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NOTE PURCHASE AGREEMENT THIS NOTE PURCHASE AGREEMENT (this “Agreement”), dated
as of May 2, 2016 is made by and among DLH HOLDINGS CORP. (the “Company”), a New
Jersey corporation and each party executing the Purchaser Signature Page
attached hereto (individually, a “Purchaser” and, collectively, the
“Purchasers”). BACKGROUND WHEREAS, upon the terms and subject to the conditions
set forth herein, the Company wishes to sell and issue to each Purchaser, and
each Purchaser desires to purchase, severally and not jointly, from the Company
securities of the Company as more fully described in this Agreement. NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchasers hereby agree as follows:
ARTICLE I CERTAIN DEFINITIONS 1.1 Certain Definitions. In addition to the other
terms specifically defined elsewhere in this Agreement, the following
capitalized terms shall have the following respective meanings when used herein:
“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control”, when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing. “Board of Directors” means the board of directors of the Company or
any authorized committee of the board of directors. “Business Day” means each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which the
banking institutions in the City of New York, New York are authorized or
obligated by law or executive order to close or be closed. “Capital Stock” of
any Person means any and all shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or interest in (however
designated) equity of such Person, but excluding any debt securities convertible
into such equity. “Closing” means the closing of the purchase and sale of
Securities pursuant to this Agreement. “Commission” means the United States
Securities and Exchange Commission. “Event of Default” has the meaning given
such term in the Subordinated Notes.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended and the
rules and regulations promulgated thereunder. “GAAP” means generally accepted
accounting principles in the United States as in effect from time to time.
“Indebtedness” means, without duplication, with respect to any Person (the
“subject Person”), all liabilities, obligations and indebtedness of the subject
Person to any other Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise,
consisting of indebtedness for borrowed money or the deferred purchase price of
property, excluding purchases of property, product, merchandise and services in
the ordinary course of business, but including (a) all obligations and
liabilities of any Person secured by any lien on the subject Person’s property,
even though the subject Person shall not have assumed or become liable for the
payment thereof (except unperfected liens incurred in the ordinary course of
business and not in connection with the borrowing of money); provided, however,
that all such obligations and liabilities which are limited in recourse to such
property shall be included in Indebtedness only to the extent of the book value
of such property as would be shown on a balance sheet of the subject Person
prepared in accordance with GAAP; (b) all capital lease obligations and other
obligations or liabilities created or arising under any conditional sale or
other title retention agreement with respect to property used or acquired by the
subject Person, even if the rights and remedies of the lessor, seller or lender
thereunder are limited to repossession of such property; provided, however, that
all such obligations and liabilities which are limited in recourse to such
property shall be included in Indebtedness only to the extent of the book value
of such property as would be shown on a balance sheet of the subject Person
prepared in accordance with GAAP; (c) all obligations and liabilities under
guarantees; (d) the present value of lease payments due under synthetic leases;
(e) all obligations and liabilities under any asset securitization or
sale/leaseback transaction; and (f) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by banks and other
financial institutions for the account of such Person; provided, further,
however, that in no event shall the term Indebtedness include the capital stock
surplus, retained earnings, minority interests in the common stock of
Subsidiaries, lease obligations (other than pursuant to (b) or (d) above),
reserves for deferred income taxes and investment credits, other deferred
credits or reserves. “Majority in Interest” shall mean the holders of fifty-one
percent (51%) or more of the outstanding principal amount of all then
outstanding Subordinated Notes. “New Securities” means, collectively, equity
securities of the Company, whether or not currently authorized, as well as
rights, options, or warrants to purchase such equity securities, or securities
of any type whatsoever that are, or may become, convertible or exchangeable into
or exercisable for such equity securities, other than rights issued in
connection with the Rights Offering. “Person” shall mean and include an
individual, a partnership, a corporation (including a business trust), a joint
stock company, a limited liability company, an unincorporated association, a
joint venture or other entity or a governmental authority. “Required Approvals”
means (i) filings expressly required pursuant to this Agreement, (ii)
application(s) to the Company’s principal Trading Market for the listing of the
shares of Common Stock which may be issued pursuant to the terms of this
Agreement for trading thereon in the time and manner required thereby; (iii)
such filings as are required to be made under applicable federal and state
securities laws; (iv) approvals or consents that have been made or obtained
prior to or contemporaneously with the date of this Agreement; (v) filings
pursuant to the Exchange Act; and (vi) the approval of the lender under

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the Senior Credit Facility, which has been made or obtained prior to or
contemporaneously with the execution of this Agreement. “Securities” means the
Subordinated Notes, the Warrants and the Warrant Shares. “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder. “Senior Credit Facility” means the secured loan
arrangements comprised of (i) a $25,000,000 senior secured term loan and (ii) a
$10,000,000 revolving credit facility entered into between the Company and the
Senior Lender, as of May 2, , 2016, and as such arrangements may be amended or
replaced from time to time. “Senior Lender” means initially, Fifth Third Bank
(and its Affiliates), or such other lender or syndicate of lenders, or their
assignees, as may subsequently provide the senior secured loans to the Company
pursuant to the Senior Credit Facility. “Significant Subsidiary” has the meaning
assigned to it under Rule 405 of the Securities Act. “Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Subordinated
Notes and Warrants purchased hereunder as specified below such Purchaser’s name
on the signature page of this Agreement and next to the heading “Subscription
Amount,” payable in United States dollars and in immediately available funds.
“Subordinated Notes” means the 4% Subordinated Notes due, subject to the terms
therein, sixty six months from their date of issuance, issued by the Company to
the Purchasers hereunder, in the form of Exhibit A attached hereto. “Subsidiary”
means, in respect of any Person, any corporation, association, partnership or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers, general partners or trustees thereof is at the time owned
or controlled, directly or indirectly, by (i) such Person; (ii) such Person and
one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of
such Person. “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 AMEX, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin
Board. “Transaction Agreements” means this Agreement, the Subordinated Notes,
the Warrants and any other agreement or instrument executed by a party to this
Agreement or in connection with the transactions contemplated hereunder. “VWAP”
means the dollar volume-weighted average price for the Company’s Common Stock on
the Nasdaq Capital Market during the period beginning at 9:30:01 a.m., New York
time (or such other time as the Nasdaq Capital Market publicly announces is the
official open of trading), and ending at

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4:00:00 p.m., New York time (or such other time as the Nasdaq Capital Market
publicly announces is the official close of trading), as reported by Bloomberg,
L.P. through its “Volume at Price” function or, if the foregoing does not apply,
the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time (or such other time
as Nasdaq publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York City Time (or such other time as Nasdaq publicly
announces is the official close of trading), as reported by Bloomberg, L.P., or,
if no dollar volume-weighted average price is reported for such security by
Bloomberg, L.P. for such hours, the average of the highest closing bid price and
the lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the VWAP cannot be calculated for the Company’s
Common Stock on a particular date on any of the foregoing bases, the VWAP of the
Common Stock shall be the fair market value of the Company’s Common Stock on
such date as determined by the Company’s Board of Directors in good faith.
“Warrants” means, collectively, the Common Stock purchase warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be in the form of Exhibit B attached hereto. “Warrant Shares”
means the shares of Common Stock issuable upon exercise of the Warrants. ARTICLE
II PURCHASE AND SALE OF NOTES AND WARRANTS 2.1 Purchase and Sale of Securities;
Closing. (a) The Company is authorized to offer and sell to the Purchasers (i)
an aggregate principal amount of $2,500,000 of Subordinated Notes, having the
terms set forth in the form of Subordinated Note attached hereto as Exhibit A,
and (ii) Warrants to purchase a maximum of 53,619 shares of Common Stock which
warrants shall be exercisable at a per share exercise price equal to the VWAP of
the Company’s Common Stock for the 20 consecutive Trading Days immediately
preceding the Closing, and otherwise be substantially in the form attached
hereto as Exhibit B. On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchasers, severally and not jointly, agree to purchase, an aggregate
of $2,500,000 in principal amount of the Subordinated Notes and the aggregate
number of Warrants stated in the first sentence of this Section 2.1(a), which
Subordinated Notes and Warrants shall be allocated among the Purchasers as set
forth on the Purchasers’ respective signature pages hereto. If there shall be
more than one Purchaser, each Subordinated Note and Warrant to be issued at the
Closing shall be identical in all respects except for (i) the name of the Person
to whom such Subordinated Note or Warrant is being issued, and (ii) the
principal amount of each such Subordinated Note or number of shares of Common
Stock issuable upon exercise of each such Warrant. (b) At the Closing, each
Purchaser shall deliver its Subscription Amount by delivering to the Company,
via wire transfer, immediately available funds equal to such Purchaser’s
Subscription Amount as set forth on the signature page hereto executed by such
Purchaser. At the Closing, the Company shall deliver to each Purchaser its
respective Subordinated Note and a Warrant, as determined pursuant to Section
2.2(a), and the Company and each Purchaser shall deliver the other items set
forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the Closing of the
purchase and sale of the Securities pursuant to this Agreement shall occur at
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offices of Company’s counsel or such other location and on such Business Day as
the parties shall mutually agree (the “Closing Date”). (c) Each Purchaser
acknowledges and agrees that the Company reserves the right, in its absolute
discretion, to reject a subscription for Subordinated Notes and Warrants, in
whole, but not in part, at any time prior to the Closing. If a subscription is
rejected in whole, any checks or other forms of payment delivered to the Company
representing the Subscription Amount will be promptly returned to each Purchaser
without interest or deduction. 2.2 Deliveries. (a) On or prior to the Closing
Date (except as otherwise provided below), the Company shall deliver or cause to
be delivered to each Purchaser the following: (i) this Agreement duly executed
by the Company; (ii) a copy via pdf delivery of the executed Subordinated Note
with a principal amount equal to such Purchaser’s Subscription Amount,
registered in the name of such Purchaser, with the original to delivered within
three Trading Days of the Closing (iii) a copy via pdf delivery of the executed
Warrant registered in the name of such Purchaser to purchase such number of
shares of Common Stock as is equal to the quotient obtained by dividing such
Purchaser’s Subscription Amount by the initial exercise price of the Warrant
issued to such Purchaser, with the original to be delivered within three Trading
Days of the Closing; (iv) a certificate executed by the Chief Executive Officer
of the Company in the form reasonably acceptable to the Purchasers; and (v) such
other documents relating to the transactions contemplated by this Agreement as
the Purchasers or their counsel may reasonably request. (b) On or prior to the
Closing Date, each Purchaser shall deliver or cause to be delivered to the
Company, as applicable, the following: (i) this Agreement duly executed by such
Purchaser; (ii) such Purchaser’s Subscription Amount by wire transfer to the
account designated by the Company for receipt of such funds; (iii) a fully
completed and duly executed Accredited Investor Certification, substantially in
the form attached hereto as Schedule A; and (iv) such other documents relating
to the transactions contemplated by this Agreement as the Company or its counsel
may reasonably request. 2.3 Closing Conditions. (a) The obligations of the
Company hereunder in connection with the Closing are subject to the
satisfaction, or the waiver by the Company, at or prior to the Closing, of each
of the following conditions: (i) the accuracy in all material respects on the
Closing Date of the representations and warranties of the Purchasers contained
herein (unless made as of a specific date therein in which case they shall be
accurate as of such date); (ii) all obligations, covenants and agreements of
each Purchaser required to be performed at or prior to the Closing Date shall
have been performed; (iii) the delivery by each Purchaser of the items set forth
in Section 2.2(b) of this Agreement; and (iv) the Company shall have received
all Required Approvals for the applicable Closing. .

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(b) The respective obligations of the Purchasers hereunder in connection with
the Closing are subject to the satisfaction, or the waiver by such Purchaser, on
or prior to such payment, of each of the following conditions: (i) the accuracy
in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein (unless made as
of a specific date therein in which case they shall be accurate as of such
date); (ii) all obligations, covenants and agreements of the Company required to
be performed at or prior to the relevant Closing Date shall have been performed;
and (iii) the delivery by the Company of the items set forth in Section 2.2(a)
of this Agreement; (iv) the Company shall have received all Required Approvals
for the applicable Closing; and (v) the Senior Credit Facility shall have been
executed and delivered by the parties thereto. ARTICLE III REPRESENTATIONS AND
WARRANTIES 3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers as follows: (a) Organization and
Qualification. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey and has the requisite
legal authority to own and use its properties and assets and to carry on its
business as currently conducted. The Company is not in violation of any of the
provisions of its certificate of incorporation, bylaws or other organizational
or charter documents. The Company is duly qualified to do 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 the Company
makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, would not, individually or in the
aggregate, have, or reasonably be expected to result in, a Material Adverse
Effect (defined below). For purposes of this Agreement, “Material Adverse
Effect” means (i) a material adverse effect on the results of operations,
assets, business and/or financial condition of the Company and its Subsidiaries,
taken as a whole on a consolidated basis, or (ii) material and adverse
impairment of the Company’s ability to perform its obligations under this
Agreement, provided that none of the following alone shall be deemed, in and of
itself, to constitute a Material Adverse Effect: (A) a change in the market
price or trading volume of the shares of Common Stock of the Company; or (B)
changes in general economic conditions or changes affecting the industry in
which the Company operates generally (as opposed to Company-specific changes) so
long as such changes do not have a disproportionate effect on the Company and
its Subsidiaries, taken as a whole. (b) Authorization; Enforcement. The Company
has the requisite corporate power and authority to enter into this Agreement and
to carry out its obligations hereunder. The execution and delivery of this
Agreement and the certificates or instruments representing the Subordinated
Notes and the Warrants have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been duly executed and
delivered by the Company and constitutes, and the certificates representing the

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Subordinated Notes and Warrants, when executed and delivered in accordance with
the terms hereof, will constitute, a valid and binding obligation of the Company
enforceable against the Company in accordance with their respective terms,
except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors’ rights generally; (ii) the effect of rules of law
governing the availability of specific performance and other equitable remedies;
and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law. (c) Required Approvals; No Conflicts. The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person or entity in
connection with the execution, delivery and performance by the Company of this
Agreement or the issuance, sale or delivery of the Securities other than the
Required Approvals.. The execution and delivery by the Company of this Agreement
and the certificates representing the Subordinated Notes and the Warrants, and
the performance by the Company of its obligations hereunder and thereunder, do
not and will not (i) conflict with or violate any provision of the Company’s
certificate of incorporation, bylaws or other organizational or charter
documents, (ii) subject to the Company obtaining the Required Approvals,
conflict in any material respect with, or constitute a material default under
(or an event that, with notice or lapse of time or both, would become a material
default under), or give to others any rights of termination, amendment,
acceleration or cancellation under (with or without notice, lapse of time or
both), any agreement, credit facility, debt or other instrument evidencing a
debt of the Company or other understanding to which the Company is a party, or
by which any of its properties or assets is bound, or (iii) 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 is
subject, or by which any of its properties or assets is bound. (d)
Capitalization. The Company is currently authorized to issue 40,000,000 shares
of Common Stock, $0.001 par value per share, of which 9,716,929 shares are
issued and outstanding on the date hereof, and 5,000,000 shares of Preferred
Stock, $0.10 par value per share, of which no shares are issued and outstanding
on the date hereof. All of the issued and outstanding shares of the Company’s
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and were issued in full compliance with applicable state and
federal securities laws and any rights of third parties. Except as may be
described in this Agreement, no securities of the Company are entitled to
preemptive or similar rights, and no entity or Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by this Agreement unless any such
rights have been waived. (e) Due Issuance. The Subordinated Notes and the
Warrants to be issued and the shares of Common Stock to be issued upon exercise
of the Warrants have been duly authorized and, when issued and paid for in
accordance with this Agreement and the Warrants, as the case may be, will be
duly and validly issued and outstanding, fully paid and non-assessable, free and
clear of all liens and will not be subject to pre-emptive or similar rights of
stockholders of the Company. (f) Litigation. There is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having jurisdiction
over the Company, or any of its Affiliates that would affect the execution by
the Company or the performance by the Company of its obligations under this
Agreement, and all other agreements entered into by the Company relating hereto.
Except as disclosed in the Company’s reports filed with the SEC pursuant to the
Exchange Act (the “SEC Reports”), there is no pending or, to the knowledge of
the Company, threatened action, suit, proceeding or investigation before any
court, governmental agency or

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body, or arbitrator having jurisdiction over the Company, or any of its
Affiliates which litigation if adversely determined could have a Material
Adverse Effect. (g) Material Liabilities and Indebtedness. Neither the Company
nor any of its Significant Subsidiaries has any material liabilities or
obligations which are not disclosed in the SEC Reports, other than the
Acquisition (as defined in Section 4.4 below) and the Senior Credit Facility.
Except as disclosed in the Company’s SEC Reports, the Company does not have any
material outstanding Indebtedness as of the date of this Agreement. (h)
Financial Statements. The financial statements included in the Company’s Annual
Report on Form 10-K for the year ended September 30, 2015 and in the Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2015,
present fairly, in all material respects, the consolidated financial position of
the Company and its Subsidiaries as of the dates shown and its consolidated
results of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis (except as may be
disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act). (i) No
Defaults. Except as disclosed in the Company’s SEC Reports, the Company and its
Subsidiaries are not, nor have they received notice that they would be with the
passage of time, giving of notice, or both, in breach or violation of any of the
terms and provisions of, or in default under (a) their charters and bylaws, (b)
any statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over them, or any of their
assets or properties, or (c) any agreement or instrument to which they are a
party or by which they are bound or to which any of their assets or properties
are subject, except, in the case of clauses (b) and (c) only, for such
conflicts, breaches or violations as have not and could not reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect. (j) Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement, based upon any arrangement made by
or on behalf of the Company. (k) SEC Reports. The Company has filed on a timely
basis all SEC Reports required to be filed pursuant to the Exchange Act and such
SEC Reports conform in all material respects to the requirements of the Exchange
Act and are true and correct in all material respects. Since the date of the
most recent SEC Report filed by the Company there has been no event, change or
circumstance relating to the Company or any of its Subsidiaries that would have
been required to have been reported on a prior SEC Report if such event, change
or circumstance had occurred on or prior to such SEC Report. (l) Full
Disclosure. None of the representations and warranties in this Section 3.1,
taking into account the schedules attached to this Agreement, contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein, in light of the circumstances in which
they were made, not misleading. 3.2 Representations, Warranties and
Acknowledgements of the Purchasers. (a) Organization; Authority. Each Purchaser
certifies that it is resident in the jurisdiction set out on the face page of
this Agreement. Such address was not created and is not used solely for the
purpose of acquiring the Subordinated Notes and each Purchaser was solicited to
purchase in such

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jurisdiction. In the case of a Purchaser that is not a natural person, (i) such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has the requisite
corporate, partnership or other power and authority to enter into this
Agreement, to subscribe for and purchase the Subordinated Notes as contemplated
herein and to carry out its obligations hereunder, and (ii) the execution and
delivery of this Agreement have been duly authorized by all necessary corporate,
partnership or other action on the part of such Purchaser. The Purchaser is duly
authorized to execute and deliver this Agreement and all other necessary
documentation. In the case of all Purchasers, whether or not a natural person,
this Agreement has been duly authorized, executed and delivered by such
Purchaser and constitutes a legal, valid and binding obligation of each such
Purchaser, enforceable against him, her or it in accordance with its terms,
except as may be limited by (A) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors’ rights generally; (B) the effect of rules of law
governing the availability of specific performance and other equitable remedies;
and (C) insofar as indemnification and contribution provisions may be limited by
applicable law. (b) No Conflicts. The execution, delivery and performance by the
Purchaser of this Agreement and each of the Transaction Agreements to which it
is a party, and the consummation by the Purchaser of the transactions
contemplated by this Agreement and each such Transaction Agreement, do not and
will not (i) conflict with or violate any provision of the Purchaser’s
certificate of incorporation, bylaws or other organizational or charter
documents, or (ii) 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 Purchaser is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Purchaser is bound or affected. (c) No General Solicitation. The
subscription for the Subordinated Notes and Warrants by each Purchaser has not
been made through or as a result of, and the distribution of the Subordinated
Notes and Warrants is not being accompanied by any advertisement, including
without limitation in printed public media, radio, television or
telecommunications, including electronic display, or as part of a general
solicitation. (d) Limited Representations. No Person has made any written or
oral representations that (i) any Person will resell or repurchase the
Subordinated Notes, the Warrants or the Warrant Shares, (ii) that any Person
will refund all or any part of the Subscription Amount, or (iii) as to the
future price or value of the shares of Common Stock of the Company. (d)
Restricted Securities. Each Purchaser understands that the Subordinated Notes,
the Warrants, and Warrant Shares will be characterized as “restricted
securities” under U.S. federal securities laws inasmuch as, if issued, they will
be acquired from the Company in a transaction not involving a public offering
and that, under U.S. federal securities laws and applicable regulations, the
Subordinated Notes, the Warrants, and Warrant Shares may be resold without
registration under the Securities Act only in certain limited circumstances.
Such Purchaser acknowledges that all certificates and instruments representing
any of the Subordinated Notes, the Warrants, and Warrant Shares will bear a
restrictive legend in a form as set forth below and hereby consents to the
transfer agent for the Common Stock making a notation on its records to
implement the restrictions on transfer described herein. Such Purchaser
understands that except as provided herein: (i) the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
must be held indefinitely and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Purchaser
shall have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such Securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) such Purchaser provides the Company with reasonable
assurance that such Securities

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can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or a successor rule thereto)
(collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances
in which the seller (or the Person (through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Commission thereunder; and (iii) neither the Company nor any
other Person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (except as provided elsewhere herein).
(e) Certain Legends. Such Purchaser understands that the Securities are
“restricted securities” and that the certificates or other instruments
representing the Securities shall bear any applicable legend as required under
U.S. federal securities laws and a restrictive legend in substantially the form
set forth in Section 4.5 of this Agreement. Further, the Company may place a
stop transfer order on its transfer books against the Warrant Shares if such is
required in the reasonable opinion of counsel to the Company pursuant to
applicable securities laws. Such stop order will be removed, and further
transfer of such shares of Common Stock will be permitted, upon an effective
registration of the Warrant Shares or the receipt by the Company of an opinion
of counsel satisfactory to the Company that such further transfer may be
effected pursuant to an applicable exemption from registration. (f) Reliance on
Representations. Such Purchaser understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein and in the applicable
schedules and exhibits in order to determine the availability of such exemptions
and the eligibility of such Purchaser to acquire the Securities. The Purchaser
undertakes to immediately notify the Company of any change in any statement or
other information relating to the Purchaser set forth in such applicable
schedules and exhibits which takes place prior to the Closing time. (g)
Schedules. Each Purchaser acknowledges that this Agreement and the Schedules
attached hereto require the Purchaser to provide certain personal information to
the Company. Such information is being collected by the Company for the purposes
of completing the transactions contemplated by this Agreement, which includes,
without limitation, determining the Purchaser’s eligibility to purchase the
Subordinated Notes under the securities laws applicable in the United States and
other applicable securities laws, preparing and registering certificates
representing the Subordinated Notes and Warrants and completing filings required
by any stock exchange or securities regulatory authority. The Purchaser’s
personal information may be disclosed by the Company to: (a) stock exchanges or
securities regulatory authorities, and (b) any of the other parties to this
Agreement, such parties’ respective legal counsel and may be included in record
books in connection with the Offering. By executing this Agreement, the
Purchaser is deemed to be consenting to the foregoing collection, use and
disclosure of the Purchaser’s personal information; provided, that in the event
of a disclosure pursuant to clause (a) of the preceding sentence, the Company
shall (to the extent it is legally permitted), use commercially reasonable
efforts to give such Purchaser advance notice of any required disclosure. The
Purchaser also consents to the filing of copies or originals of any of the
Purchaser’s documents as may be required to be filed with any stock exchange or
securities regulatory authority in connection with the transactions contemplated
hereby. (h) No Public Sale or Distribution. Each Purchaser will be acquiring the
Securities in the ordinary course of business for his, her or its account and
not for the benefit of any other Person and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, and the

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Purchaser covenants that it will not resell the Subordinated Notes the Warrants,
or shares of Common Stock except pursuant to sales registered under the
Securities Act or under an exemption from such registration and in compliance
with applicable U.S. federal and state securities laws. Such Purchaser has no
present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other persons to distribute or
regarding the distribution of such Securities in violation of the Securities Act
or any applicable state securities law (i) Purchaser Status. At the time such
Purchaser was offered the Securities, it was, and as of the date hereof it is,
and on each date on which it exercises any Warrants it will be either (i) an
“accredited investor” as defined in Rule 501(a) under the Securities Act or (ii)
a “qualified institutional buyer” as defined in Rule 144A(a) under the
Securities Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act. Neither the Purchaser nor
any director, executive officer, other member or officer of the Purchaser
participating in the transactions contemplated by this Agreement, any beneficial
owner of 20% of more of the Purchaser’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the Securities Act) connected with the Purchaser in
any capacity at the time of sale (each a “Purchaser Covered Person”) is subject
to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to
(viii) under the Securities Act (a “Disqualification Event”), except for a
Disqualification Event covered by Rule 506(d)(2) or (3) (provided that the
foregoing exception shall not be available hereunder with respect to Rule
506(d)(2)(iv) for any Disqualification Event of which the Company did not know
as a result of the Purchaser’s failure to disclose such Disqualification Event
to the Company as otherwise required by this Section 3.2). Such Purchaser has
exercised reasonable care to determine (i) the identity of each person that is a
Purchaser Covered Person and (ii) whether any Purchaser Covered Person is
subject to a Disqualification Event. (j) Experience of Purchaser. There are
risks associated with the purchase of and investment in the Subordinated Notes,
the Warrants, and shares of Common Stock of the Company, and the Purchaser,
either alone or together with his, her or 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 entering into this Agreement
and making his, her or its Subscription Amount and the merits and risks of the
prospective investment in the Subordinated Notes, the Warrants, and shares of
Common Stock of the Company, and such Purchaser has so evaluated such merits and
risks. Such Purchaser understands that he, she or it must bear the economic risk
of an investment in the Subordinated Notes, the Warrants, and shares of Common
Stock of the Company, if any, indefinitely and is able to bear such risk and to
afford a complete loss of such investment. (k) Access to Information. Such
Purchaser acknowledges that he, she or it has reviewed the SEC Reports and has
been afforded (i) the opportunity to ask such questions as he, she or it has
deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of this Agreement and the merits and risks
of the prospective investment in the Subordinated Notes and Warrants, (ii)
access to information about the Company and its Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable him, her or it to evaluate the
terms and conditions of this Agreement and the merits and risks of the
prospective investment in 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 decision.
The Purchaser is not purchasing the Subordinated Notes and Warrants based on
knowledge of material information concerning the Company that has not been
generally disclosed. Such Purchaser and its advisors, if any, in acquiring the
Securities, have relied solely on their independent investigation of the Company
and have been afforded the opportunity to ask questions of the

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Company. Neither such inquiries nor any other due diligence investigations
conducted by such Purchaser or its advisors, if any, or its representatives
shall modify, amend or affect such Purchaser’s right to rely on the Company’s
representations and warranties contained herein. Such Purchaser understands that
its investment in the Securities involves a high degree of risk. Such Purchaser
has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to its acquisition of the
Securities. (l) No Governmental Review. Each Purchaser understands that no
United States federal or state agency, or any other government or governmental
agency has reviewed or passed on or made, or will pass on or make, any
recommendation or endorsement of the Subordinated Notes, the Warrants, or shares
of Common Stock of the Company or the fairness or suitability of the prospective
investment in the Subordinated Notes, the Warrants, or shares of Common Stock of
the Company. (m) Aggregate Investment. Each Purchaser understands that his, her
or its subscription for the Subordinated Notes and Warrants forms part of a
larger offering of Subordinated Notes and Warrants by the Company for gross
proceeds to the Company of $2,500,000. (n) Securities Transactions. No Purchaser
has engaged, directly or indirectly, and no Person or entity acting on behalf of
or pursuant to any understanding with such Purchaser has engaged, in any
purchases or sales of any securities of the Company since the time such
Purchaser was first contacted by the Company, or by any other Person or entity,
regarding an investment in the Company, including this Agreement and the
transactions contemplated herein. (o) No Legal, Tax or Investment Advice. Each
Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to him, her or it in connection with
this Agreement and the transactions contemplated herein, including the
prospective investment in the Subordinated Notes, the Warrants, and Warrant
Shares, constitutes legal, tax or investment advice. Each Purchaser has
consulted such legal, tax and investment advisors as he, she or it, in his, her
or its sole discretion, has deemed necessary or appropriate in the
circumstances. The Purchaser is not relying on the Company or its counsel in
this regard. ARTICLE IV OTHER AGREEMENTS AND COVENANTS 4.1 Reservation of Common
Stock. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
providing for the exercise of the Warrants, such number of shares of Common
Stock as shall from time to time equal the number of shares sufficient to permit
the exercise of the Warrants issued pursuant to this Agreement in accordance
with its terms. 4.2 Piggyback Registration Rights. Each Purchaser and the
Company agree that the Purchasers shall be entitled to the registration rights
with respect to the Securities as set forth in this Section 4.2. (a) Definition
of Registrable Securities. As used in this Section 4.2, the term “Registrable
Security” means each of the shares of Common Stock which may be issued upon the
exercise of the Warrants; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination; (A) it has been and remains effectively
registered under the Securities Act and disposed of pursuant thereto; (B) in the
opinion of counsel to the Company, registration under the Securities Act is no
longer required for subsequent public distribution of such security pursuant to
Rule 144 promulgated under the Securities Act, or otherwise; or

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(C) it has ceased to be outstanding. The term “Registrable Securities” means any
and all of the securities falling within the foregoing definition of
“Registrable Security.” In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be made in the definition of
“Registrable Security” as is appropriate to prevent any dilution or increase of
the rights granted pursuant to this clause (a) as determined in good faith by
the Board of Directors. (b) Piggyback Registration Rights. As used herein, a
“Registration Statement” shall mean any registration statement filed by the
Company with the Commission under the Securities Act at any time or from time to
time while any Registrable Securities remain outstanding; provided, however,
that a Registration Statement for the purposes hereof shall not include: (A) any
registration statement (or amendment thereto) filed by the Company in respect of
a rights offering to be undertaken by the Company and completed within 150 days
of the Closing; (B) a registration relating to employee benefit plans (whether
effected on Form S-8 or its successor); or (C) a registration effected on Form
S-4 (or its successor). If at any time or from time to time while any
Registrable Securities remain outstanding, the Company shall determine to
register or shall be required to register any of its Common Stock, other than
pursuant to a Registration Statement excluded from the definition of
“Registration Statement” set forth in the preceding sentence, whether or not for
its own account, the Company shall: (i) provide to each Purchaser written notice
thereof at least ten days prior to the filing of the Registration Statement by
the Company in connection with such registration; (ii) include in such
registration, and in any underwriting involved therein, all those Registrable
Securities specified in a written request by each Purchaser received by the
Company within five days after the Company mails the written notice referred to
above. The Company may withdraw the registration at any time. If a registration
covered by this Section 4.2 is an underwritten registration on behalf of the
Company, and the underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company shall include in such
registration: (1) first, the securities the Company proposes to sell, (2)
second, the Registrable Securities and other securities requested to be included
in such registration, pro rata among the selling Purchasers and any other
selling security holders on the basis of the number of shares owned by each such
Purchaser and other selling security holder. The Purchasers’ right to have
Registrable Securities included in the first registration statement filed by the
Company may be deferred to the second registration statement filed by the
Company, which deferral may be continued to the third or subsequent registration
statement so long as the registration statements are pursuant to underwritten
offerings and the underwriter determines in good faith that marketing factors
require exclusion of some or all of the Registrable Securities held by the
Purchasers, but such deferral shall be only to the extent of such required
exclusion as determined by the underwriter; and (iii) if the registration is an
underwritten registration, each Purchaser of Registrable Securities shall enter
into an underwriting agreement in customary form with the underwriter and
provide such information regarding Purchaser that the underwriter shall
reasonably request in connection with the preparation of the prospectus
describing such offering, including completion of FINRA Questionnaires. (c)
Covenants with Respect to Registration. In connection with the registration in
which the Registrable Securities are included, the Company and Purchaser
covenant and agree as follows: (i) The foregoing registration rights shall be
contingent on the Purchasers furnishing the Company with such appropriate
information as the Company shall reasonably request,

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including (A) such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of the Registrable Securities held
by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least seven days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Purchaser of the information the Company requires from such
Purchaser if such Purchaser elects to have any of the Registrable Securities
included in the Registration Statement. A Purchaser shall provide such
information to the Company at least two (2) Business Days prior to the first
anticipated filing date of such Registration Statement if it elects to have any
of the Registrable Securities included in the Registration Statement. Each
Purchaser agrees to furnish to the Company a completed selling security holder
questionnaire (a “Questionnaire”) in the form provided to it by the Company not
less than two Business Days prior to the filing date of such Registration
Statement. The Company shall not be required to include the Registrable
Securities of a Purchaser in a Registration Statement and shall not be required
to pay any damages to such Purchaser who fails to furnish to the Company a fully
completed Questionnaire at least two Business Days prior to the filing date. The
Company may require each selling Purchaser to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by it
and, if required by the Commission, the natural persons thereof that have voting
and dispositive control over its shares of Common Stock. (ii) Each Purchaser, by
its acceptance of the Registrable Securities agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless such
Purchaser has notified the Company in writing of its election to exclude all of
its Registrable Securities from such Registration Statement. Each Holder agrees
that, upon receipt of any notice from the Company that it must suspend sales of
Common Stock pursuant to the Registration Statement, it will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities, until the Purchaser is advised
by the Company that such dispositions may again be made. (iii) Each Purchaser
covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement. (iv) The Company
shall indemnify each Purchaser of Registrable Securities to be sold pursuant to
the registration statement and each person, if any, who controls such Purchaser
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage, expense or liability (including
reasonable expenses reasonably incurred in investigating, preparing or defending
against any claim) to which any of them may become subject under the Securities
Act, the Exchange Act or otherwise, arising from such registration statement,
except to the extent arising under paragraph (v) below. (v) Each Purchaser
owning Registrable Securities to be sold pursuant to a registration statement,
and their successors and assigns, shall severally, and not jointly, indemnify
the Company, its officers and directors and any underwriter, and each person, if
any, who controls the Company or such underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or reasonable expense or liability (including expenses reasonably
incurred in investigating, preparing or defending against any claim) to which
they may become subject under the Securities Act, the Exchange Act or otherwise,
arising (A) from information furnished by or on behalf of such Purchaser, or
their successors or assigns, for inclusion in such registration statement, or
(B) as a result of use by the Purchaser of a registration statement that the
Purchaser was advised by the Company in writing to discontinue.

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4.3 Securities Laws Disclosure. (a) The Company shall, by 5:30 p.m. (New York
City time) on the fourth Trading Day immediately following the date hereof, file
a Current Report on Form 8-K disclosing the material terms of the transactions
contemplated hereby and including the form of this Agreement as an exhibit
thereto. (b) So long as the Purchasers own any of the Securities, the Company
shall continue to timely file all SEC Reports required by the Exchange Act. 4.4
Use of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder for general business and working capital purposes,
including the payment of a portion of the purchase price of the Company’s
acquisition of Danya International, LLC (the “Acquisition”) or expenses related
thereto. 4.5 Transfer Restrictions. (a) The Subordinated Notes, Warrants and
Warrant Shares may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement, to the Company or to an
affiliate of a Purchaser or to an entity managed by a Purchaser (provided, in
such case the prospective transferee agrees in all such instances in writing to
be subject to the terms hereof to the same extent as if he or she were an
original Purchaser hereunder), the Company may require the transferor thereof to
provide to the Company an opinion of counsel, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement. (b) The Purchasers agree to
the imprinting, so long as is required by this Section 4.5 or applicable
securities laws, of a legend on any of the Securities substantially in the
following form (and a stop-transfer order may be placed against transfer of such
certificates): [NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS
SECURITY IS [EXERCISABLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. (c) Each Purchaser, severally and not jointly with
the other Purchasers, agrees with the Company (i) that such Purchaser will sell
any Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements, or an
exemption therefrom, and (ii) that if Securities are sold pursuant to a
Registration Statement, they will be sold in compliance with the plan of
distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing Securities is predicated upon
the Company’s reliance upon this understanding.

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4.6 Rights Offering. The Company agrees to use it best efforts to effectuate a
rights offering to its shareholders of at least $2,500,000 of gross proceeds
(the “Rights Offering”) as soon as practicable after the closing of the
Acquisition. Purchaser understands that the final terms of the Rights Offering
are subject to market conditions; however, the Company agrees that the exercise
price of the purchase rights to be distributed to shareholders in the Rights
Offering will not exceed the initial exercise price of the Warrants without the
consent of the Purchaser. In the event the Company commences a Rights Offering,
the Purchasers (or one or more entities Affiliated with the Purchasers) shall
use their commercially reasonable efforts to negotiate and enter into a Standby
Purchase Agreement pursuant to which the Purchasers (or their Affiliates) will
exercise such number of purchase rights as shall equal, in the aggregate,
$2,500,000, less the amount of the aggregate exercise price received by the
Company in the Rights Offering from the exercise of the purchase rights by the
Company’s shareholders other than the Purchasers and their Affiliates; provided,
however, that such Standby Purchase Agreement and the obligations of the
Purchasers thereunder shall terminate in the event that the Company materially
breaches this Agreement or any representation or warranty made by the Company in
this Agreement or in the other agreements entered into in connection herewith
shall have been incorrect in any material respect when made or deemed made or
there has been an Event of Default under the Subordinated Note. The Company
acknowledges and agrees that the proceeds from the Rights offering will first be
used by the Company to repay all principal and accrued interest on the
Subordinated Notes; provided, however, that is such proceeds are less than the
aggregate amount of outstanding principal and accrued interest on the
Subordinated Notes, the Company shall repay the Subordinated Notes on a pro rata
basis. 4.7 Right of First Offer. (a) Subject to the terms and conditions of this
Section 4.7 and applicable securities laws, if at anytime commencing on the
Closing and ending on a date which is the earlier of (i) the Accelerated Payment
Date of the Subordinated Notes or (ii) the Maturity Date of the Subordinated
Notes, the Company proposes to offer or sell any New Securities, the Company
shall notify each Purchaser of the proposed terms of the offer of such New
Securities. The Company shall give notice (the “Offer Notice”) to each
Purchaser, stating (i) its bona fide intention to offer such New Securities,
(ii) the number of such New Securities to be offered, and (iii) the price and
terms, if any, upon which it proposes to offer such New Securities. (b) By
notification to the Company within twenty (20) days after the Offer Notice is
given, each Purchaser may elect to purchase or otherwise acquire, at the price
and on the terms specified in the Offer Notice, up to that portion of such New
Securities which equals up to that portion of such New Securities which equals
the proportion that the Common Stock held by such Purchaser Investor (including
all shares of Common Stock then issuable (directly or indirectly) upon
conversion and/or exercise, as applicable, convertible securities then held by
such Purchaser) bears to the total Common Stock of the Company then outstanding
of a fully diluted basis . At the expiration of such twenty (20) day period, the
Company shall promptly notify each Purchaser that elects to purchase or acquire
all the New Securities available to it (each, a “Fully Exercising Purchaser”) of
any other Purchaser’s failure to do likewise. During the ten (10) day period
commencing after the Company has given such notice, each Fully Exercising
Purchaser may, by giving notice to the Company, elect to purchase or acquire, in
addition to the number of New Securities specified above, up to that portion of
the New Securities for which Purchasers were entitled to subscribe but that were
not subscribed for by the non subscribing Purchasers hereunder. The closing of
any sale pursuant to this Section 4.7(b) shall occur within the later of sixty
(60) days of the date that the Offer Notice is given and the date of initial
sale of New Securities pursuant to Section 4.7(c).

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(c) If all New Securities referred to in the Offer Notice are not elected to be
purchased or acquired as provided in Section 4.7(b), the Company may, during the
one hundred eighty (180) day period following the expiration of the periods
provided in Section 4.7(b), offer and sell the remaining unsubscribed portion of
such New Securities to any Person or Persons at a price not less than, and upon
terms no more favorable to the offeree than, those specified in the Offer
Notice. If the Company does not enter into an agreement for the sale of the New
Securities within such period, or if such agreement is not consummated within
thirty (30) days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such New Securities shall not be offered unless first
reoffered to the Purchasers in accordance with this Section 4.7. (d) The right
of first offer in this section 4.7 shall not be applicable to any Exempt
Issuance as defined in the Warrants. ARTICLE V INDEMNIFICATION 5.1 Survival of
Representations; Indemnity. (a) Survival. All representations and warranties
herein shall survive the execution and delivery of this Agreement and the
payment by each of the Purchasers of his, her or its Subscription Amount for a
period of 18 months from the Closing Date. (b) Indemnification. (i) The Company
agrees to indemnify and hold harmless each Purchaser, its Affiliates, each of
their officers, directors, employees and agents and their respective successors
and assigns, from and against any losses, damages, or expenses which are caused
by or arise out of (A) any breach or default in the performance by the Company
of any covenant or agreement made by the Company in the this Agreement or in the
other Transaction Agreements; (B) any breach of warranty or representation made
by the Company in this Agreement or in the other Transaction Agreements; and (C)
any and all actions, suits, proceedings, claims, demands, judgments, costs and
expenses (including reasonable legal fees and expenses) incident to any of the
foregoing. (ii) Each Purchaser agrees to indemnify and hold harmless the
Company, its Affiliates, each of their officers, directors, employees and agents
and their respective successors and assigns, from and against any losses,
damages, or expenses which are caused by or arise out of: (A) any breach or
default in the performance by such Purchaser of any covenant or agreement made
by such Purchaser in this Agreement or in the other Transaction Agreements; (B)
any breach of warranty or representation made by such Purchaser in this
Agreement or in the other Transaction Agreements; and (C) any and all actions,
suits, proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) incident to any of the foregoing. ARTICLE VI
GENERAL 6.1 Termination. If the Closing has not been consummated on or before
May 15, 2016, this Agreement may be terminated (a) by any Purchaser (except
where any such Purchaser is in breach of this Agreement or has failed to perform
or satisfy any closing condition applicable to it), as to such Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and

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the other Purchasers, or (b) by the Company (except for any breach by it or
failure to perform or satisfy any closing condition applicable to it), by
written notice to the other parties; provided, however, that such termination
will not affect the right of any non-breaching party to sue or seek specific
performance for any breach by any other party (or parties). If the proposed
Acquisition has been terminated or abandoned prior to the Closing, this
Agreement may be terminated by any Purchaser or by the Company. 6.2
Confidentiality. The Purchasers acknowledge that due to certain of the covenants
contained herein or in the Subordinated Note, from time to time the Purchasers
may come into possession of confidential information of the Company, including
material, non-public information relating to the Company. The Purchasers hereby
agree that (i) they shall keep all such information strictly confidential,
applying, at a minimum, the same degree of care as it does to protect its own
confidential information of a similar nature; (ii) shall only use such
information in connection with the transactions contemplated by this Agreement;
and (iii) shall not disclose any of such information other than: (a) to the
Purchaser’s employees, representatives, directors, attorneys, auditors, or
Affiliates who are advised of the confidential nature of such information (so
long as any of the foregoing persons agree to be bound by the provisions of this
Section), (b) to the extent such information presently is or hereafter becomes
available on a non-confidential basis from any source of such information that
is in the public domain at the time of disclosure, (c) to the extent disclosure
is required by law (including applicable securities law), regulation, subpoena
or judicial order or any administrative body or commission to whose jurisdiction
the Purchasers are subject (provided that notice of such requirement or order
shall be promptly furnished to the Company in advance of such disclosure), (d)
to assignees or participants or prospective assignees or participants who agree
to be bound by the provisions of this Section, or (e) with the Company’s prior
written consent. The Purchasers agree to be responsible for any breach of this
agreement by any of the persons identified in Section 6.2(iii). The Purchasers
are aware that, under certain circumstances, the United States securities laws
may prohibit a Person who has received material, non-public information from an
issuer from purchasing or selling securities of such issuer or from
communicating such information to any other Person under circumstances in which
it is reasonably foreseeable that such other Person is likely to purchase or
sell such securities. 6.3 Amendments; Waivers. No provision of this Agreement
may be amended or waived except in a written instrument signed, (i) in the case
of an amendment, by the Company and a Majority in Interest, or (ii) in the case
of a waiver, by the party against whom enforcement of any such waiver is sought;
provided that, in the case of waiver by or on behalf of all of the Purchasers,
such written instrument shall be signed by Purchasers representing a Majority in
Interest; and provided, further that that any amendment that would (i) change
the maturity of the principal of or any installment of interest on any of the
Subordinated Notes, (ii) reduce the principal amount of, or any premium or
interest on any Subordinated Note, (iii) reduce the percentage in aggregate
principal amount of Subordinated Notes outstanding necessary to modify or amend
the Subordinated Notes; or (iv) modify this Section 6.3 shall, in each case,
require the approval of the holder of each Purchaser to which such amendment
shall apply. No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right. 6.4 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile or
e-mail at the facsimile number or e-mail address referred to in this Section 6.4
prior to 5:00 p.m. (Eastern time) on a Business Day, (b) the next Business Day
after the date of transmission, if such notice or communication is delivered via
facsimile or e-mail at the facsimile number or e-mail address referred to in
this Section 6.4 on a day that is not a Business Day or later than 5:00 p.m.
(Eastern time) on any Business Day, (c) the Business

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Day following the date of deposit with a nationally recognized overnight courier
service or (d) upon actual receipt by the party to whom such notice is required
to be given. The addresses, facsimile numbers and e- mail addresses for such
notices and communications are those set forth on the signature pages hereof, or
such other address, facsimile number or e-mail address as may be designated in
writing hereafter, in the same manner, by the relevant party hereto. 6.5
Headings. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof. 6.6 Entire Agreement. This Agreement, together with the
Subordinated Notes and Warrants contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such agreements and exhibits. At or after the
Closing, and without further consideration, the parties hereto will make, do and
execute and deliver, or cause to be made, done and executed and delivered, such
further acts, deeds, assurances, documents and things as may be reasonably
requested by any of the other parties hereto in order to give practical effect
to the intention of the parties hereunder. 6.7 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. 6.8 No Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person or entity. 6.9
Governing Law; Venue. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE PARTIES
HERETO HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL OR
STATE COURTS OF THE CITY OF NEW YORK IN THE STATE OF NEW YORK FOR THE
ADJUDICATION OF ANY DISPUTE BROUGHT BY ANY OF THE PARTIES HERETO, IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF THE SECURITY AGREEMENT), AND
HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY ANY OF THE OTHER PARTIES HERETO, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT OR THAT SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER. 6.10 Execution. This Agreement may be executed
by one or more of the parties hereto on any number of separate counterparts
(including by facsimile or e-mail transmission), all of which when taken
together shall be considered one and the same agreement. In the event that any
signature is delivered by facsimile transmission or e-mail attachment, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or e-mail-attached signature page were an original thereof. 6.11
Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and

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enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement. 6.12
Interpretation. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise this Agreement and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments hereto. In addition, each and
every reference to share prices and shares of capital stock in this Agreement
shall be subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock
that occur after the date of this Agreement. The word “including”, whenever used
in this Agreement, shall be deemed to be followed by the phrase “without
limitation”. [SIGNATURE PAGES TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above. DLH HOLDINGS CORP. Address for Notice: DLH Holdings Corp. 3565
Piedmont Road, NE Building 3, Suite 700 Atlanta, GA 30305 Attn: Chief Executive
Officer By:_/s/ Zachary C. Parker_______________________ Name: Zachary C. Parker
Title: Chief Executive Officer and President With a copy to (which shall not
constitute notice): Becker & Poliakoff, LLP 45 Broadway, 8th Floor New York, NY
10006 Attn: Michael Goldstein Fax: 212-557-0295 [REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK SIGNATURE PAGES FOR PURCHASER FOLLOWS]

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Purchaser Signature Page By his, her or its execution and delivery of this
signature page, the Purchaser hereby joins in and agrees to be bound by the
terms and conditions of the Purchase Agreement (the “Purchase Agreement”), by
and among DLH HOLDINGS CORP., the Purchasers (as defined therein) and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof. Name of Purchaser: Wynnefield Small Cap Value Offshore Fund Ltd
Signature of Authorized Signatory of Purchaser: _/s/ Nelson
Obus______________________ Name of Authorized Signatory: ___/s/ Nelson
Obus________________________________ Title of Authorized Signatory:
________________________________________________ Email Address of Authorized
Signatory:_________________________________________ Facsimile Number of
Authorized Signatory: _______________________________________ EIN Number:
________________________________ Address for Notices to Purchaser:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________ Address for Delivery of
certificated Securities for Purchaser (if not same as address for notices):
_______________________________________ _______________________________________
_______________________________________ Subscription Amount: $500,000.00
Securities Purchased, comprised of: Principal Amount of Notes: $500,000.00 No.
of Common Stock Warrants: 10,724

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Purchaser Signature Page By his, her or its execution and delivery of this
signature page, the Purchaser hereby joins in and agrees to be bound by the
terms and conditions of the Purchase Agreement (the “Purchase Agreement”), by
and among DLH HOLDINGS CORP., the Purchasers (as defined therein) and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof. Name of Purchaser: Wynnefield Partners Small Cap Value, LP Signature of
Authorized Signatory of Purchaser: _/s/ Nelson Obus______________________ Name
of Authorized Signatory: ___/s/ Nelson Obus________________________________
Title of Authorized Signatory: ________________________________________________
Email Address of Authorized Signatory:_________________________________________
Facsimile Number of Authorized Signatory:
_______________________________________ EIN Number:
________________________________ Address for Notices to Purchaser:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________ Address for Delivery of
certificated Securities for Purchaser (if not same as address for notices):
_______________________________________ _______________________________________
_______________________________________ Subscription Amount: $800,000.00
Securities Purchased, comprised of: Principal Amount of Notes: $800,000.00 No.
of Common Stock Warrants: 17,694

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Purchaser Signature Page By his, her or its execution and delivery of this
signature page, the Purchaser hereby joins in and agrees to be bound by the
terms and conditions of the Purchase Agreement (the “Purchase Agreement”), by
and among DLH HOLDINGS CORP., the Purchasers (as defined therein) and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof. Name of Purchaser: Wynnefield Small Cap Value LP, I Signature of
Authorized Signatory of Purchaser: _/s/ Nelson Obus______________________ Name
of Authorized Signatory: ___/s/ Nelson Obus________________________________
Title of Authorized Signatory: ________________________________________________
Email Address of Authorized Signatory:_________________________________________
Facsimile Number of Authorized Signatory:
_______________________________________ EIN Number:
________________________________ Address for Notices to Purchaser:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________ Address for Delivery of
certificated Securities for Purchaser (if not same as address for notices):
_______________________________________ _______________________________________
_______________________________________ Subscription Amount: $1,200,000.00
Securities Purchased, comprised of: Principal Amount of Notes: $1,200,000.00 No.
of Common Stock Warrants: 25,201

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SCHEDULE A ACCREDITED INVESTOR CERTIFICATE This Accredited Investor Certificate
is being delivered to the Company pursuant to the Purchase Agreement.
Capitalized terms used in this Accredited Investor Certificate, but not defined
herein, have the respective meanings attributed to such terms in the Purchase
Agreement. Investor agrees to furnish any additional information the Company
deems necessary in order to verify the information provided below. The Purchaser
hereby acknowledges that the Company is relying on this Accredited Investor
Certificate to determine the Purchaser’s suitability for investment in the Loan
and investment, if any, in the Securities pursuant to the Securities Purchase
Agreement (collectively, the “Investment”) and hereby represents and warrants
and certifies that, as of the Closing, the Purchaser: Category I The Purchaser
is an individual (not a partnership, corporation, etc.) whose individual net
worth, or joint net worth with his or her spouse, presently exceeds $1,000,000
(excluding the value of such Purchaser’s principal residence). Category II The
Purchaser is a corporation, partnership, business trust or a non profit
organization within the meaning of Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, that was not formed for the specific purpose of
acquiring the securities offered and that has total assets in excess of
$5,000,000. Category III The Purchaser is an individual (not a partnership,
corporation, etc.) who reasonably expects an individual income in excess of
$200,000 in the current year and had an individual income in excess of $200,000
in each of the last two years (including foreign income, tax exempt income and
the full amount of capital gains and losses but excluding any income of the
Purchaser’s spouse or other family members and any unrealized capital
appreciation); Or The Purchaser is an individual (not a partnership,
corporation, etc.) who, together with his or her spouse, reasonably expects
joint income in excess of $300,000 for the current year and had joint income in
excess of $300,000 in each of the last two years (including foreign income, tax
exempt income and the full amount of realized capital gains and losses).
Category IV The Purchaser is a director or executive officer of the Company.
Category V The Purchaser is a bank, savings and loan association or credit
union, insurance company, registered investment company, registered business
development company, licensed small business investment company, or employee
benefit plan within the meaning of Title 1 of ERISA whose plan fiduciary is
either a bank, insurance company or registered investment advisor or whose total
assets exceed $5,000,000. Describe entity:

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Category VI The Purchaser is a private business development company as defined
in Section 202(a)(22) of the Investment Advisors Act of 1940. Category VII The
Purchaser is a trust with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person (a person who either alone or with his or her
purchaser representative(s) has such knowledge and experience in financial and
business matters that he or she is capable of evaluating the merits and risks of
the prospective investment). A copy of the declaration of trust or trust
agreement and a representation as to the sophistication of the person directing
purchases for the trust is enclosed. Category VIII The Purchaser is a self
directed employee benefit plan for which all persons making investment decisions
are “accredited investors” within one or more of the categories described above.
Category IX The Purchaser is an entity in which all of the equity owners are
“accredited investors” within one or more of the categories described above. If
relying upon this category alone, each equity owner must complete a separate
copy of this agreement. Describe entity: Category X The Purchaser does not come
within any of the Categories I – IX set forth above.

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EXHIBIT A FORM OF SUBORDINATED NOTE

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EXHIBIT B FORM OF WARRANT

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