least two (2) Trading Days prior to the
Closing Date), the Company’s Quarterly Reports on Form 10-Q
for the quarters ended September 30, 2020, June 30, 2020 and March
31, 2007 (and any amendments thereto filed at least two (2) Trading
Days prior to the Closing Date),, and any of the Company’s
Current Reports on Form 8-K filed since January 1, 2020 (and any
amendments thereto filed at least two (2) Trading Days prior to the
Closing Date) (all collectively, the “SEC Reports”), the
Company hereby represents and warrants to, and covenants with, each
Holders as of the date hereof and the applicable Closing Date, as
follows:
(a) Subsidiaries. All of the direct
and indirect subsidiaries of the Company are set forth on
Schedule 4.1(a)
(individually, a “Subsidiary” and
collectively, the “Subsidiaries”). The
Company owns, directly or indirectly, all of the capital stock or
other equity interests of each Subsidiary free and clear of any
Liens, and all of the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) Organization and Qualification.
The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not have
or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of any Exchange
Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business, prospects or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a
whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its
obligations under any Exchange Transaction Document (any of (i),
(ii) or (iii), a “Material Adverse Effect”)
and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
(c) Authorization; Enforcement. The
Company has all requisite power and authority to execute, deliver
and perform its obligations under the Transaction Agreements. The
execution and delivery of the Exchange Transaction Documents, and
the consummation by the Company of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action
and no further action on the part of the Company or its Board of
Directors or stockholders is required. The Exchange Transaction
Documents have been validly executed and delivered by the Company
and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms,
except to the extent (i) rights to indemnity and contribution may
be limited by state or federal securities laws or the public policy
underlying such laws, (ii) such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting
parties’ rights generally and (iii) such enforceability may
be subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(d) No Conflicts. The execution,
delivery and performance by the Company of this Agreement and the
other Exchange Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of
the transactions contemplated hereby and thereby do not and will
not: (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the
properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to
which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or
asset of the Company or a Subsidiary is bound or affected; except
in the case of each of clauses (ii) and (iii), such as could not
have or reasonably be expected to result in a Material Adverse
Effect.
(e) Issuance of the Securities. The
Securities are duly authorized and, when issued and paid for in
accordance with the applicable Exchange Transaction Documents, will
be duly and validly issued, fully paid and nonassessable, free and
clear of all Liens imposed by the Company other than restrictions
on transfer provided for in the Exchange Transaction Documents. The
Underlying Shares, when issued in accordance with the terms of the
Exchange Transaction Documents, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the
Exchange Transaction Documents.
(f) Capitalization. The outstanding
capital stock of the Company is as described in the SEC
Reports.
The Company has not made any material issuances of capital stock
since December 10, 2020, other than pursuant to the purchase of
shares under the Company’s employee stock equity plans and
the exercise of outstanding warrants or stock options, in each
case as disclosed in the SEC Reports, as well as the issuance of
restricted shares to certain of its directors as part of its
director compensation program and the issuance of restricted shares
to certain of the Company’s employees and consultants under
the Company’s employee stock equity plans. There are not (i)
any outstanding preemptive rights, or (ii) any rights, warrants or
options to acquire, or instruments convertible into or exchangeable
for, any unissued shares of capital stock or other equity interest
in the Company not disclosed in the SEC Reports, or (iii) any
contract, commitment, agreement, understanding or arrangement of
any kind to which the Company is a party that would provide for the
issuance or sale of any capital stock of the Company, any such
convertible or exchangeable securities or any such rights, warrants
or options not disclosed in the SEC Reports. There are no
shareholders agreements, voting agreements or other similar
agreements with respect to the Common Stock to which the Company is
a party.
(g) Financial Statements. The
financial statements of the Company and the related notes contained
in the SEC Reports present fairly and accurately in all material
respects the financial position of the Company as of the dates
therein indicated, and the results of its operations, cash flows
and the changes in shareholders’ equity for the periods
therein specified, subject, in the case of unaudited financial
statements for interim periods, to normal year-end audit
adjustments. Such financial statements (including the related
notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis at the times
and throughout the periods therein specified, except that unaudited
financial statements may not contain all footnotes required by
generally accepted accounting principles.
(h) Material Changes; Undisclosed Events,
Liabilities or Developments. Except as disclosed in the SEC
Reports or in any press releases issued by the Company at
least two (2) Business Days prior to the Closing Date, there has
not been (i) an event, circumstance or change that has had or
is reasonably likely to have a Material Adverse Effect upon the
Company, (ii) any obligation incurred by the Company that is
material to the Company, (iii) any dividend or distribution of
any kind declared, paid or made on the capital stock of the
Company, or (iv) any loss or damage (whether or not insured) to the
physical property of the Company which has had a Material Adverse
Effect.
(i) Litigation. There is no
material legal or governmental proceeding pending, or to the
knowledge of the Company, threatened, to which the Company is a
party or of which the business or property of the Company is
subject that is required to be disclosed and that is not so
disclosed in the SEC Reports or in the supplemental written
disclosure on material legal proceedings provided to the Holders.
Other than the information disclosed in the SEC Reports, the
Company is not subject to any injunction, judgment, decree or order
of any court, regulatory body, administrative agency or other
government body.
(j) No Violations. To the knowledge
of the Company, it is
not in violation of its Certificate of Incorporation, bylaws or
other organizational documents, as amended. To the knowledge of the
Company, it is not in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency,
arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect. The Company is not in default
(and there exists no condition which, with the passage of time or
otherwise, would constitute a default) in the performance of any
bond, debenture, note or any other evidence of indebtedness or any
indenture, mortgage, deed of trust or any other material agreement
or instrument to which the Company is a party or by which the
Company is bound, which such default would have a Material Adverse
Effect upon the Company.
(k) Governmental and Regulatory
Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary
to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits could not
reasonably be expected to result in a Material Adverse Effect
(“Material
Permits”), and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation
or modification of any Material Permit.
(l) Title to Assets. The Company
and the Subsidiaries have good and marketable title in fee simple
to all real property owned by them and good and marketable title in
all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company and the Subsidiaries and (ii) Liens for the payment of
federal, state or other taxes, for which appropriate reserves have
been made therefor in accordance with GAAP and, the payment of
which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are
in compliance.
(m) Intellectual
Property.
(i) Except for matters which are
not reasonably likely to have a Material Adverse Effect, (i) each
of the Company has ownership of, or a license or other legal right
to use, all patents, copyrights, trade secrets, trademarks,
customer lists, designs, manufacturing or other processes, computer
software, systems, data compilation, research results or other
proprietary rights used in the business of the Company
(collectively, “Intellectual Property”)
and (ii) all of the Intellectual Property owned by the Company
consisting of patents, registered trademarks and registered
copyrights have been duly registered in, filed in or issued by the
United States Patent and Trademark Office, the United States
Register of Copyrights or the corresponding offices of other
jurisdictions and have been maintained and renewed in accordance
with all applicable provisions of law and administrative
regulations in the United States and/or such other
jurisdictions.
(ii) Except for matters which are
not reasonably likely to have a Material Adverse Effect, all
material licenses or other material agreements under which (i) the
Company employs rights in Intellectual Property, or (ii) the
Company has granted rights to others in Intellectual Property owned
or licensed by the Company are in full force and effect, and there
is no default by the Company with respect thereto.
(iii) The Company believes that it
has taken all steps reasonably required in accordance with sound
business practice and business judgment to establish and preserve
the ownership of the Company’s material Intellectual
Property.
(iv) Except for matters which are
not reasonably likely to have a Material Adverse Effect, to the
knowledge of the Company, (i) the present business, activities and
products of the Company do not infringe any intellectual property
of any other person; (ii) neither the Company is making
unauthorized use of any confidential information or trade secrets
of any person; and (iii) the activities of any of the employees of
the Company, acting on behalf of the Company, do not materially
violate any agreements or arrangements related to confidential
information or trade secrets of third parties.
(v) Except for matters which are
not reasonably likely to have a Material Adverse Effect, and except
as disclosed in the SEC Reports, no proceedings are pending, or to
the knowledge of the Company, threatened, which challenge the
rights of the Company to the use the Company’s Intellectual
Property.
(n) Insurance. The Company
maintains insurance of the types and in the amounts that the
Company reasonably believes is adequate for its businesses,
including, but not limited to, insurance covering real and personal
property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily
insured against by similarly situated companies, all of which
insurance is in full force and effect.
(o) Transactions With Related
Parties. Other than described in the SEC Reports, to the
knowledge of the Company, no transaction has occurred between or
among the Company or any of its Affiliates, officers or directors
or any Affiliate or Affiliates of any such officer or director that
with the passage of time are reasonably likely be required to be
disclosed pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(p) Private Placement. Assuming the
accuracy of the Holder’s representations and warranties set
forth in Section 5, no registration under the Securities Act is
required for the exchange, offer and sale of the Securities by the
Company to the Holder as contemplated hereby. The issuance and sale
of the Securities hereunder does not contravene the rules and
regulations of the Trading Market.
(q) Investment Company. The Company
is not, and is not an Affiliate of, and immediately after receipt
of payment for the Securities, will not be or be an Affiliate of,
an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an
“investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(r) Listing and Maintenance
Requirements. The Company’s Common Stock is listed on
the OTCQB maintained by the OTC Markets Group, Inc. under the
symbol TAPM. The Company has not, in the 12 months preceding the
date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements.
(s) Tax
Status. Except
for matters that would not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect,
the Company and its Subsidiaries each (i) has made or filed all
United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required
by any jurisdiction to which it is subject, or has properly filed
extensions with respect thereto, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and
declarations except for taxes due for which appropriate extensions
have been filed, and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company or of any Subsidiary
know of no basis for any such claim.
(t) Contracts. Except for matters
which are not reasonably likely to have a Material Adverse Effect
and those contracts that are substantially or fully performed or
expired by their terms, the contracts listed as exhibits to or
described in the SEC Reports that are material to the Company and
all amendments thereto, are in full force and effect on the date
hereof, and neither the Company nor, to the Company’s
knowledge, any other party to such contracts is in breach of or
default under any of such contracts.
(u) Offering Prohibitions. Neither
the Company nor any person acting on its behalf or at its direction
has in the past or will in the future take any action to sell,
offer for sale or solicit offers to buy any securities of the
Company which would bring the offer or sale of the Series A
Preferred Stock as contemplated by this Agreement or the issuance
of the Conversion Shares as contemplated by the Series A Preferred
Stock within the provisions of Section 5 of the Securities
Act.
(v) Books and Records. The books,
records and accounts of the Company accurately and fairly reflect,
in reasonable detail, the transactions in, and dispositions of, the
assets of, and the operations of, the Company. The Company
maintains a system of internal accounting controls sufficient to
provide reasonable assurances 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 accordance with
generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(w) Survival. The foregoing
representations and warranties shall survive the Closing
Date.
5. Representations and Warranties of the
Holder. The Holder hereby represents and warrants as of the
date hereof to the Company as follows (unless as of a specific date
therein):
(a) Organization; Authority. The
Holder is an entity duly incorporated or formed, validly existing
and in good standing under the laws of the jurisdiction of its
incorporated or formed with full right, corporate, partnership,
limited liability company or similar power and authority to enter
into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and
performance by the Holder of the transactions contemplated herein
have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the
part of the Holder. This Agreement has been duly executed by the
Holder, and when delivered by the Holder in accordance with the
terms hereof, will constitute the valid and legally binding
obligation of the Holder, enforceable against it in accordance with
its terms, except: (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.
(b) Experience of
Holder. Each
Holder, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated
the merits and risks of such investment. Each Holder is able
to bear the economic risk of an investment in the Securities and,
at the present time, is able to afford a complete loss of such
investment.
(c) Communication of Offer. No
Holder is purchasing the Securities as a result of any
“general solicitation” or “general
advertising,” as such terms are defined in Regulation D,
which includes, but is not limited to, any advertisement, article,
notice or other communication regarding the Securities published in
any newspaper, magazine or similar media or on the internet or
broadcast over television, radio or the internet or presented at
any seminar or any other general solicitation or general
advertisement.
(d) Information on Company. Each
Holder has been furnished with or has had access to the SEC Reports
during the period from the date that is two years preceding the
date hereof through the tenth Trading Day preceding the Closing
Date in which such Holder purchases Securities. Holders are not
deemed to have any knowledge of any information not included in the
SEC Reports unless such information is delivered in the manner
described in the next sentence. In addition, such Holder
may have received in writing from the Company such other
information concerning its operations, financial condition and
other matters as such Holder has requested under a confidentiality
agreement (such other information is collectively, the
“Other Written
Information”), and considered all factors such Holder
deems material in deciding on the advisability of investing in the
Securities. Such Holder was afforded (i) the opportunity
to ask such questions as such Holder deemed necessary of, and to
receive answers from, representatives of the Company concerning the
merits and risks of acquiring the Securities; (ii) the right of
access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable such Holder to evaluate the
Securities; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an
informed investment decision with respect to acquiring the
Securities.
(e) Securities Act Representations.
The Holder understands that the Securities are “restricted
securities” and have not been registered under the Securities
Act or any applicable state securities law. The Holder acknowledges it is contemplating
selling certain of the Series A Preferred Stock immediately
subsequent to the execution of this Agreement but that such
transfer shall be accomplished in full compliance with the
provisions of the Securities Act.
(f) Holder Status. At the time the
Holder was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it converts the Series A
Preferred Stock it will be, an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act.
(g) Survival. The foregoing
representations and warranties shall survive the Closing
Date.
The
Company acknowledges and agrees that the representations contained
in Section 5 shall not modify, amend or affect the Holder’s
right to rely on the Company’s representations and warranties
contained in this Agreement or any other document or instrument
executed and/or delivered in connection with this Agreement or the
consummation of the transaction contemplated hereby.
6. Covenants
in Favor of the Holders. The Company covenants and agrees
with the Holders that, so long as any shares of the Series A
Preferred Stock shall be outstanding, unless waived by the Agent
(as defined in the Certificate of Designation) will perform the
obligations set forth in this Section 6:
(a) Taxes and Levies. The Company
will promptly pay and discharge all taxes, assessments, and
governmental charges or levies imposed upon the Company or upon its
income and profits, or upon any of its property, before the same
shall become delinquent, as well as all claims for labor, materials
and supplies which, if unpaid, might become a lien or charge upon
such properties or any part thereof; provided, however, that the
Company shall not be required to pay and discharge any such tax,
assessment, charge, levy or claim so long as the validity thereof
shall be contested in good faith by appropriate proceedings and the
Company shall set aside on its books adequate reserves in
accordance with GAAP with respect to any such tax, assessment,
charge, levy or claim so contested.
(b) Maintenance of Existence. The
Company will do or cause to be done all things reasonably necessary
to preserve and keep in full force and effect its corporate
existence, rights and franchises and comply with all laws
applicable to the Company, except where the failure to comply would
not have a Material Adverse Effect.
(c) Maintenance of Property. The
Company will at all times maintain, preserve, protect and keep its
property used or useful in the conduct of its business in good
repair, working order and condition, and from time to time make all
needful and proper repairs, renewals, replacements and improvements
thereto as shall be reasonably required in the conduct of its
business.
(d) Insurance. The Company will, to
the extent necessary for the operation of its business, keep
adequately insured by financially sound reputable insurers, all
property of a character usually insured by similarly situated
corporations and carry such other insurance as is usually carried
by similar corporations.
(e) Books and Records. The Company
will maintain a system of accounting sufficient to enable the
Company to prepare financial statements in accordance with GAAP and
will furnish to the Holders such books, records and accounts
reflecting all of the business affairs and transactions of the
Company as the Holders may reasonably request.
(f) Notice of Certain Events. The
Company will give prompt written notice (with a description in
reasonable detail) to the Holders upon becoming aware of the
occurrence of any Event of Default (as hereinafter defined) or any
event which, with the giving of notice or the lapse of time, would
constitute an Event of Default.
(g) Matters Requiring Agent
Approval. So long as any of shares of the Series A Preferred
Stock remain outstanding, the Company will not, without the
approval of the Agent:
(i) make any loan or advance to, or
own any stock or other securities of, any subsidiary or other
corporation, partnership, or other entity unless it is wholly owned
by the Company;
(ii) make any loan or advance to any
person, except advances and similar expenditures in the ordinary
course of business or under the terms of an employee stock or
option plan approved by the Company’s Board of
Directors;
(iii)
guarantee any
indebtedness except for trade accounts of the Company or any
subsidiary arising in the ordinary course of business;
(iv)
make any investment
other than investments in prime commercial paper, money market
funds, certificates of deposit in any United States bank having a
net worth in excess of $100,000,000 or obligations issued or
guaranteed by the United States of America, in each case having a
maturity not in excess of two years;
(v)
incur any
indebtedness in excess of $25,000 individually or in the aggregate,
other than trade credit incurred in the ordinary course of
business;
(vi)
increase or approve
the compensation of the named executive officers, including
benefits, bonuses and issuances of equity compensation; provided,
however, that approval by the Agent of a pool of compensation
benefits to be allocated by the Company will constitute approval of
each specific allocation of such benefits by the
Company;
(vii)
change the
principal business of the Company, enter new lines of business, or
exit the current line of business;
(viii)
sell, transfer,
exclusively license, pledge or encumber any material Intellectual
Property of the Company, except in the ordinary course of
business;
(ix)
create or authorize
the creation of or issue any other security convertible into or
exercisable for any equity security of the Company, other than
issuances to officers, directors, employees, consultants or
advisors pursuant to equity compensation plans approved by the
Company’s Board of Directors;
(x)
purchase or redeem
or pay any dividend on any capital stock, other than stock
repurchased from former employees or consultants in connection with
the cessation of their employment or consulting services, at the
lower of fair market value or cost; or
(xi)
increase the
number of shares authorized for issuance to officers, directors,
employees, consultants and advisors pursuant to equity incentive
plans or other similar compensatory agreements or
arrangement.
(a) Waivers
and Amendments. Any provision of this Agreement may be
amended, waived or modified only upon the written consent of the
Company and Holders the written consent or approval of at least a
majority of the then outstanding Series A Preferred Stock
(“Requisite
Percentage”).
(b) Governing
Law. This Agreement and all actions arising out of or in
connection with this Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without
regard to the conflicts of law provisions of the State of Delaware
or of any other state.
(c) Survival.
The representations, warranties, covenants and agreements made
herein shall survive the execution and delivery of this
Agreement.
(d) Successors
and Assigns. Subject to the restrictions on transfer
described in Sections 9(e) below, the rights and obligations
of the Company and the Holders shall be binding upon and benefit
the successors, assigns, heirs, administrators and transferees of
the parties.
(e) Assignment
by the Company. The rights, interests or obligations
hereunder may not be assigned, by operation of law or otherwise, in
whole or in part, by the Company without the prior written consent
of Holders holding a Requisite Percentage.
(f) Entire
Agreement. This Agreement together with the other
Transaction Agreements constitute and contain the entire agreement
among the Company and Holders and supersede any and all prior
agreements, negotiations, correspondence, understandings and
communications among the parties, whether written or oral,
respecting the subject matter hereof.
(g) Notices.
Except as set forth in Section 1(c), all notices, requests,
demands, consents, instructions or other communications required or
permitted hereunder shall in writing and faxed, mailed or delivered
to each party as follows: (i) if to a Holder, at such
Holder’s address or facsimile number set forth in the
Schedule of Holders attached as Schedule I, or at such other
address as such Holder shall have furnished the Company in writing,
or (ii) if to the Company, at 5400 Trinity Road, Suite 208,
Raleigh, North Carolina 27607
Attention: Legal Department, email address
legal@mobilesmith.com, with a copy to Quick Law Group PC, 1035
Pearl Street, Suite 403, Boulder, CO 80302, Attn: Jeffrey M. Quick,
Esq., fax: (303) 845-7315, email: jquick@quicklawgroup.com or at
such other address or facsimile number as the Company shall have
furnished to the Holders in writing. All such notices and
communications will be deemed effectively given the earlier of
(i) when received, (ii) when delivered personally,
(iii) one Trading Day after being delivered by facsimile (with
receipt of appropriate confirmation), (iv) one Trading Day
after being deposited with an overnight courier service of
recognized standing or (v) two days after being deposited in
the U.S. mail, first class with postage prepaid.
(h) Expenses.
Each of the parties hereto shall bear its own expenses in
connection with the preparation, execution and delivery of this
Agreement and the other Transaction Agreements.
(i) Separability
of Agreements; Severability of this Agreement. The
Company’s agreement with each of the Holders is a separate
agreement and the sale of the Series A Preferred Stock to each of
the Holders is a separate sale. Unless otherwise expressly provided
herein, the rights of each Holder hereunder are several rights, not
rights jointly held with any of the other Holders. Any invalidity,
illegality or limitation on the enforceability of the Agreement or
any part thereof, by any Holder whether arising by reason of the
law of the respective Holder’s domicile or otherwise, shall
in no way affect or impair the validity, legality or enforceability
of this Agreement with respect to other Holders. If any provision
of this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or
impaired thereby.
(j) Counterparts.
This Agreement may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together will
constitute one and the same agreement. Facsimile copies of signed
signature pages will be deemed binding originals.
(Signature Pages Follow)
IN
WITNESS WHEREOF, this Series A Exchange Agreement is executed as of
the date first set forth above.
MOBILESMITH,
INC.
By:
__/s/ Jerry
Lepore________________
Name:
Jerry Lepore
Title:
Chief Executive
Officer
[signature page of Holder to follow]
[HOLDER
SIGNATURE PAGE TO MOBILESMITH, INC.
SERIES
A EXCHANGE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Series A Exchange
Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Name of Holder:
Address of Holder:
Signature
of Authorized Signatory of Holder: _____________________________________________
Name of
Authorized Signatory: _________________________________________________________
Title
of Authorized Signatory: __________________________________________________________
Address
for Delivery of Securities to Holder (if not same as address for
notice): _________________
_________________________________________________________________________________
__________________________________________________________________________________
Number
of Series A Preferred Stock Shares:
EXHIBIT A
SCHEDULE OF NOTE PURCHASE AGREEMENTS AND NOTES
SCHEDULE B
CERTIFICATE OF DESIGNATION