STOCK PURCHASE AGREEMENT between CALEB BORGSTROM and PHUNWARE, INC. dated as of September 10, 2021 DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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STOCK PURCHASE AGREEMENT between XXXXX XXXXXXXXX and PHUNWARE, INC. dated as of September 10, 2021 DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (this “Agreement”), dated as of September 10, 2021, is entered into between Xxxxx Xxxxxxxxx, an individual residing in the State of Illinois (“Seller”) and Phunware, Inc., a Delaware corporation (“Buyer”). WHEREAS, Seller owns all of the issued and outstanding shares of common stock (the “Shares”) of Lyte Technology Inc., an Illinois corporation (the “Company”); WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Shares, subject to the terms and conditions set forth herein; and WHEREAS, a portion of the purchase consideration payable by Buyer to Seller shall be paid after Closing (as defined herein), which shall be subject to adjustment and/or contingent upon certain events and conditions, all as set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS The following terms have the meanings specified or referred to in this ARTICLE I: “Acquisition Proposal” has the meaning set forth in Section 5.03(a). “Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity. “Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “Agreement” has the meaning set forth in the preamble. “Annual Financial Statements” has the meaning set forth in Section Section 3.06. “Balance Sheet” has the meaning set forth in Section Section 3.06. “Balance Sheet Date” has the meaning set forth in Section 3.06. “Benefit Plan” has the meaning set forth in Section 3.20(a). “Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Austin, Texas are authorized or required by Law to be closed for business. “Buyer” has the meaning set forth in the preamble. “Buyer Balance Sheet” has the meaning set forth in Section 4.13. DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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2 “Buyer Indemnitees” has the meaning set forth in Section 8.01. “Buyer SEC Documents” has the meaning set forth in Section 4.11. “Buyer Securities” has the meaning set forth in Section 4.10(b). “Buyer’s Accountants” means Xxxxxx LLP. “Calculation Period” has the meaning set forth in Section 2.05(a). “Cap” has the meaning set forth in Section 8.04(a). “Cause” means, with respect to Seller, one or more of the following: (i) the indictment for or plea of guilty or nolo contendere to a felony or of any other crime involving moral turpitude, (ii) the commission of any act or omission involving dishonesty or fraud with respect to the Buyer or any of its Affiliates or any of their customers or suppliers, (iii) reporting to work under the influence of alcohol, or being convicted of the use of illegal drugs (whether or not at the workplace), (iv) conduct causing the Buyer or any of its Affiliates substantial public disgrace, disrepute or economic harm, (v) repeated failure to perform material duties relating to Seller's position reasonably directed by the Board or Buyer management, (vi) any act or omission aiding or abetting a competitor or supplier of the Buyer or any of its Affiliates to the disadvantage or detriment of the Buyer or any of its Affiliates, (vii) breach of fiduciary duty, gross negligence or willful misconduct with respect to the Buyer or any of its Affiliates, (viii) the requirement of any regulatory body, governmental or otherwise, that Seller be removed from his position with the Buyer or (ix) any other material breach of this Agreement or the Employment Agreement. Termination for any of the reasons described above shall be effective upon receipt of notice from the Buyer. Any such determination by the Buyer shall be made in good faith and supported by demonstrable evidence that such an event occurred. In no event shall Buyer act in bad faith to create any situation, circumstance or description of events that is designed to invoke a termination of Seller for “Cause”. With respect to each item set forth above in the definition of “Cause” Buyer must reasonably prove that Seller acted willfully and that such action or event was not exaggerated or facilitated by Buyer to avoid making any payments of the Purchase Consideration to Seller, including but not limited to the Quarterly Cash Payments, Quarterly Phunware Share Issuance, Earn-out Cash Payment and the Earn-out Phunware Share Issuance. Notwithstanding anything to the contrary in this Agreement or the Employment Agreement, in no event will the mere existence pre-disclosed personal relationship as disclosed on Schedule 5.11 hereof constitute grounds for a for “Cause” termination under Section 5.11, provided no other events connected to the disclosed personal relationship would otherwise constitute Cause. “Closing” has the meaning set forth in Section Section 2.06. “Closing Date” has the meaning set forth in Section 2.06. “Closing Cash Payment” has the meaning set forth in Section Section 2.02. “Closing Indebtedness Certificate” means a certificate executed by the Chief Executive Officer of the Company certifying on behalf of the Company an itemized list of all outstanding Indebtedness as of the close of business on the Closing Date and the Person to whom such outstanding Indebtedness is owed and an aggregate total of such outstanding Indebtedness. “Closing Transaction Expenses Certificate” means a certificate executed by the Chief Executive Officer of the Company, certifying the amount of Transaction Expenses remaining unpaid as of the close DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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3 of business on the Closing Date (including an itemized list of each such unpaid Transaction Expense with a description of the nature of such expense and the person to whom such expense is owed). “Closing Working Capital” means: (a) the Current Assets of the Company, less (b) the Current Liabilities of the Company, determined as of the close of business on the Closing Date. “Closing Working Capital Statement” has the meaning set forth in Section Section 2.04(b)(i). “Code” means the Internal Revenue Code of 1986, as amended. “Common Stock” has the meaning set forth in Section Section 3.03(a). “Company” has the meaning set forth in the recitals. “Company Intellectual Property” means all Intellectual Property that is owned by the Company. “Company IP Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to xxx, waivers, releases, permissions and other Contracts, whether written or oral, relating to Intellectual Property to which the Company is a party, beneficiary or otherwise bound. “Company IP Registrations” means all Company Intellectual Property that is subject to any issuance, registration or application by or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued patents, registered trademarks, domain names and copyrights, and pending applications for any of the foregoing. “Company IT Systems” means all software, computer hardware, servers, networks, platforms, peripherals, and similar or related items of automated, computerized, or other information technology (IT) networks and systems (including telecommunications networks and systems for voice, data and video) owned, leased, licensed, or used (including through cloud-based or other third-party service providers) by the Company. “Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral. “Current Assets” means cash and cash equivalents, accounts receivable, inventory and prepaid expenses, but excluding (a) the portion of any prepaid expense of which Buyer will not receive the benefit following the Closing, (b) deferred Tax assets, and (c) receivables from any of the Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, determined in accordance with GAAP on an accrual basis and applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Annual Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end. “Current Liabilities” means accounts payable, accrued Taxes and accrued expenses, but excluding payables to any of the Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, deferred Tax liabilities, Transaction Expenses and the current portion of any Indebtedness of the Company, determined in accordance with GAAP on an accrual basis using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Annual DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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4 Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end. “Direct Claim” has the meaning set forth in Section 8.05(c). “Disclosure Schedules” means the Disclosure Schedules delivered by Seller and Buyer concurrently with the execution and delivery of this Agreement. “Disputed Amounts” has the meaning set forth in Section Section 2.04(c)(iii). “Earn-out Calculation” has the meaning set forth in Section 2.05(b)(i). “Earn-out Calculation Delivery Date” has the meaning set forth in Section 2.05(b)(i). “Earn-out Calculation Objection Notice” has the meaning set forth in Section 2.05(b)(ii). “Earn-out Calculation Statement” has the meaning set forth in Section 2.05(b)(i). “Earn-out Cash Payment” has the meaning set forth in Section Section 2.02. “Earn-out Consideration” has the meaning set forth in Section 2.05(a). “Earn-out Phunware Share Issuance” has the meaning set forth in Section Section 2.02. “Earn-out Review Period” has the meaning set forth in Section 2.05(b)(ii). “Employment Agreement” means that certain At-Will Employment and Employee Proprietary Information Agreement between the Buyer and Seller, in substantially attached as Exhibit A. Seller further agrees that any exhibits to the Employment Agreement shall be provided to the Buyer within seven (7) calendar days of the date hereof. “Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership. “Environmental Law” means all Laws, now or hereafter in effect, in each case as amended or supplemented from time to time, relating to the regulation and protection of human health, safety, the environment, and natural resources, including any federal, state, or local transfer of ownership notification or approval statutes. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. “Estimated Closing Working Capital” has the meaning set forth in Section Section 2.04(a)(ii). “Estimated Closing Working Capital Statement” has the meaning set forth in Section Section 2.04(a)(ii). “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Financial Statements” has the meaning set forth in Section 3.06. “Fiscal Quarter” means each three (3) month period beginning on the first day of each March, June, September and December. DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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5 “GAAP” means United States generally accepted accounting principles in effect from time to time. “Government Contracts” has the meaning set forth in Section 3.09(a)(viii). “Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction. “Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority. “Hazardous Substances” means: (A) “hazardous materials,” “hazardous wastes,” “hazardous substances,” “industrial wastes,” or “toxic pollutants,” as such terms are defined under any Environmental Laws; (B) any other hazardous or radioactive substance, contaminant, or waste; and (C) any other substance with respect to which any Environmental Law or Governmental Authority requires environmental investigation, regulation, monitoring, or remediation. “Indebtedness” means, without duplication and with respect to the Company, all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services (other than Current Liabilities taken into account in the calculation of Closing Working Capital), (c) long or short- term obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations under any interest rate, currency swap or other hedging agreement or arrangement; (e) capital lease obligations; (f) reimbursement obligations under any letter of credit, banker’s acceptance or similar credit transactions; (g) guarantees made by the Company on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f); and (h) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (g). “Indemnified Party” has the meaning set forth in Section 8.05. “Indemnifying Party” has the meaning set forth in Section 8.05. “Independent Accountant” means an independent certified public accountant as mutually agreed upon by Seller’s Accountants and Buyer’s Accountants. “Insurance Policies” has the meaning set forth in Section Section 3.16. “Intellectual Property” means any and all rights in, arising out of, or associated with any of the following in any jurisdiction throughout the world: (a) issued patents and patent applications (“Patents”); (b) trademarks, service marks, brands, certification marks, logos, trade dress, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing (“Trademarks”); (c) copyrights and works of authorship, whether or not copyrightable, and all registrations, applications for registration, and renewals of any of the foregoing (“Copyrights”); (d) internet domain names and social media account or user names (including “handles”), whether or not Trademarks, all associated web addresses, URLs, websites and web pages, social media sites and pages, and all content and data thereon or relating thereto, whether or not Copyrights; (e) trade secrets, know- how, inventions (whether or not patentable), discoveries, improvements, technology, business and DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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6 technical information, databases, data compilations and collections, tools, methods, processes, techniques, and other confidential and proprietary information and all rights therein (“Trade Secrets”); (f) computer programs, operating systems, applications, firmware, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof; and (g) all other intellectual or industrial property and proprietary rights. “Interim Balance Sheet” has the meaning set forth in Section Section 3.06. “Interim Balance Sheet Date” has the meaning set forth in Section Section 3.06. “Interim Financial Statements” has the meaning set forth in Section Section 3.06. “Issue Price” means the volume-weighted average price of the Phunware Shares on each trading day during the thirty (30) consecutive days immediately preceding the price calculation date. “Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge qualification, means the actual or constructive knowledge of any director or officer of Seller or the Company, after due reasonable inquiry. “Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority. “Liabilities” has the meaning set forth in Section Section 3.07. “Licensed Intellectual Property” means all Intellectual Property in which the Company holds any rights or interests granted by other Persons, including Seller or any of its Affiliates. “Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include punitive damages, except to the extent actually awarded to a Governmental Authority or other third party. “Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Company, or (b) the ability of Seller to consummate the transactions contemplated hereby on a timely basis. “Material Contracts” has the meaning set forth in Section Section 3.09(a). “Material Customers” has the meaning set forth in Section Section 3.15(a). “Material Suppliers” has the meaning set forth in Section 3.15(b). “Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities. “Permitted Encumbrances” has the meaning set forth in Section Section 3.10(a). “Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity. DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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7 “Phunware Preferred Stock” has the meaning set forth in Section 4.10. “Phunware Shares” means shares of common stock of Buyer, par value $0.0001 per share. “Platform Agreements” has the meaning set forth in Section Section 3.12(h). “Post-Closing Adjustment” has the meaning set forth in Section Section 2.04(b)(ii). “Post-Closing Tax Period” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date. “Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date. “Purchase Consideration” has the meaning set forth in Section Section 2.02. “Quarterly Cash Payment” has the meaning set forth in Section Section 2.02. “Quarterly Phunware Share Issuance” has the meaning set forth in Section Section 2.02. “Real Property” means the real property owned, leased or subleased by the Company, together with all buildings, structures and facilities located thereon. “Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person. “Resolution Period” has the meaning set forth in Section Section 2.04(c)(ii). “Restricted Business” means any business that would be directly or indirectly competitive with the Company as of the Closing Date, including specifically, designing, assembling and selling personal computers. “Restricted Period” has the meaning set forth in Section 5.06(a). “Review Period” has the meaning set forth in Section Section 2.04(c)(i). “SEC” means the Securities and Exchange Commission. “Securities Act” means the Securities Act of 1933, as amended. “Seller” has the meaning set forth in the preamble. “Seller Account” has the meaning set forth in Section 2.03(a)(i)(A). “Seller Indemnitees” has the meaning set forth in Section 8.03. “Seller’s Accountants” means Xxxx Xxxx. “Shares” has the meaning set forth in the recitals. “Statement of Objections” has the meaning set forth in Section Section 2.04(c)(ii). “Straddle Period” has the meaning set forth in Section 6.01(a). DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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13 (ii) If gross revenue of the Company is less than $12,000,000 but greater than $9,000,000, the Earn-out Consideration value shall equal the product of $2,500,000 and the percentage that the gross revenue represents of $12,000,000. By way of example, if gross revenue is $10,000,000, which is 83.3% of $12,000,000, the Earn-out Consideration value would equal $2,082,500 ($2,500,000*0.833); (iii) If gross revenue of the Company is less than $9,000,000 but greater than $6,000,000, the Earn-out Consideration value shall equal $1,250,000; and (iv) If gross revenue of the Company is less than $6,000,000, no Earn-out Consideration shall be payable. Earn-out Consideration shall be payable as provided in Section 2.03(d) one-half in cash consideration and one-half in Phunware Shares and shall be subject to the limitations and adjustments provided for in Section 2.02(b). (b) Procedures Applicable to Determination of the Earn-out Consideration. (i) On or before the date which is 30 days after the last day of the Calculation Period (the “Earn-out Calculation Delivery Date”), Buyer shall prepare and deliver to Seller a written statement (the “Earn-out Calculation Statement”) setting forth in reasonable detail its determination of gross revenue for the Calculation Period and its calculation of the resulting Earn-out Consideration, specifying amount of the Earn-out Cash Payment and make an Earn-out Phunware Share Issuance, and any applicable adjustments (in each case, an “Earn-out Calculation”). Any such Earn-out Calculation shall be prepared in a manner consistent with the Company’s preparation of its financial statements prior to the Closing. (ii) Seller shall have 15 days after receipt of the Earn-out Calculation Statement for each Calculation Period (in each case, the “Earn-out Review Period”) to review the Earn-out Calculation Statement and the Earn-out Calculation set forth therein. During the Earn-out Review Period, Seller and its accountants shall have the right to inspect the Company’s books and records during normal business hours at the Company’s offices, upon reasonable prior notice and solely for purposes reasonably related to the determinations of gross revenues and the resulting Earn-out Consideration. Prior to the expiration of the Earn-out Review Period, Seller may object to the Earn-out Calculation set forth in the Earn-out Calculation Statement by delivering a written notice of objection (an “Earn-out Calculation Objection Notice”) to Buyer. Any Earn-out Calculation Objection Notice shall specify the items in the applicable Earn-out Calculation disputed by Seller and shall describe in reasonable detail the basis for such objection, as well as the amount in dispute. If Seller fails to deliver an Earn-out Calculation Objection Notice to Buyer prior to the expiration of the Earn-out Review Period, then the Earn-out Calculation set forth in the Earn-out Calculation Statement shall be final and binding on the parties hereto. If Seller timely delivers an Earn-out Calculation Objection Notice, Buyer and Seller shall negotiate in good faith to resolve the disputed items and agree upon the resulting amount of the gross revenue and the Earn-out Consideration. If Buyer and Seller are unable to reach agreement within 15 days after such an Earn-out Calculation Objection Notice has been given, all unresolved disputed items shall be promptly referred to the Independent Accountant. The Independent DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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18 (i) incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice; (j) transfer, assignment, sale or other disposition of any of the assets shown or reflected in the Balance Sheet or cancellation of any debts or entitlements; (k) transfer or assignment of or grant of any license or sublicense under or with respect to any Company Intellectual Property or Company IP Agreements except non-exclusive licenses or sublicenses granted in the ordinary course of business consistent with past practice; (l) abandonment or lapse of or failure to maintain in full force and effect any Company IP Registration, or failure to take or maintain reasonable measures to protect the confidentiality or value of any Trade Secrets included in the Company Intellectual Property; (m) material damage, destruction or loss (whether or not covered by insurance) to its property; (n) any capital investment in, or any loan to, any other Person; (o) acceleration, termination, material modification to or cancellation of any material Contract (including, but not limited to, any Material Contract) to which the Company is a party or by which it is bound; (p) any material capital expenditures; (q) imposition of any Encumbrance upon any of the Company properties, capital stock or assets, tangible or intangible; (r) (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees for which the aggregate costs and expenses exceed $10,000, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant; (s) hiring or promoting any person as or to (as the case may be) an officer or hiring or promoting any employee below officer/ except to fill a vacancy in the ordinary course of business; (t) adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant, or (ii) Benefit Plan; (u) any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its stockholders or current or former directors, officers and employees; DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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22 (c) The Company is the sole and exclusive legal and beneficial, and with respect to the Company IP Registrations, record, owner of all right, title, and interest in and to the Company Intellectual Property, and has the valid and enforceable right to use all other Intellectual Property used or held for use in or necessary for the conduct of the Company’s business as currently conducted and as proposed to be conducted, in each case, free and clear of Encumbrances other than Permitted Encumbrances. The Company has entered into binding, valid and enforceable, written Contracts with each current and former employee and independent contractor who is or was involved in or has contributed to the invention, creation, or development of any Intellectual Property during the course of employment or engagement with the Company whereby such employee or independent contractor (i) acknowledges the Company’s exclusive ownership of all Intellectual Property invented, created, or developed by such employee or independent contractor within the scope of his or her employment or engagement with the Company; (ii) grants to the Company a present, irrevocable assignment of any ownership interest such employee or independent contractor may have in or to such Intellectual Property, to the extent such Intellectual Property does not constitute a “work made for hire” under applicable Law; and (iii) irrevocably waives any right or interest, including any moral rights, regarding any such Intellectual Property, to the extent permitted by applicable Law. Seller has provided Buyer with true and complete copies of all such Contracts. All assignments and other instruments necessary to establish, record, and perfect the Company’s ownership interest in the Company IP Registrations have been validly executed, delivered, and filed with the relevant Governmental Authorities and authorized registrars. (d) Neither the execution, delivery or performance of this Agreement, nor the consummation of the transactions contemplated hereunder, will result in the loss or impairment of, or require the consent of any other Person in respect of, the Company’s right to own or use any Company Intellectual Property or Licensed Intellectual Property. (e) To Seller’s Knowledge, all of the Company Intellectual Property and Licensed Intellectual Property are valid and enforceable, and all Company IP Registrations are subsisting and in full force and effect. The Company has taken all necessary steps to maintain and enforce the Company Intellectual Property and Licensed Intellectual Property and to preserve the confidentiality of all Trade Secrets included in the Company Intellectual Property, including by requiring all Persons having access thereto to execute binding, written non-disclosure agreements. All required filings and fees related to the Company IP Registrations have been timely submitted with and paid to the relevant Governmental Authorities and authorized registrars. Seller has provided Buyer with true and complete copies of all file histories, documents, certificates, office actions, correspondence, assignments, and other instruments relating to the Company IP Registrations. (f) The conduct of the Company’s business as currently and formerly conducted and as proposed to be conducted, including the use of the Company Intellectual Property and Licensed Intellectual Property in connection therewith, and the products, processes and services of the Company have not infringed, misappropriated or otherwise violated, and will not infringe, misappropriate or otherwise violate, the Intellectual Property or other rights of any Person. To Seller’s Knowledge, no Person has infringed, misappropriated or otherwise violated any Company Intellectual Property or Licensed Intellectual Property. DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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32 misleading. To the knowledge of Buyer, none of the Buyer SEC Documents is the subject of ongoing SEC review or outstanding SEC investigation and there are no outstanding or unresolved comments received from the SEC with respect to any of the Buyer SEC Documents. Section 4.10 Financial Statements. Each of the consolidated financial statements (including, in each case, any notes and schedules thereto) contained in or incorporated by reference into the Buyer SEC Documents: (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto as of their respective dates; (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and, in the case of unaudited interim financial statements, as may be permitted by the SEC for Quarterly Reports on Form 10-Q); and (iii) fairly presented in all material respects the consolidated financial position and the results of operations, changes in stockholders’ equity, and cash flows of Buyer and its consolidated subsidiaries as of the respective dates of and for the periods referred to in such financial statements, subject, in the case of unaudited interim financial statements, to normal and year-end audit adjustments as permitted by the applicable rules and regulations of the SEC (but only if the effect of such adjustments would not, individually or in the aggregate, be material). Section 4.11 Undisclosed Liabilities. The audited balance sheet of Buyer dated as of December 31, 2020 contained in the Buyer SEC Documents filed prior to the date hereof is hereinafter referred to as the “Buyer Balance Sheet.” Neither Buyer nor any of its subsidiaries has any Liabilities other than Liabilities that: (i) are reflected or reserved against in the Buyer Balance Sheet (including in the notes thereto); (ii) were incurred since the date of the Buyer Balance Sheet in the ordinary course of business consistent with past practice; (iii) are incurred in connection with the transactions contemplated by this Agreement; or (iv) would not reasonably be expected to be, have or become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Buyer, or (b) the ability of Buyer to consummate the transactions contemplated hereby on a timely basis. Section 4.12 Exchange Compliance. Buyer is in compliance in all material respects with all of the applicable listing and corporate governance rules of the NASDAQ Capital Market. Buyer has obtained all approvals from the NASDAQ Capital Market necessary in connection with the issuance of the Phunware Shares to be issued to Seller pursuant to the terms of this Agreement. Section 4.13 Rule 144(i) Status. Buyer has filed current “Form 10 information” (as such term is defined in Rule 144(i)(3)) with the SEC reflecting its status as an entity that is no longer an issuer described in Rule 144(i)(1)(i) at least one year prior to the date of this Agreement. ARTICLE V COVENANTS Section 5.01 Conduct of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), Seller shall, and shall cause the Company to, (x) conduct the business of the Company in the ordinary course of business consistent with past practice; and (y) use reasonable best efforts to maintain and preserve intact the current organization, business and franchise of the Company and to preserve the rights, franchises, goodwill and relationships DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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45 (b) Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 8.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.05(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed). (c) Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Company’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement. (d) Tax Claims. Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event or proceeding in respect of Taxes of the Company (including, but not limited to, any such claim in respect of a breach of the representations and warranties in Section Section 3.22 hereof or any breach or violation of or failure to fully perform any covenant, agreement, undertaking or obligation in ARTICLE VI) shall be governed exclusively by ARTICLE VI hereof. DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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48 ARTICLE X MISCELLANEOUS Section 10.01 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred; provided, however, Seller shall pay all amounts payable to XxxxxxxXxxxxxx.xxx. Section 10.02 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02): If to Seller: Xxxxx Xxxxxxxxx 0000 Xx. Xxxx Xxx. Xxxxxx, XX 00000 E-Mail: xxxxx@xxxxxxxxxxxxxx.xxx with a copy to: AEGIS LAW 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000 Xxxxx, XX 00000 E-mail: xxxxx@xxxxxxxx.xxx Attention: Xxxxxxxx Xxxxxxxx Walk If to Buyer: Phunware, Inc. 0000 Xxxxx Xxxxx Xxxxxxxxx Xxxxx 000-X Xxxxxx, Xxxxx 00000 E-mail: xxxxxxxxxx@xxxxxxxx.xxx Attention: Xxxx Xxxxxxxxx, Chief Executive Officer DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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50 Section 10.07 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that prior to the Closing Date, Buyer may, without the prior written consent of Seller, assign all or any portion of its rights under this Agreement to one or more of its direct or indirect wholly-owned subsidiaries. No assignment shall relieve the assigning party of any of its obligations hereunder. Section 10.08 No Third-party Beneficiaries. Except as provided in Section 6.04 and ARTICLE VIII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Section 10.09 Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas without giving effect to any choice or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction). (b) ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE EMPLOYMENT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF TEXAS IN EACH CASE LOCATED IN THE CITY OF AUSTIN AND COUNTY OF XXXXXX, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. Buyer: Phunware, Inc., a Delaware corporation By: _______________________________________ Name: Xxxxxx Xxxxx Title: Executive Vice President Corporate Development Seller: _______________________________________ Xxxxx Xxxxxxxxx DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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Schedule 4.10 Registration Statements Form S-3 (Amendment No. 1) filed on February 10, 2021 (the “February 2021 Registration Statement”) registering shares of common stock, par value $0.0001 per share (the “Common Stock”), shares of preferred stock, par value $0.0001 per share ("Preferred Stock"), warrants to purchase such shares of Common Stock (the “Warrants”) or units to purchase a combination thereof (the "Units") of Phunware, Inc. (the “Company”). The aggregate initial offering price of all securities sold under the prospectus will not exceed $100,000,000. The Company has filed a Prospectus Supplement as part of the February 2021 Registration Statement relating to the sale of shares of our Common Stock having an aggregate offering price of up to $25,000,000 under the terms of an At Market Issuance Sales Agreement with X. Xxxxx Securities, Inc. The Company has issued 2,403,291 shares of Common Stock under the February 2021 Registration Statement and may issue shares of Common Stock, Preferred Stock, Warrants or Units with an aggregate offering price of up to $22,078,393 under the February 2021 Registration Statement. Form S-3 filed on October 9, 2020 (the “October 2020 Registration Statement”) registering up to 20,474,769 shares of our Common Stock that may be offered for resale or otherwise disposed of by a selling stockholder. The shares of Common Stock offered for resale consist of shares underlying one Series A Senior Convertible Note (the "Series A Note") and shares issuable upon the exercise of a Warrant to Purchase Common Stock (the "Warrant") issued by us in a private placement in July 2020 (the "Private Placement"). DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252
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Exhibit A Form of Employment Agreement DocuSign Envelope ID: A0C657AC-53B2-41A5-B7BF-DA3532022252