Exhibit 10.1
 
CONFIDENTIAL

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated on and as of the
latest date set forth on the signature page hereto, by and between Virtual
Piggy, Inc., a Delaware corporation (the “Company”), and the purchaser
identified on the signature page hereof (“Purchaser”).
 
R E C I T A L S:

WHEREAS, Purchaser desires to purchase and the Company desires to sell
securities on the terms and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the premises hereof and the agreements set
forth herein below, the parties hereto hereby agree as follows:
 
1.          The Offering.
 
(a)          Private Offering.  The securities offered by this Agreement are
being offered in a private offering (the “Offering”) of up to an aggregate
original principal amount of $10,000,000 of 3.5% Secured Convertible Promissory
Notes due 2018 (the “New Secured Notes”), which Notes shall accrue interest on
the unpaid principal amount thereof at a rate equal to three and one-half
percent (3.5%) per annum, compounded quarterly, and shall mature on June 30,
2018.  The New Secured Notes shall be convertible by the holder, at any time,
into shares of the Company’s Series C Cumulative Convertible Preferred Stock
(“Series C Preferred Stock”) at a conversion price of $90.00 per share (the
“Conversion Price”), subject to adjustment for stock, splits, stock dividends
and similar transactions with respect to the Series C Preferred Stock only. 
Each share of Series C Preferred Stock is currently convertible into 100 shares
of the Company’s common stock at a current conversion price of $0.90 per share,
subject to anti-dilution adjustment as described in the Certificate of
Designation of the Series C Preferred Stock.  The New Secured Notes will be sold
on a “best efforts” basis pursuant to Section 4(a)(2) of the Securities Act of
1933, as amended (the “Securities Act” or the “Act”), and/or Rule 506(b) of
Regulation D thereunder.  The New Secured Notes, the shares of Series C
Preferred Stock issuable upon conversion of the New Secured Notes and the shares
of Company common stock (“Common Stock”) issuable upon conversion of the Series
C Preferred Stock are hereinafter referred to collectively as the “Securities.” 
The New Secured Notes are being offered solely to a limited number of
“accredited investors” as that term is defined in Rule 501(a) of the Securities
Act during an offering period (the “Offering Period”) commencing on the date
hereof and terminating not later than September 30, 2016, unless further
extended by the Company in its discretion (the “Termination Date”).  The
Offering may be terminated by the Company at any time in its sole discretion.
This Agreement, the Exhibits hereto and the Offering Memorandum dated July 28,
2016 (including the documents incorporated by reference therein) are hereinafter
collectively referred to as the “Offering Documents”.
 
 

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(b)          Description of Securities.  The terms and provisions of the New
Secured Notes are set forth in the form of 3.5% Secured Convertible Promissory
Note due 2018, attached hereto as Exhibit A.  The rights, preferences, powers
and other terms of the Series C Preferred Stock are set forth in full in the
Certificate of Designation of Series C Cumulative Convertible Preferred Stock
attached hereto and made a part hereof as Exhibit B (the “Certificate of
Designation”).
 
(c)          Placement of the New Secured Notes.  The Company intends to offer
and sell certain or all of the New Secured Notes through the efforts of its own
officers and personnel without the payment of a brokerage commission or sales
incentives.  However, the Company also reserves the right to engage the services
of one or more registered broker-dealers serving as a placement agent (a
“Placement Agent”) to offer and sell the New Secured Notes on a best-efforts
basis, and in connection with sales to investors introduced to the Offering
through the efforts of such Placement Agent(s), if at all, the Company will
agree to pay to the Placement Agent: (i) a placement fee of up to five percent
(5%) of the principal amount of Notes; (ii) a retainer in such amount or amounts
as may be determined in the discretion of the Company; (iii) warrants to
purchase up to three percent (3%) of the underlying securities at the applicable
offering price; and (iv) such amounts as are necessary to cover the reasonable
and ordinary out-of-pocket expenses of the Placement Agent.
 
(d)          Escrow Account. The Company will establish a segregated escrow
account (the “Escrow Account”) for the deposit of cash subscriptions.  Upon the
acceptance of subscriptions for the New Secured Notes, the Company may conduct
an initial closing of the Offering and thereafter, may conduct any number of
additional closings until the Termination Date.
 
(e)          Security Agreement.  As collateral security for the prompt and
complete payment and performance when due of the Company’s obligations under the
New Secured Notes, the Company will enter into an Amended and Restated Security
Agreement with William F. Miller III, as collateral agent for each Purchaser,
and each Purchaser in the form attached hereto and made a part hereof as Exhibit
C (the “Security Agreement”) to grant a security interest in the Company’s
Collateral (as defined in the Security Agreement) on a pari passu basis with the
holders of the Prior Secured Notes (as defined below).
 
2.          Sale and Purchase of Securities.
 
(a)          Purchase and Sale.  Subject to the terms and conditions hereof, the
Company agrees to sell, and Purchaser irrevocably subscribes for and agrees to
purchase, the aggregate principal amount of Notes set forth on the signature
page of this Agreement at a purchase price equal to 100% of such principal
amount (the “Aggregate Purchase Price”), which shall be payable upon execution
hereof by check or wire transfer of immediately available funds as set forth
below; provided that holders of the Company’s currently outstanding 10% Secured
Convertible Promissory Notes due 2016 (the “Prior Secured Notes”) may exchange
such Prior Secured Notes for New Secured Notes on a dollar-for-dollar basis with
any New Secured Notes purchased for cash.
 
 
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(b)          Subscription Procedure.  In order to purchase Notes, Purchaser
shall: (i) deliver to the Company at 1618 South Broad Street, Philadelphia, PA
19145, Attn: Ernest Cimadamore (or via facsimile to 215-465-2013 or email to
ernie@oink.com): (X) one completed and duly executed copy of this Agreement, (Y)
one completed and duly executed copy of the Amended and Restated Security
Agreement and (Z) one completed and duly executed Accredited Investor
Questionnaire in the form attached hereto as Exhibit D; and (ii) deposit into
the Escrow Account payment for the New Secured Notes in an amount equal to the
Aggregate Purchase Price by certified or bank check covering immediately
available funds or through wire transmission, which Escrow Account is identified
on Exhibit E, or otherwise provided upon request, and (iii) in the case of
Purchasers also exchanging Prior Secured Notes, by delivery of such Prior
Secured Notes to the Company at the address set forth above.  Delivery of the
Prior Secured Notes and the closing of this Offering and acceptance thereof
shall constitute satisfaction in full of amounts due under the Prior Secured
Notes and the collateral therefor shall be released thereupon.  Execution and
delivery of this Agreement shall constitute an irrevocable subscription for that
aggregate principal amount of New Secured Notes set forth on the signature page
hereto.  Receipt by the Company in the Escrow Account of funds wired, or deposit
and collection into the Escrow Account of the check tendered herewith, or of the
original Prior Secured Notes, as the case may be, will not constitute acceptance
of this Agreement by the Company.  The New Secured Notes subscribed for will not
be deemed to be issued to, or owned by, Purchaser until the Company has executed
this Agreement.  All consideration tendered by Purchaser will be held by the
Company pending acceptance or rejection of this Agreement by the Company and the
closing of Purchaser’s purchase of New Secured Notes.  This Agreement will
either be accepted by the Company, in whole or in part, in its sole discretion,
or rejected by the Company prior to the termination of the Offering.  If this
Agreement is accepted only in part, Purchaser agrees to purchase such smaller
principal amount of Notes as the Company determines to sell to Purchaser.  If
this Agreement is rejected for any reason, including the termination of the
Offering by the Company, this Agreement and all funds or other consideration
tendered herewith will be promptly returned to Purchaser, without interest or
deduction of any kind, and this Agreement will be void and of no further force
or effect. Until the Company elects to accept or reject a Purchaser’s Securities
Purchase Agreement, the Purchaser’s subscription is irrevocable.
 
(c)          Closing.  The Company may conduct an initial closing of the
Offering and thereafter, may conduct any number of additional closings until the
Termination Date.  Upon the Company’s execution of this Agreement, the
subscription evidenced hereby, if not previously rejected by the Company, will,
in reliance upon Purchaser’s representations and warranties contained herein, be
accepted, in whole or in part, by the Company.  If Purchaser’s subscription is
accepted only in part, this Agreement will be marked to indicate such fact, and
the Company will return to Purchaser the portion of the funds tendered by
Purchaser representing the unaccepted portion of Purchaser’s subscription,
without interest or deduction of any kind.  Upon acceptance of this Agreement,
in whole or in part, by the Company, the Company will promptly issue the New
Secured Notes to Purchaser. 
 
3.          Representations and Warranties of Purchaser.  Purchaser represents
and warrants to the Company as follows:
 
 
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(a)          Organization and Qualification. 
 
(i)          If Purchaser is an entity, Purchaser is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, with the corporate or other entity power and authority to own and
operate its business as presently conducted, except where the failure to be or
have any of the foregoing would not have a material and adverse effect on the
legality, validity or enforceability of any Transaction Documents, and Purchaser
is duly qualified as a foreign corporation or other entity to do business and is
in good standing in each jurisdiction where the character of its properties
owned or held under lease or the nature of their activities makes such
qualification necessary, except for such failure to be so qualified or in good
standing as would not have a Material Adverse Effect on it.  For purposes of
this Agreement, “Material Adverse Effect” means any of (i) a material and
adverse effect on the legality, validity or enforceability of any Transaction
Documents, (ii) a material and adverse effect on the results of operations,
assets, business or financial condition of such party and its subsidiaries,
taken as a whole, or (iii) any material adverse impairment to the ability of
such party to perform in any material respect on a timely basis its obligations
under any Transaction Document.
 
(ii)          If Purchaser is an entity, the address of its principal place of
business is as set forth on the signature page hereto, and if Purchaser is an
individual, the address of his or her principal residence is as set forth on the
signature page hereto.
 
(b)          Authority; Validity and Effect of Agreement.
 
(i)          If Purchaser is an entity, Purchaser has the requisite corporate or
other entity power and authority to execute and deliver this Agreement and any
documents contemplated hereby (collectively, the “Transaction Documents”) and
perform its obligations under the Transaction Documents.  The execution and
delivery of each Transaction Document by Purchaser, the performance by Purchaser
of its obligations thereunder, and all other necessary corporate or other entity
action on the part of Purchaser have been duly authorized by its board of
directors or similar governing body, and no other corporate or other entity
proceedings on the part of Purchaser is necessary for Purchaser to execute and
deliver the Transaction Documents and perform its obligations thereunder.
 
(ii)          Each of the Transaction Documents has been duly and validly
authorized, executed and delivered by Purchaser and, assuming each has been duly
and validly executed and delivered by the Company, each constitutes a legal,
valid and binding obligation of Purchaser, in accordance with its terms.
 
(c)          No Conflict; Required Filings and Consents.  Neither the execution
and delivery of the Transaction Documents by Purchaser nor the performance by
Purchaser of its obligations, thereunder will: (i) if Purchaser is an entity,
conflict with Purchaser’s articles of incorporation or bylaws, or other similar
organizational documents; (ii) violate any statute, law, ordinance, rule or
regulation, applicable to Purchaser or any of the properties or assets of
Purchaser; or (iii) violate, breach, be in conflict with or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or result in the
termination of, the acceleration of the maturity of, or the acceleration of the
performance of any obligation of Purchaser under, or result in the creation or
imposition of any lien upon any properties, assets or business of Purchaser
under, any material contract or any order, judgment or decree to which Purchaser
is a party or by which it or any of its assets or properties is bound or
encumbered except, in the case of clauses (ii) and (iii), for such violations,
breaches, conflicts, defaults or other occurrences which, individually or in the
aggregate, would not have a Material Adverse Effect on it.
 
 
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(d)          Accredited Investor.  Purchaser is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D under the Securities Act.  If
Purchaser is an entity, Purchaser was not formed for the specific purpose of
acquiring the Securities, and, if it was, all of Purchaser’s equity owners are
“accredited investors” as defined above.
 
(e)          No Government Review.  Purchaser understands that neither the
United States Securities and Exchange Commission (“SEC”) nor any securities
commission or other governmental authority of any state, country or other
jurisdiction has approved the issuance of the New Secured Notes or passed upon
or endorsed the merits of this Agreement, the New Secured Notes, or any of the
other documents relating to the proposed Offering, or confirmed the accuracy of,
determined the adequacy of, or reviewed this Agreement, the New Secured Notes or
such other documents.
 
(f)          Investment Intent.  The Securities are being acquired for the
Purchaser’s own account for investment purposes only, not as a nominee or agent
and not with a view to the resale or distribution of any part thereof, and
Purchaser has no present intention of selling, granting any participation in or
otherwise distributing the same.  By executing this Agreement, Purchaser further
represents that Purchaser does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person or third person with respect to the New Secured Notes.
 
(g)          Restrictions on Transfer.  Purchaser understands that the
Securities are “restricted securities” as such term is defined in Rule 144 under
the Securities Act and have not been registered under the Securities Act or
registered or qualified under any state securities law, and may not be, directly
or indirectly, sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act and
registration or qualification under applicable state securities laws or the
availability of an exemption therefrom.  Purchaser acknowledges that it is able
to bear the economic risks of an investment in the Securities for an indefinite
period of time, and that its overall commitment to investments that are not
readily marketable is not disproportionate to its net worth.
 
(h)          Investment Experience.  Purchaser has such knowledge,
sophistication and experience in financial, tax and business matters in general,
and investments in securities in particular, that it is capable of evaluating
the merits and risks of this investment in the Securities, and Purchaser has
made such investigations in connection herewith as it deemed necessary or
desirable so as to make an informed investment decision without relying upon the
Company for legal or tax advice related to this investment.  In making its
decision to acquire the Securities, Purchaser has not relied upon any
information other than information provided to Purchaser by the Company or its
representatives and referenced herein.
 
 
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(i)          Access to Information.  Purchaser acknowledges that it has had
access to and has reviewed all publicly available documents and records relating
to the Company, including, but not limited to, the Company’s Annual Report on
SEC Form 10-K for the year ended December 31, 2014, as amended, the Company’s
Annual Report on SEC Form 10-K for the year ended December 31, 2015, the
Company’s Proxy Statement covering the annual meeting of its shareholders
occurring during 2016, if any, and any Quarterly Report on SEC Form 10-Q, or
Current Report on SEC Form 8-K, filed with the SEC after December 31, 2015 and
before the date this Offering is closed (as such documents have been amended
since the date of their filing, collectively, the “Company SEC Documents”), that
it has deemed necessary in order to make an informed investment decision with
respect to an investment in the New Secured Notes; that it has had the
opportunity to ask representatives of the Company certain questions and request
certain additional information regarding the terms and conditions of such
investment and the finances, operations, business and prospects of the Company
and has had any and all such questions and requests answered to its
satisfaction; and that it understands the risks and other considerations
relating to such investment.  Purchaser understands any statement contained in
the Company SEC Documents shall be deemed to be modified or superseded for the
purposes of this Agreement to the extent that a statement contained herein or in
any other document subsequently filed with the SEC modifies or supersedes such
statement. 
 
(j)          Reliance on Representations.  Purchaser understands that the New
Secured Notes are being offered and sold to it in reliance on specific
exemptions from the registration requirements of the 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 in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the New Secured Notes.  Purchaser
represents and warrants to the Company that any information that Purchaser has
heretofore furnished or furnishes herewith to the Company is complete and
accurate, and further represents and warrants that it will notify and supply
corrective information to the Company immediately upon the occurrence of any
change therein occurring prior to the Company’s issuance of the New Secured
Notes.  Within five (5) days after receipt of a request from the Company,
Purchaser will provide such information and deliver such documents as may
reasonably be necessary to comply with any and all laws and regulations to which
the Company is subject.
 
(k)          No General Solicitation.  Purchaser is unaware of, and in deciding
to participate in the Offering is in no way relying upon, and did not become
aware of the Offering through or as a result of, any form of general
solicitation or general advertising including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media, or broadcast over television or radio or the
internet, in connection with the Offering.
 
 
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(l)          Placement and Finder’s Fees.  No agent, broker, investment banker,
finder, financial advisor or other person acting on behalf of Purchaser or under
its authority is or will be entitled to any broker’s or finder’s fee or any
other commission or similar fee, directly or indirectly, in connection with the
Offering, and no person is entitled to any fee or commission or like payment in
respect thereof based in any way on agreements, arrangements or understanding
made by or on behalf of Purchaser.
 
(m)          Investment Risks.  Purchaser understands that purchasing Notes in
the Offering will subject Purchaser to certain risks, including, but not limited
to, those set forth in the Company SEC Documents and the Offering Documents.
 
(n)          OFAC.  Purchaser is directed to review the U.S. Treasury
Department’s Office of Foreign Assets Control (“OFAC”) website at www.treas.gov.
before making the following representations.  Purchaser represents that no part
of the Aggregate Purchase Price set forth on the signature page hereto was
directly or indirectly derived from activities that may contravene federal,
state or international laws and regulations, including anti-money laundering
laws and regulations. Federal regulations and executive orders administered by
OFAC prohibit, among other things, the engagement in transaction with, and the
provision of services to, certain foreign countries, territories, entities and
individuals.  The lists of OFAC prohibited countries, territories, persons and
entities can be found at the OFAC website. In addition, the programs
administered by OFAC prohibit dealing with individuals or entities in certain
countries regardless of whether such individuals or entities appear on the OFAC
lists.  Purchaser hereby represents that none of the following is named on the
OFAC list, nor is a person or entity prohibited under the OFAC programs: (i) the
Purchaser, (ii) any person controlling or controlled by the Purchaser, (iii) if
the undersigned is an entity, any person having a beneficial interest in the
Purchaser, or (iv) any person for whom the undersigned is acting as agent or
nominee in connection with this investment. The Purchaser understands and
acknowledges that, by law, the Company may be required to disclose the identity
of the Purchaser to OFAC.
 
(o)          Anti-Money Laundering.  The Purchaser acknowledges that due to
anti-money laundering regulations within their respective jurisdictions, the
Company and/or any person acting on behalf of the Company may require further
documentation verifying the Purchaser’s identity and the source of funds used to
purchase the New Secured Notes before this Agreement can be accepted.  The
Purchaser further agrees to provide the Company at any time with such
information as the Company determines to be necessary and appropriate to verify
compliance with the anti-money laundering regulations of any applicable
jurisdiction or to respond to requests for information concerning the identity
of the Purchaser from any governmental authority, self-regulatory organization
or financial institution in connection with its anti-money laundering compliance
procedures, and to update such information as necessary.
 
 
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(p)          Short Sales and Confidentiality Prior to the Date Hereof.  Other
than the transaction contemplated hereunder, Purchaser has not directly or
indirectly, nor has any person acting on behalf of or pursuant to any
understanding with Purchaser, executed any disposition, including Short Sales
(as such term is defined in Rule 200 of Regulation SHO under the Exchange Act),
in the securities of the Company during the period commencing from the time that
Purchaser first received written or oral notice of this Offering from the
Company or any other person setting forth the material terms of the transactions
contemplated hereunder or this Agreement until the date hereof (“Discussion
Time”).  Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of Purchaser’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement.  Other than to other persons a party to this
Agreement, Purchaser has maintained the confidentiality of all disclosures made
to it in connection with this transaction (including the existence and terms of
this transaction).
 
4.          Representations and Warranties of the Company.  Except as set forth
in the correspondingly numbered section of the Schedules hereto, the Company
represents and warrants to Purchaser as follows:
 
(a)          Organization and Qualification.  The Company is duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with the corporate power and authority to own and operate its business as
presently conducted, except where the failure to be or have any of the foregoing
would not have a Material Adverse Effect on the Company.  The Company is duly
qualified as a foreign corporation or other entity to do business and is in good
standing in each jurisdiction where the character of its properties owned or
held under lease or the nature of their activities makes such qualification
necessary, except for such failures to be so qualified or in good standing as
would not have a Material Adverse Effect.
 
(b)          Authority; Validity and Effect of Agreement.  The Company has the
requisite corporate power and authority to execute and deliver each of the
Transaction Documents, perform its obligations thereunder, and conduct the
Offering.  The execution and delivery of each of the Transaction Documents by
the Company, the performance by the Company of its obligations thereunder, the
transactions contemplated thereby, the Offering, and all other necessary
corporate action on the part of the Company have been duly authorized by its
board of directors, and no other corporate proceedings on the part of the
Company are necessary to authorize each of the Transaction Documents or the
Offering.  Each of the Transaction Documents has been duly and validly executed
and delivered by the Company and, assuming that each has been duly authorized,
executed and delivered by Purchaser, each constitutes a legal, valid and binding
obligation of the Company, in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
 
 
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(c)          No Conflict; Required Filings and Consents.  Neither the execution
and delivery of the Transaction Documents by the Company nor the performance by
the Company of its obligations thereunder will: (i) conflict with the Company’s
certificate of incorporation or bylaws; (ii) violate any statute, law,
ordinance, rule or regulation, applicable to the Company or any of the
properties or assets of the Company; or (iii) violate, breach, be in conflict
with or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or permit the termination of any
provision of, or result in the termination of, the acceleration of the maturity
of, or the acceleration of the performance of any obligation of the Company, or
result in the creation or imposition of any lien upon any properties, assets or
business of the Company under, any material contract or any order, judgment or
decree to which the Company is a party or by which it or any of its assets or
properties is bound or encumbered except, in the case of clauses (ii) and (iii),
for such violations, breaches, conflicts, defaults or other occurrences which,
individually or in the aggregate, would not have a Material Adverse Effect.
 
(d)          SEC Reports.  The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC Reports prior
to the expiration of any such extension.  As of their respective dates, or to
the extent corrected by a subsequent amendment, the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2015, and all other reports of
the Company filed with the Commission pursuant to the Exchange Act from January
1, 2016 through the date of this Agreement (including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) complied in all material respects with the
requirements of the Exchange Act, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
 
(e)          Issuance of the Securities.  The New Secured Notes have been duly
authorized and, when issued and paid for in accordance with the terms of the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens, other than restrictions on transfer
provided for in the Transaction Documents or imposed by applicable securities
laws, and shall not be subject to preemptive or similar rights of shareholders. 
Assuming the accuracy of the representations and warranties of the Purchasers in
this Agreement, the New Secured Notes will be issued in compliance with
applicable federal and state securities laws.  The Company shall, so long as any
of the New Secured Notes are outstanding, take all action reasonably necessary
to reserve and keep available out of its authorized and unissued capital stock,
100% of the shares of Series C Preferred Stock issuable upon conversion of the
New Secured Notes, 150% of the shares of Common Stock underlying the Series C
Preferred Stock, as well as such other shares as, in the discretion of its Board
of Directors, may be necessary for the ordinary and necessary business needs of
the Company.
 
5.          Other Agreements of the Parties.
 
(a)          Transfer Restrictions.
 
 
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(i)          The Securities may only be disposed of in compliance with
applicable federal and state securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or Rule
144, to the Company or to an Affiliate of a Purchaser or in connection with a
pledge, the Company may require the transferor thereof to provide to the Company
an opinion of counsel to the Company, 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 and the other Transaction
Documents and shall have the rights and obligations of a Purchaser under this
Agreement.
 
(ii)          Legends.  The promissory notes, certificates and agreements
evidencing the Securities shall have endorsed thereon the following legend (and
appropriate notations thereof will be made in the Company’s stock transfer
books), and stop transfer instructions reflecting these restrictions on transfer
will be placed with the transfer agent of the Securities:
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.  THE SECURITIES
REPRESENTED HEREBY HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND
WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD,
TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF
1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE
SECURITIES LAWS.
 
(b)          Securities Laws Disclosure; Publicity.  On or prior to the fourth
(4th) Business Day following the initial closing contemplated by this Agreement,
the Company will file a Current Report on Form 8-K with the SEC describing the
terms of the Transaction Documents. Each Purchaser, severally and not jointly
with the other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as
described in this Section 5(b), such Purchaser will maintain the confidentiality
of all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).
 
(c)          Equal Treatment of Purchasers.  No consideration shall be offered
or paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents.  For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended for the Company to treat the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of the New Secured Notes, the
shares of Series C Preferred Stock (upon conversion of the New Secured Notes) or
otherwise.
 
 
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(d)          Form D and Blue Sky.  The Company agrees to file a Form D with
respect to the sale of the New Secured Notes as required under Regulation D. 
The Company, on or before the Closing, shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for or
to qualify the New Secured Notes for sale to the Purchasers at the Closing
pursuant to this Agreement under applicable securities or “Blue Sky” laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall make all filings and reports relating to the offer and sale of the New
Secured Notes required under applicable securities or “Blue Sky” laws of the
states of the United States following the Closing.
 
(e)          Lock-Up Agreements.  Each Purchaser agrees in connection with any
underwritten public offering that occurs after a closing of the Offering, if
requested by the managing underwriter, not to sell or transfer any shares of
Common Stock of the Company for a period of up to 180 days, plus up to an
additional 20 days to the extent necessary to comply with applicable regulatory
requirements following such public offering.  Such lock-up agreement shall
provide that any discretionary waiver or termination of the restrictions of such
agreements by the Company or representatives of the underwriters shall apply to
investors, pro rata, based on the number of shares held.
 
(f)          Limitations on Certain Future Financings.  Until such time as the
New Secured Notes have been repaid in full or converted into Series C Preferred
Stock, the Company shall not, without the consent of holders of a majority of
the outstanding principal amount of New Secured Notes (i) issue any new
promissory notes secured by Company assets or (ii) authorize any new class of
preferred stock senior to, or with a liquidation preference greater than, the
Series C Preferred Stock.
 
6.          Piggyback Registration.
 
(a)          Until the earlier of (i) the date as of which the Purchaser may
sell all of the “Registrable Securities” (as defined below) owned by Purchaser
without restriction pursuant to Rule 144 (including, without limitation, volume
restrictions) and without the need for current public information required by
Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the
Purchaser shall have sold all of the Registrable Securities owned by Purchaser,
(the “Registration Period”), whenever the Company proposes to register any
shares of its Common Stock under the Securities Act (other than a registration
effected solely to implement an employee benefit plan or a transaction to which
Rule 145 of the Securities Act is applicable, or a Registration Statement on
Form S-4, S-8 or any successor form thereto or another form not available for
registering the Securities for sale to the public), whether for its own account
or for the account of one or more stockholders of the Company and the form of
Registration Statement to be used may be used for any registration of Securities
(a “Piggyback Registration”), the Company shall give prompt written notice (in
any event no later than 10 days prior to the filing of such Registration
Statement) to the Purchaser and the other holders of securities subject to
piggyback registration rights (each, a “Selling Stockholder”) of its intention
to effect such a registration and, subject to Section 6(b) and Section 6(c),
shall include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion from the holders
of Registrable Securities within 5 days after the Company's notice has been
given to each such holder. The Company may postpone or withdraw the filing or
the effectiveness of a Piggyback Registration at any time in its sole discretion
and/or reduce the amount of shares to be included in such registration as a
result of rules, regulations, positions or releases issued or actions taken by
the SEC pursuant to its authority with respect to Rule 415, promulgated by the
SEC under the Securities Act. For purposes of this Section 6, the term
“Registrable Securities” means (x) the shares of Common Stock issuable upon
conversion of shares of the Series C Preferred Stock (the “Conversion Shares”),
(y) any Common Stock of the Company issued or issuable with respect to the
Conversion Shares including, without limitation, as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise, and
(z) any other shares of Common Stock of the Company which are subject to
piggyback registration rights.
 
 
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(b)          If during the Registration Period, a Piggyback Registration is
initiated as a primary underwritten offering on behalf of the Company, all
Selling Stockholders proposing to distribute their Registrable Securities
through such underwriting shall be required to enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Company. If during the Registration Period, a Piggyback
Registration is initiated as a primary underwritten offering on behalf of the
Company and the managing underwriter advises the Company and the Selling
Stockholders (if any Selling Stockholders have elected to be included in such
Piggyback Registration) in writing that in its opinion the number of shares of
Common Stock proposed to be included in such registration, including all
Registrable Securities and all other shares of Common Stock proposed to be
included in such underwritten offering, exceeds the number of shares of Common
Stock which can be sold in such offering and/or that the number of shares of
Common Stock proposed to be included in any such registration would adversely
affect the price per share of the Common Stock to be sold in such offering
and/or the Company is unable to include in such registration all of the
securities as a result of rules, regulations, positions or releases issued or
actions taken by the SEC pursuant to its authority with respect to Rule 415,
promulgated by the SEC under the Securities Act, the Company shall include in
such registration (i) first, the number of shares of Common Stock that the
Company proposes to sell on its own behalf; and (ii) second, the number of all
other shares of Common Stock required to be included as a result of contractual
demand or piggyback registration rights, allocated among such holders pro rata
on the basis of the number of securities to be included in such registration, or
in such manner as they may otherwise agree.
 
(c)          If during the Registration Period, a Piggyback Registration is
initiated as an underwritten offering on behalf of a holder of Common Stock
other than Registrable Securities as a result of contractual demand or mandatory
registration rights, and the managing underwriter advises the Company in writing
that in its opinion the number of shares of Common Stock proposed to be included
in such registration, including all Registrable Securities and all other shares
of Common Stock proposed to be included in such underwritten offering, exceeds
the number of shares of Common Stock which can be sold in such offering and/or
that the number of shares of Common Stock proposed to be included in any such
registration would adversely affect the price per share of the Common Stock to
be sold in such offering and/or the Company is unable to include in such
registration all of the Registrable Securities as a result of rules,
regulations, positions or releases issued or actions taken by the SEC pursuant
to its authority with respect to Rule 415, promulgated by the SEC under the
Securities Act, the Company shall include in such registration (i) first, the
number of shares of Common Stock required to be included as a result of
contractual demand or mandatory registration rights, (ii) second, the number of
shares of Common Stock required to be included therein as a result of
contractual piggyback registration rights, allocated among such holders pro rata
according to the number of shares to be included in such registration; and (iii)
third, the number of all other shares of Common Stock to be included as
determined jointly by the Company and managing underwriter.
 
 
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(d)          If any Piggyback Registration is initiated as a primary
underwritten offering on behalf of the Company, the Company shall select the
investment banking firm or firms to act as the managing underwriter or
underwriters in connection with such offering.
 
(e)          Registration Procedures.  Subject to the limitations set forth in
this Section 6, whenever it is obligated to register any Registrable Securities
pursuant to this Agreement, the Company shall:
 
(i)          use its reasonable best efforts to prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities in the manner
set forth in this Section 6 and use its reasonable best efforts to cause such
Registration Statement to be declared effective by the SEC as soon as reasonably
practicable thereafter;
 
(ii)          furnish to each Selling Stockholder such number of copies of the
Registration Statement and the prospectus included therein (including each
preliminary prospectus) as such person may reasonably request in order
facilitate the public sale or other disposition of the Registrable Securities
covered by such Registration Statement;
 
(iii)          use its reasonable best efforts to register or qualify the
Registrable Securities covered by such Registration Statement under the state
securities laws of such jurisdictions as any Selling Stockholder shall
reasonably request; provided, however, that the Company shall not be required to
qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
 
(iv)          in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering.  Each Selling
Stockholder participating in such underwriting shall also enter into and perform
its obligations under such an agreement, as described in Section 6(b);
 
(v)          immediately notify each Selling Stockholder at any time when a
prospectus relating thereto is required to be delivered under the Act, of the
happening of any event as a result of which the prospectus contained in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required or necessary to be
stated therein in order to make the statements contained therein not misleading
in light of the circumstances under which they were made.  The Company will use
reasonable efforts to amend or supplement such prospectus in order to cause such
prospectus not to include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
 
 
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(vi)          notify each Selling Stockholder of the issuance by the SEC of any
stop order of which the Company or its counsel is aware or should be aware
suspending the effectiveness of the Registration Statement or any order
preventing the use of a related prospectus, or the initiation or any threats of
any proceedings for such purposes;
 
(vii)          notify each Selling Stockholder of the receipt by the Company of
any written notification of the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation of any
threats of any proceeding for that purpose; and
 
(viii)          cooperate in the timely removal of any restrictive legends from
the shares of Registrable Securities in connection with the resale of such
shares covered by an effective Registration Statement.
 
(f)          Expenses.
 
(i)          For the purposes of this Section 6(f), the term “Registration
Expenses” shall mean all expenses incurred by the Company in complying with this
Section 6, including, without limitation, all registration, qualifying and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, fees and expenses under state securities laws, fees of the
Financial Industry Regulatory Authority, and fees and expenses of listing shares
of Registrable Securities on any securities exchange or automated quotation
system on which the Company’s shares are listed.  The term “Selling Expenses”
shall mean all underwriting discounts, broker and other selling fees and
commissions, stock transfer taxes applicable to the sale of the Registrable
Securities, and fees and disbursements of counsel for any Selling Stockholder.
 
(ii)          Except as otherwise provided herein, the Company will pay all
Registration Expenses in connection with the Registration Statements filed
pursuant to this Section 6.  All Selling Expenses in connection with any
Registration Statements filed pursuant to this Section 6 shall be borne by the
Selling Stockholders pro rata on the basis of the number of shares registered by
each Selling Stockholder whose shares of Registrable Securities are covered by
such Registration Statement, or by such persons other than the Company (except
to the extent the Company may be a seller) as they may agree upon.
 
(g)          Obligations of the Selling Stockholders.
 
(i)          In connection with each registration hereunder, each Selling
Stockholder shall furnish to the Company in writing such information with
respect to it and the securities held by it and the proposed distribution by it,
as shall be reasonably requested by the Company in order to assure compliance
with applicable federal and state securities laws as a condition precedent to
including the Selling Stockholder's Registrable Securities in the Registration
Statement.  Each Selling Stockholder shall also promptly notify the Company in
writing of any changes in such information included in the Registration
Statement or prospectus as a result of which there is an untrue statement of
material fact or an omission to state any material fact required or necessary to
be stated therein in order to make the statements contained therein not
misleading in light of the circumstances under which they were made.
 
 
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(ii)          In connection with the filing of the Registration Statement, each
Selling Stockholder shall furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with such
Registration Statement or prospectus.
 
(iii)         In connection with each registration pursuant to this Agreement,
each Selling Stockholder agrees that it will not affect sales of any Registrable
Securities until notified by the Company of the effectiveness of the
Registration Statement, and thereafter will suspend such sales after receipt of
notice from the Company to suspend sales to permit the Company to correct or
update a Registration Statement or prospectus or upon receipt by the Company of
a threat by the SEC or state securities commission to undertake a stop order
with respect to sales under the Registration Statement.  At the end of any
period during which the Company is obligated to keep a Registration Statement
current, each Selling Stockholder shall discontinue sales of Registrable
Securities pursuant to such Registration Statement upon receipt of notice from
the Company of its intention to remove from registration the Registrable
Securities covered by such Registration Statement which remains unsold, and each
Selling Stockholder shall notify the Company in writing of the number of shares
registered which remain unsold immediately upon receipt of such notice from the
Company.
 
(h)          Information Blackout and Holdbacks.
 
(i)          At any time when a Registration Statement effected pursuant to this
Section 6 is effective, upon written notice from the Company to the Selling
Stockholder that the Company has determined in good faith that the sale of
Registrable Securities pursuant to the Registration Statement would require
disclosure of non-public material information, the Selling Stockholder shall
suspend sales of Registrable Securities pursuant to such Registration Statement
until such time as the Company notifies the Selling Stockholder that such
material information has been disclosed to the public or has ceased to be
material, or that sales pursuant to such Registration Statement may otherwise be
resumed.
 
(ii)          Notwithstanding any other provision of this Agreement, the Selling
Stockholder shall not affect any sale or other transfer, or make any short sale
of, any Common Stock or other securities of the Company held by such Selling
Stockholder (other than those included in a Registration Statement) during the
180-day period following the effective date of any primary offering undertaken
by the Company of shares of its Common Stock, (“Primary Offering”), which may
also include other securities, unless the Company, in the case of a
non-underwritten Primary Offering, or the managing underwriter, in the case of
an underwritten Primary Offering, otherwise agree. The obligations described in
this Section 6(h)(ii) shall not apply to a registration relating solely to
employee benefit plans on Form S-8 or similar forms that may be promulgated in
the future, or a registration relating solely to a transaction on Form S-4 or
similar forms that may be promulgated in the future.
 
 
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7.          Indemnification.  Purchaser agrees to indemnify, defend and hold
harmless the Company and its respective affiliates and agents from and against
any and all demands, claims, actions or causes of action, judgments,
assessments, losses, liabilities, damages or penalties and reasonable attorneys’
fees and related disbursements incurred by the Company that arise out of or
result from a breach of any representations or warranties made by Purchaser
herein, and Purchaser agrees that in the event of any breach of any
representations or warranties made by Purchaser herein, the Company may, at its
option, forthwith rescind the sale of the New Secured Notes to Purchaser.
 
8.          Confidentiality.  Purchaser acknowledges and agrees that:
 
(a)          Certain of the information contained herein is of a confidential
nature and may be regarded as material non-public information under Regulation
FD of the Securities Act.
 
(b)          This Agreement has been furnished to Purchaser by the Company for
the sole purpose of enabling Purchaser to consider and evaluate an investment in
the Company, and will be kept confidential by Purchaser and not used for any
other purpose.
 
(c)          Until the time the information contained herein has been adequately
disseminated to the public, the existence of this Agreement and the information
contained herein shall not, without the prior written consent of the Company, be
disclosed by Purchaser to any person or entity, other than Purchaser’s personal
financial and legal advisors for the sole purpose of evaluating an investment in
the Company, and Purchaser will not, directly or indirectly, disclose or permit
Purchaser’s personal financial and legal advisors to disclose, any of such
information without the prior written consent of the Company.
 
(d)          Purchaser shall make its representatives aware of the terms of this
Section 8 and to be responsible for any breach of this Agreement by such
representatives. 
 
(e)          Purchaser shall not, without the prior written consent of the
Company, directly or indirectly, make any statements, public announcements or
release to trade publications or the press with respect to the contents or
subject matter of this Agreement. 
 
(f)          If Purchaser decides to not pursue further investigation of the
Company or to not participate in the Offering, Purchaser will promptly return
this Agreement and any accompanying documentation to the Company.
 
9.          Non-Public Information.  Purchaser acknowledges that certain
information concerning the matters that are the subject matter of this Agreement
constitute material non-public information under United States federal
securities laws, and that United States federal securities laws prohibit any
person who has received material non-public information relating to the Company
from purchasing or selling securities of the Company, or from communicating such
information to any person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell securities of the
Company.  Accordingly, until such time as any such non-public information has
been adequately disseminated to the public, Purchaser shall not purchase or sell
any securities of the Company, or communicate such information to any other
person.
 
 
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10.          Sales and Confidentiality After The Date Hereof.  Such Purchaser
shall not, and shall cause its affiliates not to, engage, directly or
indirectly, in any transactions in the securities of the Company (including,
without limitation, any Short Sales (as such term is defined in Rule 200
promulgated under Regulation SHO under the Exchange Act)) during the period from
the date hereof until such time as (i) the transactions contemplated by this
Agreement are first publicly announced or (ii) this Agreement is terminated. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser's assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser's assets, the representation set forth
above shall apply only with respect to the portion of assets managed by the
portfolio manager that have knowledge about the financing transaction
contemplated by this Agreement.  Each Purchaser understands and acknowledges,
severally and not jointly with any other Purchaser, that the SEC currently takes
the position that covering a short position established prior to effectiveness
of a resale registration statement with shares included in such registration
statement would be a violation of Section 5 of the Securities Act, as set forth
in Division of Corporation Finance Compliance and Disclosure Interpretation
239.10 regarding short selling.
 
11.          Entire Agreement; No Third Party Beneficiaries.  This Agreement and
the other Transaction Documents contain the entire agreement between the parties
and supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereto, and no party
shall be liable or bound to any other party in any manner by any warranties,
representations, guarantees or covenants except as specifically set forth in
this Agreement and the Transaction Documents.  Purchaser acknowledges and agrees
that, with the exception of the information contained or incorporated by
reference in the Offering Documents, Purchaser did not rely upon any statements
or information, whether oral or written, provided by the Company, or any of its
officers, directors, employees, agents or representatives, in deciding to enter
into this Agreement or purchase the New Secured Notes.  Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
 
12.          Amendment and Modification.  This Agreement may not be amended,
modified or supplemented except by an instrument or instruments in writing
signed by the Company and the Purchaser.
 
 
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13.          Extensions and Waivers.  At any time prior to the Closing, the
parties hereto entitled to the benefits of a term or provision may (a) extend
the time for the performance of any of the obligations or other acts of the
parties hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto, or (c) waive compliance with any obligation, covenant, agreement or
condition contained herein.  Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument or
instruments in writing signed by the Company and the holders of a majority of
the outstanding principal amount of the New Secured Notes sold in the Offering. 
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement.
 
14.          Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that the Company may not assign its rights or
delegate its obligations under this Agreement without the express prior written
consent of the Purchaser.  Except as provided in Section 6, nothing in this
Agreement is intended to confer upon any person not a party hereto (and their
successors and assigns) any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
 
15.          Survival of Representations, Warranties and Covenants.  The
representations and warranties contained herein shall survive the Closing and
shall thereupon terminate 18 months from the Closing, except that the
representations contained in Sections 3(a), 3(b), 4(a), and 4(b) shall survive
indefinitely.  All covenants and agreements contained herein which by their
terms contemplate actions following the Closing shall survive the Closing and
remain in full force and effect in accordance with their terms.  All other
covenants and agreements contained herein shall not survive the Closing and
shall thereupon terminate.
 
16.          Headings; Definitions.  The Section headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement.  All references to Sections
contained herein mean Sections of this Agreement unless otherwise stated.  All
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms.
 
17.          Severability.  If any provision of this Agreement or the
application thereof to any person or circumstance is held to be invalid or
unenforceable to any extent, the remainder of this Agreement shall remain in
full force and effect and shall be reformed to render the Agreement valid and
enforceable while reflecting to the greatest extent permissible the intent of
the parties.
 
18.          Notices.  All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, telecopy,
telefax or other electronic transmission service to the appropriate address or
number as set forth below:
 
 
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If to the Company:
 
Virtual Piggy, Inc.
1618 South Broad Street
Philadelphia, PA 19145
Fax (215) 465-2013
Attention: Ernest Cimadamore

with a copy to:

Wiggin and Dana LLP
Two Stamford Plaza
281 Tresser Boulevard
Stamford, CT 06901
Fax (203) 363-7676
Attention:  Michael Grundei, Esquire

If to Purchaser:
 
To that address indicated on the signature page hereof.
 
19.          Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
 
20.          Arbitration.  If a dispute arises as to the interpretation of this
Agreement, it shall be decided in an arbitration proceeding conforming to the
Rules of the American Arbitration Association applicable to commercial
arbitration then in effect at the time of the dispute.  The arbitration shall
take place in Wilmington, Delaware.  The decision of the arbitrators shall be
conclusively binding upon the parties and final and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. The parties
shall share equally the costs of the arbitration.
 
21.          Counterparts.  This Agreement may be executed and delivered by
facsimile in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same agreement.
 

[Signature page follows.]
 
 
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IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have
caused this Agreement to be executed as of the date set forth below.
 

   
PURCHASER
Date: __________________, 201__
                                     
By:
                 
Name:
                 
Title:
                 
Address:
                                     
Phone:
                 
Social Security
       
or Tax ID No.:
           
Original principal amount of 3.5% Secured Convertible Notes to be Purchased for
cash:
 
$____________
 
         
Original principal amount of 3.5% Secured Convertible Notes to be Purchased
through exchange of Prior Secured Notes:
 
$____________
               
Delivery Instructions (if different than Address):
                       

 
 
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VIRTUAL PIGGY, INC.
     
Date: __________________, 201__
   
By:
      Name:       Title:  

 
 
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EXHIBIT A

 
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE.  THIS NOTE HAS BEEN TAKEN BY THE REGISTERED
OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND
MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE
THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR
OTHER APPLICABLE SECURITIES LAWS.
 

 
VIRTUAL PIGGY, INC.
 
3.5% SECURED CONVERTIBLE PROMISSORY NOTE DUE 2018
 
U.S. $[_______]
No.: PN-C2016-[___]
Philadelphia, PA
[__________], 2016

 
FOR VALUE RECEIVED, the undersigned, VIRTUAL PIGGY, INC., a Delaware corporation
(the “Company”), hereby promises to pay to the order of [____________________]
or any future holder of this promissory note (the “Payee”), at the principal
office of the Payee set forth herein, or at such other place as the holder may
designate in writing to the Company, the principal sum of [___________] Dollars
(U.S. $[_________]), or such other amount as may be outstanding hereunder (the
“Principal Amount”), together with all accrued but unpaid interest, in such coin
or currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts and in immediately available funds,
as provided in this promissory note (the “Note”).
 
This Note is one of a duly authorized issue of 3.5% Secured Convertible
Promissory Notes due 2018 of the Company, in aggregate principal amount of up to
Ten Million Dollars ($10,000,000) (the “Promissory Notes”) issued pursuant to
the Securities Purchase Agreement of even date herewith (the “Purchase
Agreement”; capitalized terms used herein without definition shall have the
meanings assigned in the Purchase Agreement).  The Promissory Notes rank equally
and ratably without priority over one another.  No payment, including any
prepayment, shall be made hereunder unless payment, including any prepayment, is
offered with respect to the other Promissory Notes in an amount which bears the
same ratio to the then unpaid principal amount of such Promissory Notes as the
payment made hereon bears to the then unpaid principal amount under this Note.
 
1.          Principal and Interest Payments.
 
(a)          Principal.  The Company shall repay in full the entire principal
balance then outstanding under this Note plus all accrued and unpaid interest on
the first to occur (the “Maturity Date”) of: (i) June 30, 2018; (ii) such time
as there occurs a Sale Transaction (as defined below) or (iii) the acceleration
of the obligations as contemplated by this Note.
 
 
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“Sale Transaction” shall mean (i) the sale or other disposition of all or
substantially all of the Company’s assets, or (ii) the acquisition of the
Company by another entity by means of any transaction or series of related
transactions to which the Company is party (including, without limitation, any
stock acquisition, reorganization, merger or consolidation but excluding any
sale of stock for capital raising purposes) other than a transaction or series
of transactions in which the holders of the voting securities of the Company
outstanding immediately prior to such transaction continue to retain (either by
such voting securities remaining outstanding or by such voting securities being
converted into voting securities of the surviving entity), as a result of shares
in the Company held by such holders prior to such transaction, at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such
transaction or series of transactions.
 
(b)          Interest.  Interest on the outstanding principal balance of this
Note shall accrue at a rate of three and one-half percent (3.5%) per annum,
compounded quarterly.  Interest on the outstanding principal balance of this
Note shall be computed on the basis of the actual number of days elapsed and a
year of three hundred sixty (360) days and shall be payable on the Maturity
Date, upon earlier prepayment of this Note or in the form of shares of Series C
Preferred Stock, par value $0.0001 per share, of the Company (the “Series C
Preferred Stock”) upon conversion of this Note as set forth in Section 8 below. 
Furthermore, upon the occurrence of an Event of Default, then to the extent
permitted by law, the Company will pay interest to the Payee, payable on demand,
on the outstanding principal balance of this Note from the date of the Event of
Default until payment in full at the rate of fifteen percent (15%) per annum,
compounded quarterly.
 
(c)          Prepayment.  The Company may prepay the outstanding principal
amount of this Note, in whole or in part, prior to the Maturity Date (a
“Prepayment”) without the written consent of the Payee, at any time upon ten
(10) days prior written notice of the date on which the Company intends to make
such Prepayment (a “Prepayment Notice”).  Any partial Prepayment shall be
applied first to accrued but unpaid interest and second to unpaid principal. 
Nothing in this Section 1(c) shall limit the right of the Payee to convert the
principal and accrued interest under this Note into Series C Preferred Stock at
any time after receipt of the Prepayment Notice and prior to the time at which
such Prepayment is made. The Company shall prepay the outstanding principal
amount of this Note, in whole, upon the occurrence of a Sale Transaction.
 
2.          Non-Business Days.  Whenever any payment to be made shall be due on
a non-Business Day, such payment may be due on the next succeeding Business Day
and such next succeeding day shall be included in the calculation of the amount
of accrued interest payable on such date.
 
3.          Security. This Note is secured, pursuant to the terms of an Amended
and Restated Security Agreement between the Company, William F. Miller III as
collateral agent, the holders of the Promissory Notes of even date herewith, and
the holders of the Prior Secured Notes (as such term is defined in the Purchase
Agreement) (the “Security Agreement”), by a security interest in the Collateral
(as such term is defined in the Security Agreement).  This Note is subject to
the provisions of the Security Agreement.
 
 
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4.          Subordination of Future Debt; Payment of Dividends. Except as
provided in the Transaction Documents, any debt incurred after the date hereof
to any creditor shall be subordinated to the indebtedness evidenced by this
Note.  The Company shall not declare or pay any dividend or distribution with
respect to any preferred stock or common stock of the Company other than (i) a
pro rata dividend with respect to the common stock payable solely in shares of
common stock or (ii) dividend accruals (but not payments or distributions) on
Company preferred stock pursuant to the terns thereof.
 
5.          Representations and Warranties of the Company.  The Company
represents and warrants to the Payee as follows:
 
(a)          The Company has been duly incorporated and is validly existing and
in good standing under the laws of the state of Delaware, with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as currently conducted.
 
(b)          This Note has been duly authorized, validly executed and delivered
on behalf of the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors' rights generally, and the
Company has full power and authority to execute and deliver this Note and to
perform its obligations hereunder.
 
6.          Events of Default.  The occurrence of any of the following events
shall be an “Event of Default” under this Note:
 
(a)          the Company shall fail to pay the principal or any accrued interest
hereunder or any other Note after the date such payment shall become due and
payable hereunder or thereunder; or
 
(b)          if default shall be made in the performance or observance of any
representation, warranty, covenant, or agreement contained in this Note, in the
Amended and Restated Security Agreement or in the Purchase Agreement, or in any
other agreement between the Company and the Payee relating to indebtedness of
the Company to the Payee or any of its affiliates for borrowed money and such
default shall have continued for a period of five (5) days after Company’s
receipt of written notice of such default (unless such default is on account of
failure to give a required notice, in which event such 5 day cure period shall
commence with the date of such default); or
 
(c)          the Company shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property or assets, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a voluntary
case under the United States Bankruptcy Code (the “Bankruptcy Code”) or under
the comparable laws of any jurisdiction (foreign or domestic), (iv) file a
petition seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors’
rights generally, (v) acquiesce in writing to any petition filed against it in
an involuntary case under the Bankruptcy Code or under the comparable laws of
any jurisdiction (foreign or domestic), or (vi) take any action under the laws
of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or
 
 
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(d)          a proceeding or case shall be commenced in respect of the Company
or any of its subsidiaries without its application or consent, in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium,
dissolution, winding up, or composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets or (iii) similar relief in respect
of it under any law providing for the relief of debtors, and such proceeding or
case described in clause (i), (ii) or (iii) shall continue undismissed, or
unstayed and in effect, for a period of thirty (30) consecutive days or any
order for relief shall be entered in an involuntary case under the Bankruptcy
Code or under the comparable laws of any jurisdiction (foreign or domestic)
against the Company or any of its subsidiaries or action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing shall be
taken with respect to the Company or any of its subsidiaries and shall continue
undismissed, or unstayed and in effect for a period of ninety (90) consecutive
days.
 
7.          Remedies Upon an Event of Default.  If an Event of Default shall
have occurred and shall be continuing, the Payee of this Note may at any time at
its option, (a) declare the entire unpaid principal balance of this Note,
together with all interest accrued hereon, due and payable, and thereupon, the
same shall be accelerated and so due and payable; provided, however, that upon
the occurrence of an Event of Default described in (i) Sections 6(c) and (d),
without presentment, demand, protest, or notice, all of which are hereby
expressly unconditionally and irrevocably waived by the Company, the outstanding
principal balance and accrued interest hereunder shall be automatically due and
payable, and (ii) Sections 6(a) and (b) the Payee may exercise or otherwise
enforce any one or more of the Payee’s rights, powers, privileges, remedies and
interests under this Note or applicable law.  No course of delay on the part of
the Payee shall operate as a waiver thereof or otherwise prejudice the right of
the Payee.  No remedy conferred hereby shall be exclusive of any other remedy
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise.
 
8.          Conversion.
 
(a)          General.  The holder of this Note shall have the right at any time,
at such holder’s option, to convert all or any lesser portion of the Principal
Amount plus accrued and unpaid interest thereon into such number of fully paid
and non-assessable shares of Series C Preferred Stock as is determined by
dividing (i) the portion of the Principal Amount to be converted plus accrued
and unpaid interest thereon by (ii) the Conversion Rate (as defined below) then
in effect for this Note. The initial conversion rate shall be $90.00, such rate
to be subject to adjustment in accordance with the provisions of this Section 8.
Such conversion rate in effect from time to time, as adjusted pursuant to this
Section 8, is referred to herein as a “Conversion Rate.”  All of the remaining
provisions of this Section 8 shall apply separately to each Conversion Rate in
effect from time to time with respect to this Note.
 
 
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(b)          Mechanics of Conversion.
 
(i)          Such right of conversion shall be exercised by the Payee by
delivering to the Company a conversion notice in the form attached hereto as
Exhibit A (the “Conversion Notice”), appropriately completed and duly signed,
and by surrender not later than two (2) Business Days thereafter of this Note. 
The Conversion Notice shall also contain a statement of the name or names (with
addresses and tax identification or social security numbers) in which the
certificate or certificates for Series C Preferred Stock shall be issued, if
other than the name in which this Note is registered. Promptly after the receipt
of the Conversion Notice, the Company shall issue and deliver, or cause to be
delivered, to the Payee or such Payee’s nominee, a certificate or certificates
for the number of shares of Series C Preferred Stock issuable upon such
conversion. Such conversion shall be deemed to have been effected as of the
close of business on the date of receipt by the Company of the Conversion Notice
(the “Conversion Date”), and the person or persons entitled to receive the
shares of Series C Preferred Stock issuable upon conversion shall be treated for
all purposes as the holder or holders of record of such shares of Series C
Preferred Stock as of the close of business on the Conversion Date.  If the
Payee has not converted the entire principal and interest amount of this Note
pursuant to the Conversion Notice, then the Company shall execute and deliver to
the Payee a new Note instrument identical in terms to this Note, but with a
principal amount reflecting the unconverted portion of this Note.  The new Note
instrument shall be delivered subject to the same timing terms as the
certificates for the Series C Preferred Stock.
 
(ii)          The Company shall effect such issuance of Series C Preferred Stock
within three (3) Business Days following the Conversion Date and shall transmit
the certificates by messenger or reputable overnight delivery service to reach
the address designated by such holder within three (3) Business Days after the
receipt by the Company of such Conversion Notice.  Provided that the holder
complies with all of the provisions of this Note relating to the conversion
hereof, if certificates evidencing the Series C Preferred Stock are not received
by the holder (through no fault or negligence of the holder) within five (5)
Business Days following the Conversion Date, then the holder will be entitled to
revoke and withdraw its Conversion Notice, in whole or in part, at any time
prior to its receipt of those certificates.
 
(d)          Fractional Shares.  The Company shall not be required to issue a
fractional share of Series C Preferred Stock upon conversion of this Note. As to
any fraction of a share which the holder of this Note would otherwise be
entitled to acquire upon such conversion, the Company shall round down such
fractional share to the nearest whole share of Series C Preferred Stock.
 
 (e)          Stock Dividends, Subdivisions and Combinations.  If at any time
while this Note is outstanding, the Company shall:
 
(i)          cause the holders of its Series C Preferred Stock to be entitled to
receive a dividend payable in, or other distribution of, additional shares of
Series C Preferred Stock,
 
(ii)         subdivide its outstanding shares of Series C Preferred Stock into a
larger number of shares of Series C Preferred Stock, or
 
(iii)        combine its outstanding shares of Series C Preferred Stock into a
smaller number of shares of Series C Preferred Stock,
 
 
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then in each such case the Conversion Rate shall be multiplied by a fraction of
which the numerator shall be the number of shares of Series C Preferred Stock
(excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Series C Preferred
Stock outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this Section 8(e) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution, and any adjustment pursuant to clauses (ii) or (iii)
of this Section 8(e) shall become effective immediately after the effective date
of such subdivision or combination. If any event requiring an adjustment under
this paragraph occurs during the period that a Conversion Rate is calculated
hereunder, then the calculation of such Conversion Rate shall be adjusted
appropriately to reflect such event.
 
(f)          Certain Other Distributions. If at any time while this Note is
outstanding the Company shall take a record of the holders of its Series C
Preferred Stock for the purpose of entitling them to receive any special
dividend or other special distribution of:
 
(i)          cash,
 
(ii)         any evidences of its indebtedness, any shares of stock of any class
or any other securities or property or assets of any nature whatsoever (other
than cash or additional shares of Series C Preferred Stock as provided in
Section 8(e) hereof), or
 
(iii)        any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property or assets of any nature whatsoever (in each case set
forth in subparagraphs 8(f)(i), 8(f)(ii) and 8(f)(iii) hereof, the “Distributed
Property”),
 
then upon any conversion of this Note that occurs after such record date, the
holder of this Note shall be entitled to receive, in addition to the shares of
Series C Preferred Stock issuable upon conversion of the Note (the “Conversion
Shares”), the Distributed Property that such holder would have been entitled to
receive in respect of such number of Conversion Shares had the holder been the
record holder of such Conversion Shares as of such record date. Such
distribution shall be made whenever any such conversion is made, but shall, for
avoidance of doubt, not include ordinary course dividend accruals on the Series
C Preferred Stock. In the event that the Distributed Property consists of
property other than cash, then the fair value of such Distributed Property shall
be as determined in good faith by the Board and set forth in reasonable detail
in a written valuation report (the “Valuation Report”) prepared by the Board.
The Company shall give written notice of such determination and a copy of the
Valuation Report to the holder of this Note, and if the holder objects to such
determination within twenty (20) Business Days following the date such notice is
given, the Company shall submit such valuation to an investment banking firm of
recognized national standing selected by the holder of this Note and acceptable
to the Company in its reasonable discretion, whose opinion shall be binding upon
the Company and the holder of this Note. A reclassification of the Series C
Preferred Stock (other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Series C Preferred Stock
and shares of any other class of stock shall be deemed a distribution by the
Company to the holders of its Series C Preferred Stock of such shares of such
other class of stock within the meaning of this Section 8(f) and, if the
outstanding shares of Series C Preferred Stock shall be changed into a larger or
smaller number of shares of Series C Preferred Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Series C Preferred Stock within
the meaning of Section 8(e).
 
 
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(g)          Series C Preferred Stock Reserved. The Company shall at all times
reserve and keep available out of its authorized but unissued Series C Preferred
Stock, solely for issuance upon the conversion of the Promissory Notes, such
number of shares of Series C Preferred Stock as shall from time to time be
issuable upon the conversion of all the Promissory Notes at the time
outstanding.
 
9.          Other Provisions Applicable to Adjustments. The following provisions
shall be applicable to the making of adjustments of the number of shares of
Series C Preferred Stock into which this Note is convertible and the current
Conversion Rate provided for in Section 8:
 
(a)          When Adjustments to Be Made. The adjustments required by Section 8
shall be made whenever and as often as any specified event requiring an
adjustment shall occur, except that any adjustment to the Conversion Rate that
would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Series C Preferred Stock, as
provided for in Section 8(e)) up to, but not beyond the Conversion Date if such
adjustment either by itself or with other adjustments not previously made adds
or subtracts less than 1% of the shares of Series C Preferred Stock into which
this Note is convertible immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by Section 8 and not
previously made, would result in a minimum adjustment or on the Conversion Date.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
 
(b)          Fractional Interests. In computing adjustments under Section 8,
fractional interests in Series C Preferred Stock shall be rounded down to the
nearest whole share of Series C Preferred Stock.
 
(c)          When Adjustment Not Required. If the Company undertakes a
transaction contemplated under Section 8(f) and as a result takes a record of
the holders of its Series C Preferred Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights or other
benefits contemplated under Section 8(f) and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay or deliver
such dividend, distribution, subscription or purchase rights or other benefits
contemplated under Section 8(f), then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
 
(d)          Escrow of Stock. If after any property becomes distributable
pursuant to Section 8 by reason of the taking of any record of the holders of
Series C Preferred Stock, but prior to the occurrence of the event for which
such record is taken, a holder of this Note converts this Note during such
period, the holder of this Note shall continue to be entitled to receive any
shares of Series C Preferred Stock issuable upon conversion under Section 8 by
reason of such adjustment (as if this Note were not yet converted) and such
shares or other property shall be held in escrow for the holder of this Note by
the Company to be issued to holder of this Note upon and to the extent that the
event actually takes place. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be canceled by the Company and
escrowed property returned to the Company.
 
 
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10.          Replacement.  Upon receipt of a duly executed, notarized and
unsecured written statement from the Payee with respect to the loss, theft or
destruction of this Note (or any replacement hereof), and, if requested by the
Company, an indemnity bond customary in the industry, or, in the case of a
mutilation of this Note, upon surrender and cancellation of such Note, the
Company shall issue a new Note, of like tenor and amount, in lieu of such lost,
stolen, destroyed or mutilated Note.
 
11.          Parties in Interest, Transferability.  This Note shall be binding
upon the Company and its successors and permitted assigns and the terms hereof
shall inure to the benefit of the Payee and its successors and assigns. This
Note may be transferred or sold, subject to the provisions of Section 19 of this
Note, or pledged, hypothecated or otherwise granted as security by the Payee.
 
12.          Amendments.  This Note may not be modified or amended in any manner
except in writing executed by the Company and the Payee.
 
13.          Notices.  Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telecopy or facsimile at the
address or number designated below (if delivered on a Business Day during normal
business hours where such notice is to be received), or the first Business Day
following such delivery (if delivered other than on a Business Day during normal
business hours where such notice is to be received) or (b) on the second
Business Day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur.  The Company will give written notice to the Payee
at least twenty (20) days prior to the date on which dissolution, liquidation or
winding-up will take place and in no event shall such notice be provided to the
Payee prior to such information being made known to the public.  Notices to the
Payee shall be made to the address set forth in the Purchase Agreement.  Notices
to the Company shall be made to the following:
 
Address of the Company:
Virtual Piggy, Inc.
1618 South Broad Street
Philadelphia, PA 19145
Fax (215) 465-2013
Attention: Ernest Cimadamore
           
with a copy to:
Wiggin and Dana LLP
Two Stamford Plaza
281 Tresser Boulevard
Stamford, CT 06901
Fax (203) 363-7676
Attention:  Michael Grundei, Esquire
 

 
 
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14.          Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without giving
effect to the choice of law provisions.  This Note shall not be interpreted or
construed with any presumption against the party causing this Note to be
drafted.
 
15.          Headings.  Article and section headings in this Note are included
herein for purposes of convenience of reference only and shall not constitute a
part of this Note for any other purpose.
 
16.          Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief.  The remedies provided in this Note shall be cumulative and
in addition to all other remedies available under this Note, at law or in equity
(including, without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a Payee’s right to pursue actual damages for any failure by the
Company to comply with the terms of this Note.  Amounts set forth or provided
for herein with respect to payments and the like (and the computation thereof)
shall be the amounts to be received by the Payee and shall not, except as
expressly provided herein, be subject to any other obligation of the Company (or
the performance thereof).  The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Payee and
that the remedy at law for any such breach may be inadequate.  Therefore the
Company agrees that, in the event of any such breach or threatened breach, the
Payee shall be entitled, in addition to all other available rights and remedies,
at law or in equity, to such equitable relief, including but not limited to an
injunction restraining any such breach or threatened breach, without the
necessity of showing economic loss and without any bond or other security being
required.
 
17.          Failure or Indulgence Not Waiver.  No failure or delay on the part
of the Payee in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
 
18.          Enforcement Expenses.  The Company agrees to pay all costs and
expenses of enforcement of this Note, including, without limitation, reasonable
attorneys' fees and expenses.
 
19.          Compliance with Securities Laws.  The Payee of this Note
acknowledges that this Note is being acquired solely for the Payee’s own account
and not as a nominee for any other party, and for investment, and that the Payee
shall not offer, sell or otherwise dispose of this Note other than in compliance
with the laws of the United States of America and as guided by the rules of the
Securities and Exchange Commission.  This Note and any Note issued in
substitution or replacement therefore shall be stamped or imprinted with
legends, as applicable, in substantially the following form:
 
“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE.  THIS NOTE HAS BEEN TAKEN BY THE REGISTERED
OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND
MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE
THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR
OTHER APPLICABLE SECURITIES LAWS.”
 
 
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20.          Severability.  The provisions of this Note are severable, and if
any provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
 
21.          Consent to Jurisdiction.  Each of the Company and the Payee (i)
hereby irrevocably submits to the jurisdiction of the United States District
Court sitting in the District of Delaware and the courts of the State of
Delaware for the purposes of any suit, action or proceeding arising out of or
relating to this Note and (ii) hereby waives, and agrees not to assert in any
such suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such court, that the suit, action or proceeding is brought
in an inconvenient forum or that the venue of the suit, action or proceeding is
improper.  Each of the Company and the Payee consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such party at
the address set forth in Section 13 hereof and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing
in this Section 21 shall affect or limit any right to serve process in any other
manner permitted by law.
 
22.          Company Waivers.
 
(a)          Except as otherwise specifically provided herein, the Company and
all others that may become liable for all or any part of the obligations
evidenced by this Note, hereby waive presentment, demand, notice of nonpayment,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, and do hereby consent to
any number of renewals of extensions of the time or payment hereof and agree
that any such renewals or extensions may be made without notice to any such
persons and without affecting their liability herein and do further consent to
the release of any person liable hereon, all without affecting the liability of
the other persons, firms or Company liable for the payment of this Note, AND DO
HEREBY WAIVE TRIAL BY JURY.
 
(b)          No delay or omission on the part of the Payee in exercising its
rights under this Note, or course of conduct relating hereto, shall operate as a
waiver of such rights or any other right of the Payee, nor shall any waiver by
the Payee of any such right or rights on any one occasion be deemed a waiver of
the same right or rights on any future occasion.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
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IN WITNESS WHEREOF, the Company has executed and delivered this Promissory Note
as of the date first written above.
 
 
 
 

 
VIRTUAL PIGGY, INC.
                 
By:
     
Name: Scott McPherson
   
Title: Chief Financial Officer

 
 
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EXHIBIT A
 
FORM OF CONVERSION NOTICE
 
(To be executed by the registered holder in order to convert the Note)
 
The undersigned hereby irrevocably elects to convert the principal and interest
under the 3.5% Secured Convertible Promissory Note due 2018 (the “Note”) of
Virtual Piggy, Inc., a Delaware corporation (the “Company”), due June 30, 2018
held by the undersigned into shares of Series C Preferred Stock, according to
the terms and conditions of the Note and the conditions hereof, as of the date
written below. The undersigned hereby requests that certificates for the shares
of Series C Preferred Stock to be issued to the undersigned pursuant to this
Conversion Notice be issued in the name of, and delivered to, the undersigned or
its designee as indicated below. If the shares of Series C Preferred Stock are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. A copy of the Note
being converted is attached hereto (and the original Note shall be transmitted
to the Company pursuant to the terms thereof).  All capitalized terms used in
this Conversion Notice, but not otherwise defined herein shall have the meanings
assigned in the Note.
 
 

 
Date of Conversion (Date of Notice)
   
Principal Amount of Note to be Converted
   
Principal Amount of Note not to be Converted (Principal Amount Remaining after
Conversion)
   
Amount of accumulated and unpaid interest on principal amount of Note to be
Converted
   
Number of shares of Series C Preferred Stock to be Issued (including conversion
of accrued but unpaid interest on Notes to be Converted)
   
Applicable Conversion Value
 
Conversion Information:[NAME OF HOLDER]
       

 
 
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Address of Holder: 
                           
Issue Series C Preferred Stock to (if different than above):
     
Name:
           
Address:
                         
Tax ID #:
                                     
Name of Holder
             
By:
         
Name:
     
Title:
 

 
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