EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of October 19,
2017, between JRjr33, Inc., a Florida corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
ARTICLE I.

DEFINITIONS
1.Definitions. In addition to the terms defined elsewhere in this Agreement: (a)
capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the Debentures (as defined herein), and (b) the following terms
have the meanings set forth in this Section 1.1:
“Account Control Agreement(s)” means any agreement entered into by and among
Agent, Company or any Subsidiary and a third party bank or other institution
(including a securities intermediary) in which Company or any Subsidiary
maintains a deposit account or an account holding investment property and which
grants Agent a perfected first priority security interest in the subject account
or accounts.
“Action” shall have the meaning assigned to such term in Section 3.1(j).
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.
“Agent” means JGB Collateral, LLC, a Delaware limited liability company.

“Board of Directors” means the board of directors of the Company.
“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.
“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Securities, in each
case, have been satisfied or waived.
“Collateral” shall have the meaning assigned to such term in the Security
Agreement.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.0001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option,

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warrant or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company Counsel” means Gracin & Marlow, LLP, with offices located at The
Chrysler Building, 405 Lexington Ave., 26th Floor, New York, New York 10174.
“Debenture Shares” shall have the meaning assigned to such term in the
Debentures.
“Debentures” means the 14.0% Original Issue Discount Senior Secured Guaranteed
Convertible Term Loan Note due, subject to the terms therein, October 19, 2020,
issued by the Company to the Purchasers hereunder, in the form of Exhibit A
attached hereto.
“Disclosure Schedules” means the Disclosure Schedules delivered by the Company
concurrently with the execution and delivery of this Agreement.
“Domestic Subsidiary” means any Subsidiary that is organized under the law of
any State of the United States or the District of Columbia.
“Environmental Laws” means all federal, state, local or international laws,
statutes, rules, regulations, codes, directives, treaties, requirements,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, natural resources, Hazardous Material or
health and safety matters.
“Evaluation Date” shall have the meaning assigned to such term in Section
3.1(s).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a
jurisdiction other than the United States, a State thereof or the District of
Columbia.
“GAAP” shall have the meaning assigned to such term in Section 3.1(h).
“Governmental Authority” means any national, supranational, federal, state,
county, provincial, local, municipal or other government or political
subdivision thereof (including any regulatory authority), whether domestic or
foreign, and any agency, authority, commission, ministry, instrumentality,
regulatory body, court, tribunal, arbitrator, central bank or other Person
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to any such government.
“Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise), or (b)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided, however, that
the term Guarantee shall not include endorsements for collection or deposit in
the Ordinary Course of Business. The term “Guarantee” used as a verb has a
corresponding meaning.
“Haynes and Boone” means Haynes and Boone, LLP, with offices located at 30
Rockefeller Plaza, 26th Floor, New York, NY 10112.
“Hazardous Material” means any material, substance, chemical, mixture or waste
which is capable of damaging or causing harm to any living organism, the
environment or natural resources, including all explosive, special, hazardous,
polluting, toxic, industrial, dangerous, biohazardous, medical, infectious or
radioactive substances, materials or wastes, noise, odor, electricity or heat,
and including petroleum or petroleum products, byproducts or distillates,
asbestos or asbestos-containing materials, urea formaldehyde, polychlorinated
biphenyls, radon gas, ozone-depleting substances,

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greenhouse gases, and all other substances or wastes of any nature regulated
pursuant to any Environmental Law or as to which any Governmental Authority
requires investigation, reporting or remedial action.
“Indebtedness” of a Person means at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising and paid on a timely basis and
in the Ordinary Course of Business, (d) all capital leases of such Person, (e)
all non-contingent obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit, banker’s acceptance
or similar instrument, (f) all equity securities of such Person subject to
repurchase or redemption other than at the sole option of such Person, (g) all
obligations secured by a Lien on any asset of such Person, whether or not such
obligation is otherwise an obligation of such Person, (h) profit sharing
arrangements, deferred purchase money amounts and similar payment obligations or
continuing obligations of any nature of such Person arising out of purchase and
sale contracts, (i) all Debt of others Guaranteed by such Person, (j)
off-balance sheet liabilities, (k) obligations arising under non-compete
agreements, and (l) all obligations arising under bonus, deferred compensation,
incentive compensation or similar arrangements in each case under this clause
(l) other than those arising in the Ordinary Course of Business. Without
duplication of any of the foregoing, Debt of Obligors as of any date of
determination shall include the outstanding principal amount of the Debentures.
“Intellectual Property Rights” shall have the meaning assigned to such term in
Section 3.1(o).
“Liens” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest.
“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).
“Maximum Rate” shall have the meaning assigned to such term in Section 5.16.
“Permits” means all permits, licenses, registrations, certificates, orders,
approvals, authorizations, consents, waivers, franchises, variances and similar
rights issued by or obtained from any Governmental Authority or any other
Person, including, without limitation, those relating to Environmental Laws.
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Personal Guarantors” means John Rochon and Donna Rochon.
“Personal Guaranty” means the personal guaranty, dated the date hereof, executed
and delivery by the Personal Guarantors in favor of the Purchasers, in the form
of Exhibit B attached hereto.
“Pledge Agreement” means that certain Pledge Agreement, dated as of the date
hereof, by and among the Company, the Domestic Subsidiaries party thereto and
the Purchasers, as may be amended, restated, supplemented or otherwise modified
from time to time.
“Principal Amount” means, as to each Purchaser, the amounts set forth below such
Purchaser’s signature block on the signature pages hereto next to the heading
“Principal Amount,” in United States Dollars, which shall equal such Purchaser’s
Subscription Amount multiplied by 1.0526316.
“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
“Public Information Failure” shall have the meaning assigned to such term in
Section 4.3(b).
“Public Information Failure Payments” shall have the meaning assigned to such
term in Section 4.3(b).
“Purchaser Party” shall have the meaning assigned to such term in Section 4.10.

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“Ordinary Course of Business” means, in respect of any transaction involving any
Person, the ordinary course of business of such Person, as conducted by such
Person in a manner consistent in all material respects with past practices.
“Required Approvals” shall have the meaning assigned to such term in Section
3.1(e).
“Required Minimum” means, (1) with respect to the Debentures 13,521,280 shares
of Common Stock and (2) with respect to the Warrants, as of any date, the
maximum aggregate number of shares of Common Stock issuable upon exercise in
full of all Warrants, ignoring any exercise limits set forth in the Warrants.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
“SEC Reports” shall have the meaning assigned to such term in Section 3.1(h).
“Securities” means the Debentures, the Warrants, and the Underlying Shares.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Security Agreement” means the Security Agreement, dated the date hereof, among
the Company, each of the Guarantors, the Purchasers, and the Agent in the form
of Exhibit C attached hereto.

“Security Documents” shall mean the Security Agreement, the Account Control
Agreement(s), the Pledge Agreement, and any other documents and filing required
thereunder in order to grant the Purchasers or the Agent a first priority
security interest in the assets of the Company as provided in the Security
Agreement, including all UCC-1 filing receipts.
“Stockholder Approval” shall have the meaning assigned to such term in Section
4.14.
“Stockholder Meeting” shall have the meaning assigned to such term in Section
4.14.
“Stockholder Meeting Deadline” shall have the meaning assigned to such term in
Section 4.14.
“Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for Debentures and Warrants purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in immediately available
funds. The aggregate “Subscription Amount” shall be five million dollars
($5,000,000).
“Subsidiary” shall mean, as to any person, any corporation, limited liability
company, partnership or joint venture, whether now existing or hereafter
organized or acquired: (i) in the case of a corporation, of which at least a
majority of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation
(other than stock having such voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person and/or one or more of its Subsidiaries or (ii) in the case of a limited
liability company, partnership or joint venture, in which such Person or a
Subsidiary of such Person is a member, general partner or joint venturer or of
which a majority of the partnership or other ownership interests are at the time
owned by such Person or one or more of its Subsidiaries. Unless otherwise
specified herein, all references to a “Subsidiary” shall be deemed to refer to
“Subsidiaries” of the Company.
“Subsidiary Guarantors” means each of the Subsidiaries listed on Schedule 1.1A
executing the Subsidiary Guaranty and Security Agreement.
“Subsidiary Guaranty” means the Subsidiary Guaranty of even date herewith
substantially in the form attached hereto as Exhibit D.
“Trading Day” means a day on which the principal Trading Market is open for
trading.
“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Global Market, the Nasdaq Global Select

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Market, the Nasdaq Capital Market, the New York Stock Exchange, the OTCQB or the
OTCQX U.S. (or any successors to any of the foregoing).
“Transaction Documents” means this Agreement, the Debentures, the Warrants, the
Security Agreement, the Subsidiary Guaranty, the Account Control Agreement(s),
and all exhibits and schedules thereto and hereto and any other documents or
agreements executed in connection with the transactions contemplated hereunder.
“Transfer Agent” means Pacific Stock Transfer Company, the current transfer
agent of the Company, with a mailing address of 6725 Via Austi Pkwy, Suite 300,
Las Vegas, Nevada 89119 and a facsimile number of (702) 433-1979, and any
successor transfer agent of the Company.
“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion or redemption of the Debentures and upon exercise of the Warrants,
including, without limitation, the Debenture Shares and the Warrant Shares.
“Variable Rate Transaction” shall have the meaning assigned to such term in
Section 4.12.
“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (local time in New York City, New York) to 4:00 p.m.
(local time in New York City, New York)), (b) if the Common Stock is not then
listed or quoted for trading on a Trading Market and if prices for the Common
Stock are then reported in the “Pink Sheets” published by OTC Markets Group,
Inc. (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so
reported, or (c) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Purchasers and reasonably acceptable to the Company, the reasonable fees and
reasonable out-of-pocket expenses of which shall be paid by the Company.
“Warrants” means, the Common Stock Purchase Warrants delivered to the Purchasers
at the Closing in accordance with Section 2.2(a), which warrants shall be
immediately exercisable and have a term equal to four (4) years, in the form of
Exhibit E attached hereto.
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.
ARTICLE II.

PURCHASE AND SALE
1.Closing. On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, five million two hundred sixty
three thousand one hundred fifty eight dollars ($5,263,158) in principal amount
of the Debentures and the Warrants. Each Purchaser shall deliver to the Company,
via wire transfer or a certified check, immediately available funds equal to
such Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser, and the Company shall deliver to each Purchaser its
respective Debenture and Warrants, as determined pursuant to Section 2.2(a), and
the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of Haynes and Boone or such other location as the parties shall mutually
agree.
2.Deliveries.
(a)Unless otherwise indicated, on or prior to the Closing Date, the Company
shall deliver or cause to be delivered to each Purchaser the following:
(i)
this Agreement duly executed by the Company;

(ii)reserved;
(iii)a Debenture with a Principal Amount equal to such Purchaser’s Subscription
Amount multiplied by 1.0526316, registered in the name of such Purchaser;
(iv)Warrants registered in the name of such Purchaser to purchase up to a number
of shares of Common Stock set forth on such Purchaser’s signature page, with an
exercise price per share equal to one and a half (1.5) times the VWAP for the
Common Stock during the thirty (30) Trading Day prior to the Closing Date;
(v)the Subsidiary Guaranty duly executed by each Subsidiary Guarantor;

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(vi)the Personal Guaranty executed by each of the Personal Guarantors;

(vii)the Security Agreement duly executed by the Company and each Guarantor,
along with all of the other Security Documents duly executed by the applicable
parties thereto;

(viii)the Pledge Agreement executed by each of the pledgors thereto;

(ix)an Account Control Agreement(s) executed by the Company and each Subsidiary
Guarantors granting Agent a perfected first priority security interest in the
subject account or accounts, within sixty (60) days after Closing; and
(x)an English law floating charge over the assets of the Foreign Subsidiaries
organized and existing under the laws of England and Wales acceptable to the
Purchasers in form and substance, within sixty (60) days after Closing.
(b)On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i)
this Agreement duly executed by such Purchaser;

(ii)such Purchaser’s Subscription Amount by wire transfer to the account
specified in writing by the Company; and
(iii)the Security Agreement duly executed by such Purchaser and the Agent, along
with all of the Security Documents duly executed by the parties thereto.
3.Closing Conditions.
(a)The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met:
(i)the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained herein;
(ii)all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and
(iii)the delivery by each Purchaser of the items set forth in Section 2.2(b) of
this Agreement.
(b)The respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:
(iv)the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Company contained herein (unless as of
a specific date therein), in which case they shall be accurate as of such date;
(v)all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;
(vi)the delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;
(vii)there shall have been no Material Adverse Effect with respect to the
Company since June 30, 2017;
(viii)the Company and each Subsidiary shall have delivered a certificate,
executed on behalf of the Company or such Subsidiary by its Secretary, dated as
of the Closing Date, certifying the resolutions adopted by the Board of
Directors of the Company or such Subsidiary approving the transactions
contemplated by this Agreement and the other Transaction Documents, certifying
the current versions of the Company’s and each such Subsidiary’s certificate or
articles of incorporation and bylaws and certifying as to the signatures and
authority of Persons signing the Transaction Documents and related documents on
behalf of the Company or such Subsidiary;
(ix)the Company shall have delivered a certificate, executed on behalf of the
Company by its Chief Executive Officer or its Chief Financial Officer, dated as
of the Closing Date, certifying to the fulfillment of the conditions specified
in this Section 2.3(b); and
(x)from the date hereof to the Closing Date, trading in the Common Stock shall
not have been suspended by the Commission or the Company’s principal Trading
Market and, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Securities at the Closing.

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES
3.1     Representations and Warranties of the Company. Except as set forth in
the Disclosure Schedules, which Disclosure Schedules shall be deemed a part
hereof and shall qualify any representation or otherwise made herein to the
extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and
warranties:
(a)Subsidiaries. All of the direct and indirect subsidiaries of the Company are
set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each Subsidiary as set forth on
Schedule 3.1(a) free and clear of any Liens, options or warrants, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.
(b)Organization and Qualification. The Company and each of the Subsidiaries is
an entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation nor default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business or financial condition of the Company and the
Subsidiaries, taken as a whole, (iii) a material adverse effect on the Company’s
ability to perform or pay in any material respect on a timely basis its
obligations under any Transaction Document, or (iv) a material adverse effect on
the Collateral or the Agent’s Liens on the Collateral or the priority of such
Liens (any of (i), (ii), (iii), or (iv), a “Material Adverse Effect”) and no
Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.
(c)Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of this
Agreement and each of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the
Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
(d)No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or Governmental
Authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
(e)Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
Governmental Authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii)
the approvals required by Section 4.15, (iii) the notice and/or application(s)
to and approval of each applicable Trading

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Market for the issuance and sale of the Securities and the listing of the
Underlying Shares for trading thereon in the time and manner required thereby,
and (iv) the filing of Form D with the Commission and such filings as are
required to be made under applicable state securities laws (collectively, the
“Required Approvals”).
(f)Issuance of the Securities; Registration. The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. The Underlying Shares, when
issued in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents. The Company has reserved from its duly authorized capital
stock a number of shares of Common Stock for issuance of the Underlying Shares
at least equal to the Required Minimum on the date hereof.
(g)Capitalization. The capitalization of the Company is as set forth on Schedule
3.1(g), which Schedule 3.1(g) shall also include the number of shares of Common
Stock owned beneficially, and of record, by Affiliates of the Company as of the
date hereof. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to
the exercise of employee stock options under the Company’s stock option plans,
the issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as set forth on Schedule 3.1(g), there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire any shares of Common Stock, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents. The
issuance and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under any of such
securities. All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders.
(h)SEC Reports; Financial Statements. Except with respect to its Annual Report
on Form 10-K for the fiscal year ended December 31, 2016, and its Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 2017 and June 30,
2017, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the
foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, being collectively referred to herein as the “SEC
Reports”) 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, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, 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
the light of the circumstances under which they were made, not misleading. The
Company is not currently and has not in the prior twelve (12) months been an
issuer subject to paragraph (i)(1)(i) of Rule 144. The Company has no reason to
believe that it will not file its Annual Report on 10-K for the fiscal year
ended December 31, 2016, or its Quarterly Report on Form 10-Q for the fiscal
quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 prior to
December 31, 2017. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. All internal management financial statements, reports and schedules
for periods subsequent to September 30, 2017 provided to Purchasers by the
Company fairly present in all material respects the results of operations and
financial position of the Company and its Subsidiary.
(i)Material Changes; Undisclosed Events, Liabilities or Developments. Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report filed

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prior to the date hereof or on Schedule 3.1(i): (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) neither the Company nor any Subsidiary
has incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Securities
contemplated by this Agreement or as set forth on Schedule 3.1(i), no event,
liability, fact, circumstance, occurrence or development has occurred or exists
or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations, assets or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one (1) Trading Day prior to
the date that this representation is made.
(j)Litigation. Except as disclosed in the SEC Reports or on Schedule 3.1(j),
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor
any current director or officer thereof, is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k)Labor Relations. No labor dispute exists or, to the knowledge of the Company,
is imminent with respect to any of the employees of the Company or any
Subsidiary, which could reasonably be expected to result in a Material Adverse
Effect. None of the Company’s or its Subsidiaries’ employees is a member of a
union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the
Company, no executive officer of the Company or any Subsidiary, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all federal, state, local and foreign laws
and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Except as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, each
Obligor and each Subsidiary is in compliance with the applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended and the
provision of the Code relating to ERISA Plans and the regulations and published
interpretations therein.
(l)Compliance. Except as set forth on Schedule 3.1(l) neither the Company nor
any Subsidiary: (i) is in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any judgment, decree or order of any court,
arbitrator or other Governmental Authority or (iii) is or has been in violation
of any statute, rule, ordinance or regulation of any Governmental Authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, occupational health and safety, product quality and safety and
employment and labor matters and Environmental Laws, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.
(m)Regulatory Permits. The Company and the Subsidiaries possess all Permits
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such Permits could not reasonably
be expected to result in a Material Adverse Effect, and neither the Company nor
any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any such Permit.

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(n)Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable
title in all personal property owned by them that is material to the business of
the Company and the Subsidiaries, in each case free and clear of all Liens,
except for (i) Liens as do not materially affect the value of such property and
do not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries (ii) Liens for the payment of
federal, state or other taxes, for which appropriate reserves have been made
therefor in accordance with GAAP and, the payment of which is neither delinquent
nor subject to penalties or (iii) Liens set forth on Schedule 3.1(n). Any real
property and facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance. Neither the Company nor any
Subsidiary hold any material assets outside the United States.
(o)Intellectual Property. The Company and the Subsidiaries have, or have rights
to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and
other intellectual property rights and similar rights as described in the SEC
Reports as necessary or required for use in connection with their respective
businesses and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). None of, and neither the
Company nor any Subsidiary has received a notice (written or otherwise) that any
of, the Intellectual Property Rights has expired, terminated or been abandoned,
or is expected to expire or terminate or be abandoned, within two (2) years from
the date of this Agreement. Neither the Company nor any Subsidiary has received
a written notice of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as
could not have or reasonably be expected to have a Material Adverse Effect. To
the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(p)Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage at least equal to the aggregate Subscription Amount.
Neither the Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.
(q)Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports or on Schedule 3.1(q), none of the officers or directors of the Company
or any Subsidiary and, to the knowledge of the Company, none of the employees of
the Company or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from providing for the borrowing of money from or lending of
money to, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee, stockholder, member or partner, in each case in
excess of $120,000 other than for: (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.
(r)Sarbanes-Oxley; Internal Accounting Controls. Except as set forth in the SEC
Reports or on Schedule 3.1(r), the Company and the Subsidiaries are in
compliance with any and all applicable requirements of the Sarbanes-Oxley Act of
2002 that are effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the Commission thereunder that are effective as
of the date hereof and as of the Closing Date. Except as set forth in the SEC
Reports, the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
the Subsidiaries and designed such disclosure controls and procedures to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the
disclosure controls and procedures of the Company and the Subsidiaries as of the
end of the period covered by the most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”). The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of
the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the

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Evaluation Date. Since the Evaluation Date, except as set forth in the SEC
Reports, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) that have materially
affected, or is reasonably likely to materially affect, the internal control
over financial reporting of the Company and its Subsidiaries.
(s)Certain Fees. Except as set forth on Schedule 3.1(s), no brokerage or
finder’s fees or commissions are or will be payable by the Company or any
Subsidiaries to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by the Transaction
Documents.
(t)Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2, no registration under the Securities
Act is required for the offer and sale of the Securities by the Company to the
Purchasers as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading Market.
(u)Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.
(v)Registration Rights. No Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the Company or
any Subsidiaries.
(w)Listing and Maintenance Requirements. The Common Stock is registered pursuant
to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration. Except as set forth in the SEC Reports, the
Company has not, in the twelve (12) months preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has been listed
or quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company will, and has no
reason to believe that it will not, be in compliance with all such listing and
maintenance requirements by December 31, 2017. The Common Stock is currently
eligible for electronic transfer through the Depository Trust Company or another
established clearing corporation and the Company is current in payment of the
fees to the Depository Trust Company (or such other established clearing
corporation) in connection with such electronic transfer.
(x)Application of Takeover Protections. The Company and the Board of Directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
the Purchasers as a result of the Purchasers and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation as a result of the Company’s issuance of the
Securities and the Purchasers’ ownership of the Securities.
(y)Disclosure. All of the disclosure furnished by or on behalf of the Company to
the Purchasers regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The press releases disseminated by the
Company during the twelve (12) months preceding the date of this Agreement taken
as a whole do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made and when made, not misleading. The Company acknowledges and agrees that no
Purchaser makes or has made any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof.
(z)No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable stockholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.
(aa)Solvency. Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder: (i) the fair saleable value
of the Company’s assets exceeds the amount that will be required to be paid on
or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted

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including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, consolidated and
projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date. Schedule 3.1(aa) sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has commitments.
(bb)     Tax Status.     Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all United
States federal, state and local income and all foreign income and franchise tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim.
(cc)    No General Solicitation. Neither the Company nor any Person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising. The Company has offered the
Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.
(dd)     Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor
to the knowledge of the Company or any Subsidiary, any agent or other Person
acting on behalf of the Company or any Subsidiary, has: (i) directly or
indirectly, used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the
Company or any Subsidiary (or made by any Person acting on its behalf of which
the Company is aware) which is in violation of law or (iv) violated in any
material respect any provision of FCPA.
(ee)     Accountants. The Company’s accounting firm is set forth on Schedule
3.1(ee). To the knowledge and belief of the Company, such accounting firm is a
registered public accounting firm as required by the Exchange Act.
(ff)     Seniority. As of the Closing Date, except as set forth on Schedule
3.1(ff), no Indebtedness or other claim against the Company is senior to the
Debentures in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise, other than, in each case, to the
extent permitted by the Debenture, indebtedness secured by purchase money
security interests (which is senior only as to underlying assets covered
thereby) and capital lease obligations (which is senior only as to the property
covered thereby).
(gg)    No Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction
Documents.
(hh)     Acknowledgment Regarding Purchasers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated thereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Securities. The Company
further represents to each Purchaser that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
(ii)     Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding, it is understood
and acknowledged by the Company that: (i) none of the Purchasers has been asked
by the Company to agree, nor has any Purchaser agreed, to desist from purchasing
or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by
any Purchaser, specifically including, without limitation, short sales or
“derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities, (iii)

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any Purchaser, and counter-parties in “derivative” transactions to which any
such Purchaser is a party, directly or indirectly, may presently have a “short”
position in the Common Stock and (iv) each Purchaser shall not be deemed to have
any affiliation with or control over any arm’s length counter-party in any
“derivative” transaction. The Company further understands and acknowledges that
(y) one or more Purchasers may engage in hedging activities at various times
during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Underlying Shares
deliverable with respect to Securities are being determined, and (z) such
hedging activities (if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the hedging
activities are being conducted.  The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.
(jj)     Regulation M Compliance.  The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, (ii) except for the compensation payable as described on Schedule
3.1(s), sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any
Person any compensation for soliciting another to purchase any other securities
of the Company.
(kk)     Stock Option Plans. Each stock option granted by the Company under the
Company’s stock option plan was granted (i) in accordance with the terms of the
Company’s stock option plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the date such stock option would be
considered granted under GAAP and applicable law. No stock option granted under
the Company’s stock option plan has been backdated. The Company has not
knowingly granted, and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects.
(ll)     Office of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to
any United States sanctions administered by the Office of Foreign Assets Control
of the United States Treasury Department (“OFAC”).
(mm)     United States Real Property Holding Corporation. The Company is not and
has never been a United States real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the
Company shall so certify upon Purchaser’s request at any time.
(nn)     Bank Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the
Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of
its Subsidiaries or Affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent or more of the total equity of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.
(oo)     Money Laundering. The operations of the Company and its Subsidiaries
are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, applicable money laundering
statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering Laws”), and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the
Company or any Subsidiary with respect to the Money Laundering Laws is pending
or, to the knowledge of the Company or any Subsidiary, threatened.
(pp)     No Disqualification Events. With respect to the Securities to be
offered and sold hereunder in reliance on Rule 506 under the Securities Act,
none of the Company, any of its predecessors, any affiliated issuer, any
director, executive officer, other officer of the Company participating in the
offering hereunder, any beneficial owner of twenty (20%) or more of the
Company’s outstanding voting equity securities, calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the
Securities Act) connected with the Company in any capacity at the time of sale
(each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is
subject to any of the “Bad Actor” disqualifications described in Rule
506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any Issuer Covered
Person is subject to a Disqualification Event. The Company has complied, to the
extent applicable, with its disclosure obligations under Rule 506(e), and has
furnished to the Purchasers a copy of any disclosures provided thereunder.
(qq)     Other Covered Persons. The Company is not aware of any Person (other
than any Issuer Covered Person) that has been or will be paid (directly or
indirectly) remuneration for solicitation of purchasers in connection with the
sale of any Regulation D Securities.

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3.2    Representations and Warranties of the Purchasers. Each Purchaser, for
itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a
specific date therein):
(ab)Organization; Authority. Such Purchaser is either an individual or an entity
duly incorporated or formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power and authority
to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(ac)Own Account. Such Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law; provided, this representation and warranty
shall not be deemed to limit such Purchaser’s right to resell the Securities in
compliance with applicable federal and state securities laws.
(ad)Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and as of the date hereof it is, an “accredited investor” as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.
(ae)General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on
the Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated hereby.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES
4.1     Transfer Restrictions.
(a)The Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the form set forth below.
The Company may not make any notation on its books and records or give any
instructions to its Transfer Agent with respect to the transfer of the
Securities other than such legend.
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
[AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties. Such
a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in

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connection therewith. Further, no notice shall be required of such pledge. At
the appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities.
(b)Notwithstanding Section 4.1(a), certificates evidencing the Underlying Shares
shall not contain any legend (including the legend set forth in Section 4.1(a)
hereof): (i) following any sale of such Underlying Shares pursuant to Rule 144,
(ii) if such Underlying Shares are eligible for sale under Rule 144 without the
requirement for the Company to be in compliance with the current public
information requirements of Rule 144 as to such Underlying Shares, or (iii) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). The Company acknowledges that a breach by it of its obligations
under this Section 4.1(b) will cause irreparable harm to a Purchaser.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 4.1(b) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 4.1(b), that a Purchaser shall be entitled, in addition to all other
available remedies, to seek an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

4.2     Acknowledgment of Dilution. The Company acknowledges that the issuance
of the Securities may result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial under certain market conditions. The
Company further acknowledges that its obligations under the Transaction
Documents, including, without limitation, its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the Company.
4.3     Furnishing of Information; Public Information.
(c)If the Common Stock is not registered under Section 12(b) or 12(g) of the
Exchange Act on the date hereof, the Company agrees to cause the Common Stock to
be registered under Section 12(g) of the Exchange Act on or before the sixtieth
(60th) calendar day following the date hereof. Until the earliest of the time
that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the
Company covenants to maintain the registration of the Common Stock under Section
12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.
(b)     At any time during the period commencing from the six (6) month
anniversary of the date hereof and ending at such time that all of the
Securities may be sold without the requirement for the Company to be in
compliance with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, if the Company shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) (a “Public Information
Failure”) then, in addition to such Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, as partial liquidated damages and not
as a penalty, by reason of any such delay in or reduction of its ability to sell
the Securities, an amount in cash equal to one quarter of one percent (0.25%) of
the aggregate Subscription Amount of such Purchaser’s Securities on the day of a
Public Information Failure and such amount on each day thereafter until the
earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required  for the Purchasers to
transfer the Underlying Shares pursuant to Rule 144.  The payments to which a
Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to
herein as “Public Information Failure Payments.”  For purposes hereof, a “Public
Information Failure” shall be deemed to have occurred and be continuing during
any Rule 12b-25 extension period for any annual, quarterly or other report
required to be filed by the Company with the Commission. Public Information
Failure Payments shall be paid on the earlier of (i) the last day of the
calendar month during which such Public Information Failure Payments are
incurred and (ii) the third (3rd) Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured.  In the event the
Company fails to make Public Information Failure Payments in a timely manner,
such Public Information Failure Payments shall bear interest at the rate of one
and one half percent (1.5%) per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Public Information Failure, and such Purchaser shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.
4.4     Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities or that would be integrated with
the offer or sale of the Securities for purposes of the rules and regulations of
any Trading Market such that it would require stockholder approval prior to the
closing of such other transaction unless stockholder approval is obtained before
the closing of such subsequent transaction.

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4.5     Redemption, Conversion and Exercise Procedures. The form of Notice of
Exercise included in the Warrants and the forms of Notice of Conversion and
Holder Redemption Notice included in the Debentures collectively set forth the
totality of the procedures required of the Purchasers in order to exercise the
Warrants or convert or redeem the Debentures. Without limiting the preceding
sentences, no ink-original Notice of Exercise, Notice of Conversion or Holder
Redemption Notice shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any such notice be required in order to
exercise the Warrants or convert or redeem the Debentures. No additional legal
opinion, other information or instructions shall be required of the Purchasers
to exercise their Warrants or convert or redeem their Debentures. The Company
shall honor exercises of the Warrants and conversions and/or redemptions of the
Debentures and shall deliver Underlying Shares in accordance with the terms,
conditions and time periods set forth in the Transaction Documents.
4.6     Securities Laws Disclosure; Publicity. The Company shall by 9:30 a.m.
(New York City time) on the third (3rd) Trading Day immediately following the
date hereof, file a Current Report on Form 8-K, including the Transaction
Documents as exhibits thereto, with the Commission within the time required by
the Exchange Act. From and after the filing of such Form 8-K, the Company
represents to the Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the Company or any
of its Subsidiaries, or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction
Documents. The Company and each Purchaser shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor any Purchaser shall issue any such press
release nor otherwise make any such public statement without the prior consent
of the Company, with respect to any press release of any Purchaser, or without
the prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except: (a) as required by federal
securities law in connection with the filing of final Transaction Documents with
the Commission and (b) to the extent such disclosure is required by law or
Trading Market regulations or in order to obtain listing approval of the
securities, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under this clause (b).
4.7     Stockholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchasers.
4.8     Disclosure of Material Information; No Obligation of Confidentiality.
(d)Except with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf, has provided prior to the
date hereof or will in the future provide any Purchaser or its agents or counsel
with any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have entered into a
written agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company. In the event of a breach of the foregoing covenant by the Company, or
any of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents, in addition to any other remedy provided herein or in the
Transaction Documents, the Company shall publicly disclose any material,
non-public information in a Current Report on Form 8-K within one business day
following the date that it discloses such information to any Purchaser or such
earlier time as may be required by Regulation FD or other applicable law.
(e)No Purchaser shall be deemed to have any obligation of confidentiality with
respect to (i) any non-public information of the Company disclosed to such
Purchaser in breach of Section 4.8(a) (whether or not the Company files a
Current Report on Form 8-K as provided above), (ii) the fact that any Purchaser
has exercised any of its rights and/or remedies under the Transaction Documents
or (iii) any information obtained by any Purchaser as a result of exercising any
of its rights and/or remedies under the Transaction Documents. In addition, no
Purchaser shall be deemed to be in breach of any duty to the Company and/or to
have misappropriated any non-public information of the Company, if such
Purchaser engages in transactions of securities of the Company, including,
without limitation, any hedging transactions, short sales or any “derivative”
transactions while in possession of such non-public information.
(f)Any Form 8-K, including all exhibits thereto, filed by the Company pursuant
to Section 4.8(a) shall be subject to prior review and comment by the applicable
Purchasers. 
(g)From and after the filing of any such Form 8-K pursuant to Section 4.8(a)
with the Commission, no Purchaser shall be deemed to be in possession of any
material, nonpublic information regarding the Company.

4.9     Use of Proceeds. Except as set forth on Schedule 4.9, the Company shall
use the net proceeds from the sale of the Securities hereunder for general
corporate purposes and for the repayment of the Company’s Ind

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ebtedness identified on Schedule 4.9 and shall not use such proceeds: (a) for
the redemption of any Common Stock or Common Stock Equivalents, (b) the repay of
any Indebtedness other than the Indebtedness set forth on Schedule 4.9 or (c) in
violation of FCPA or OFAC regulations.
4.10     Indemnification of Purchasers. Subject to the provisions of this
Section 4.10, the Company will indemnify and hold each Purchaser and its
directors, officers, stockholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling Persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees, costs
of investigation and costs of enforcing this indemnity that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other Transaction Documents or (b) any action
instituted against the Purchaser Parties in any capacity, or any of them or
their respective Affiliates, by any stockholder of the Company who is not an
Affiliate of such Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
material breach of such Purchaser Party’s representations, warranties or
covenants under the Transaction Documents or any material violations by such
Purchaser Party of state or federal securities laws or any conduct by such
Purchaser Party which constitutes fraud, gross negligence, willful misconduct or
malfeasance). If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
counsel, a material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one
such separate counsel. The Company will not be liable to any Purchaser Party
under this Agreement (y) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (z) to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Purchaser Party’s material
breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents.
The Company shall not settle or compromise any claim for which a Purchaser Party
seeks indemnification hereunder without the prior written consent of such
Purchaser Party. The indemnification required by this Section 4.10 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or are incurred. The
indemnity agreements contained herein shall be in addition to any cause of
action or similar right of any Purchaser Party against the Company or others and
any liabilities the Company may be subject to pursuant to law.
4.11     Reservation and Listing of Securities.
(h)The Company shall maintain a reserve from its duly authorized shares of
Common Stock for issuance pursuant to the Transaction Documents in such amount
as may then be required to fulfill its obligations in full under the Transaction
Documents.
(i)If, on any date, the number of authorized but unissued (and otherwise
unreserved) shares of Common Stock is less than the Required Minimum on such
date, then the Board of Directors shall use commercially reasonable efforts to
amend the Company’s certificate or articles of incorporation to increase the
number of authorized but unissued shares of Common Stock to at least the
Required Minimum at such time, as soon as possible and in any event not later
than the seventy fifth (75th) day after such date.
(j)The Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a number of shares of Common
Stock at least equal to the Required Minimum on the date of such application,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing or quotation on such Trading Market as soon as possible
thereafter, (iii) provide to the Purchasers evidence of such listing or
quotation and (iv) maintain the listing or quotation of such Common Stock on any
date at least equal to the Required Minimum on such date on such Trading Market
or another Trading Market. The Company agrees to maintain the eligibility of the
Common Stock for electronic transfer through the Depository Trust Company or
another established clearing corporation, including, without limitation, by
timely payment of fees to the Depository Trust Company or such other established
clearing corporation in connection with such electronic transfer.
4.12     Equity Line Financing. From the date hereof until such time as no
Purchaser holds any of the Debentures, the Company shall be prohibited from
effecting or entering into an agreement to effect any “equity line financing” or
similar transactions. For clarity, this prohibition shall not be a prohibition
for an at-market-offering (ATM) program.

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4. 13     Form D; Blue Sky Filings. The Company agrees to timely file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof, promptly upon request of any Purchaser. The Company shall take
such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at the Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.
4.14     Capital Changes. Until date that the Debentures are no longer
outstanding, other than in connection with a listing of the Common Stock on a
national securities exchange, the Company shall not undertake a reverse or
forward stock split or reclassification of the Common Stock without the prior
written consent of the Purchasers holding a majority in principal amount
outstanding of the Debentures.
4.15     Stockholder Approval. The Company shall provide each stockholder
entitled to vote at either (x) the annual meeting of stockholders of the Company
held in 2018 or (y) a special meeting of stockholders of the Company (the
“Stockholder Meeting”), which shall be promptly called and held not later than
August 31, 2018 (the “Stockholder Meeting Deadline”), a proxy statement
substantially in a form which shall have been previously reviewed by the
Purchasers’ counsel, at the expense of the Company, soliciting each such
stockholder's affirmative vote at the Stockholder Meeting for approval of
resolutions providing for the Company's issuance of Underlying Shares as
described in the Transaction Documents in accordance with applicable law and the
rules and regulations of the principal Trading Market for shares of the
Company’s Common Stock and without any limitation on the number of Underlying
Shares that may be issued (such affirmative approval being referred to herein as
the “Stockholder Approval”), and the Company shall use its reasonable best
efforts to solicit its stockholders' approval of such resolutions and to cause
the Board of Directors of the Company to recommend to the stockholders that they
approve such resolutions. The Company shall be obligated to seek to obtain the
Stockholder Approval by the Stockholder Meeting Deadline. If, despite the
Company's reasonable best efforts the Stockholder Approval is not obtained on or
prior to the Stockholder Meeting Deadline, the Company shall cause an additional
Stockholder Meeting to be held once in each of the four subsequent calendar
quarters thereafter until such Stockholder Approval is obtained.
4.16     Trading Market Approval. Subject to the Exchange Cap, the Company shall
obtain the approval of each applicable Trading Market for the issuance and sale
of the Securities and the listing of the Underlying Shares for trading thereon
within one month after Closing.
ARTICLE V.

MISCELLANEOUS
5.1     Fees and Expenses. At the Closing, the Company has agreed to reimburse
the Purchasers for their legal fees and expenses, up to a maximum of seventy
five thousand dollars ($75,000), twenty five thousand dollars ($25,000) of which
has been paid to the Purchasers prior to the Closing. Accordingly, in lieu of
the foregoing payments, the aggregate amount that the Purchasers are to pay for
the Securities at the Closing shall be reduced to fifty thousand dollars
($50,000) in lieu thereof. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees (including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and any conversion
or exercise notice delivered by a Purchaser), stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the
Purchasers.
5.2     Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.
5.3     Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
or email attachment as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading
Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or email attachment as set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading
Day following the date of mailing, if sent by a nationally recognized overnight
courier service or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages attached hereto.
5.4     Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers or, in the case of a
waiver, by the party against whom enforcement of any such waived provision is
sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such
right.

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5.5     Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.6     Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
“Purchasers.”
5.7     No Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except as otherwise set forth in Section 4.10 and this Section
5.7.
5.8     Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, stockholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law. If
either party shall commence an action, suit or proceeding to enforce any
provisions of the Transaction Documents, then, in addition to the obligations of
the Company under Section 4.10, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
5.9     Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Securities.
5.10     Execution. This Agreement may be executed in two (2) or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.
5.11     Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
5.12     Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant conversion, redemption or
exercise notice, demand or election in whole or in part without prejudice to its
future actions and rights; provided, however, that in the case of a rescission
of a conversion or redemption of a Debenture or exercise of a Warrant, the
applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded conversion, redemption or exercise notice
concurrently with the return to such Purchaser of the aggregate exercise price
paid to the Company for such shares and the restoration of such Purchaser’s
right to acquire such shares pursuant to such Purchaser’s Debenture or Warrant
(including, issuance of a replacement warrant certificate evidencing such
restored right).
5.13     Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument unde

--------------------------------------------------------------------------------

r such circumstances shall also pay any reasonable third-party costs (including
customary indemnity) associated with the issuance of such replacement
Securities.
5.14     Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
5.15     Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
5.16     Usury. To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner whatsoever claim, and will resist
any and all efforts to be compelled to take the benefit or advantage of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the effective date thereof forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess shall be
applied by such Purchaser to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at such Purchaser’s election.
5.17     Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document. Nothing contained herein
or in any other Transaction Document, and no action taken by any Purchaser
pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company has elected to provide all Purchasers
with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by any of the Purchasers.
5.18     Liquidated Damages. The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
5.19     Saturdays, Sundays, Holidays, etc.    If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.
5.20     Construction. The parties agree that each of them and/or their
respective counsel have reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto. In addition, each and every reference to share prices and
shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
5.21     WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

--------------------------------------------------------------------------------

5.22     Termination.  This Agreement may be terminated by any Purchaser, as to
such Purchaser’s obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers, by written notice
to the other parties, if the Closing has not been consummated on or before
October 20, 2017; provided, however, that such termination will not affect the
right of any party to sue for any breach by any other party (or parties).

(Signature Pages Follow)
    

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
JRjr33, INC.

            
Address for Notice:
2900 North Harwood Street, 22nd Floor
Dallas, TX 75201
By: /s/ John Rochon
_______________________________________
     Name: John Rochon, Jr.
     Title: Chief Financial Officer

With a copy to (which shall not constitute notice):
Fax: (469) 913-4042
E-mail: jrjr@jrnetworks.com
Gracin & Marlow, LLP (Attention: Leslie Marlow)
The Chrysler Building
405 Lexington Avenue, 26th Floor
New York, NY 10174

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO JRJR SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Name of Purchasers:                        
Signature of Authorized Signatory of Purchasers:
______________________________________
Name of Authorized Signatory: Brett Cohen                                
Title of Authorized Signatory: President                                
Email Address of Authorized Signatory: bcohen@jgbcap.com                    
Facsimile Number of Authorized Signatory: (212)
253-4093______________________________
Address for Notice to Purchasers:

c/o JGB Management Inc.
21 Charles St, Suite 160
Westport, CT 06880

Address for Delivery of Securities to Purchaser (if not same as address for
notice):

--------------------------------------------------------------------------------

Subscription Amount:

Principal Amount (1.0526316 x Subscription Amount):

Common Stock Warrant Shares:

  

--------------------------------------------------------------------------------

Schedule 3.1(ff) - Seniority

None.

--------------------------------------------------------------------------------

Schedule 3.1(g) - Capitalization

Authorized Capital Stock
Shares Issued/Outstanding
Shares Reserved for Issuance to Dominion per Convertible Securities
Preferred Stock
250,000,000
40,371,166
2,660,000
500,000 authorized (none are issued/outstanding)

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Schedule 3.1(i) - Material Changes: Undisclosed Events, Liabilities or
Developments

None.

--------------------------------------------------------------------------------

Schedule 3.1(j) - Litigation

CFI NNN Raiders, LLC
On June 26, 2017, CFI NNN Raiders, LLC sent a Demand for Payment Letter filed a
complaint against the Company in connection to The Longaberger Company's the
Company's failure to meet the terms negotiated under the triple net lease
agreement (referred to as the "sale leaseback agreement") made executed on July
31, 2014, between CFI NNN Raiders and the Company. In the action, CFI NNN
Raiders is demanding seeking restitution of the premises and costs associated
with its recovery of the same. $102,000 for real estate tax assessed against the
leased premises, $151,000 for unpaid basic rent, $8,000 for late charges
occurred, $103,000 for real estate taxes paid by CFI NNN Raiders, $15,681,000
for the remaining portion of the unpaid basic balance, and interest at the
default rate on the sums due from the date due to the date when paid. CFI NNN
Raiders is in possession of a $4.4 million security deposit, as of December 31,
2016, that was initially retained by CFI NNN Raiders upon the effective date of
the sale leaseback agreement. The lawsuit is currently set for a hearing on
October 18, 2017, however, CFI and the Company have come to an understanding
that the entire property would be sold and that The Longaberger Company would
either vacate the premises or in the alternative would lease an appropriate
amount of space from the new owner at a market rate. The sale process is
underway as of September 27, 2017.
Licking County
On April 5, 2017, Licking County Ohio filed an action in foreclosure to collect
$715,000 of delinquent real estate taxes, assessments, interests, and penalties
due and/ or owing on the former Longaberger headquarters. The Company timely
filed its answer to the action. A non-oral hearing was held on October 16, 2017
in which no decisions were rendered. The Company is actively pursuing the sale
of the property and keeping the County updated on those efforts. To date, the
County has cooperated with requests to extend time for a sale of the property to
occur. The County may direct the sale of the property to collect from the
proceeds of the sale if the amount is not paid in full. The Company currently
has a book value of $1.0 million for the property mentioned in this lawsuit. The
Company is currently engaged in discussions with the County in hopes of
resolving the matter upon the sale of the former Longaberger headquarters.
Rachel Longaberger-Stukey
On November 7, 2016, Rachel Longaberger-Stukey filed a complaint against The
Longaberger Company and JRjr33, Inc. in the Court of Common Pleas of Franklin
County, Ohio. Ms. Stukey alleges counts of breach of note, breach of guarantee,
unjust enrichment, and promissory estoppel in the amount of damages to be
determined at trial, but in excess of $25,000 per count.  The note referenced in
Ms. Stukey’s complaint is a March 14, 2013 Promissory Note in the original
amount of $4,000,000 executed by Ms. Stukey’s sister, Tamala L. Longaberger as
the then President of The Longaberger Company. The note referenced in Ms.
Stukey's complaint is also guaranteed by Tamala L. Longaberger in a guarantee
agreement. A formal answer was filed by the Company on February 8, 2017. The
Clerk of the Franklin County Common Pleas Court has set an original trial
assignment of December 11, 2017. As of December 31, 2016, the Company has
recorded a liability of $2,750,000, all of which is included in "Current portion
of long-term debt" on the consolidated balance sheets.

--------------------------------------------------------------------------------

Schedule 3.1(l) - Compliance

Senior Secured Convertible Note - Dominion Capital LLC
The Company failed to timely file its 2016 Form 10-K, March 2017 Form 10-Q and
June Form 2017 10-Q. The Company may, from time to time, again experience
difficulties in meeting the SEC’s reporting requirements.
Workers’ Compensation
On January 1, 2017, the Company lapsed on its worker's compensation insurance.
The Company estimates its remaining self-insured worker’s compensation liability
based on past claims experience, and has an accrued liability to cover estimated
future costs. The accrued liability was approximately $1.2 million and $1.1
million at December 31, 2016 and December 31, 2015, respectively. There can be
no assurance that actual results will not materially differ from the Company's
estimates.
NYSE
On January 10, 2017, the Company received a Deficiency Letter from the NYSE
American that it was not in compliance with certain NYSE American continued
listing standards relating to stockholders’ equity as of September 30, 2016.
Specifically, the Deficiency Letter stated that the Company is not in compliance
with Section 1003(a)(1) (requiring stockholders’ equity of $2.0 million or more
if it has reported losses from continuing operations and/or net losses in two of
its three most recent fiscal years), Section 1003(a)(ii) (requiring
stockholders’ equity of $4.0 million or more if it has reported losses from
continuing operations and/or net losses in three of its four most recent fiscal
years); and Section 1003(a)(iii) (requiring stockholders’ equity of $6.0 million
or more if it has reported losses from continuing operations and/or net losses
in its five most recent fiscal years). The Deficiency Letter noted that the
Company had a stockholders’ equity deficit of $(10.3) million as of September
30, 2016, and has reported net losses in its five most recent fiscal years. The
Company was required to, and did, submit a plan to the NYSE American by February
9, 2017, advising of actions it has taken or will take to regain compliance with
the continued listing standards by July 10, 2018. On March 17, 2017, the NYSE
American notified the Company that it has reviewed the Company’s Plan and
determined to accept the Plan and grant a Plan period through July 10, 2018. 
NYSE Regulation Staff will review the Company periodically for compliance with
the initiatives outlined in the Plan.  If the Company is not in compliance with
the continued listing standards by July 18, 2018, or if the Company does not
make progress consistent within the Plan period, NYSE Regulation staff will
initiate delisting proceedings as appropriate.
On April 18, 2017, the Company received a letter from the NYSE American
notifying the Company that it is not in compliance with Section 802.01E of the
NYSE Listed Company Manual as a result of its failure to timely file this Annual
Report on Form 10-K for the year ended December 31, 2016, with the Securities
and Exchange Commission. The filing of this Form 10-K is a condition for the
Company’s continued listing on the NYSE American as required by Sections 134 and
1101 of the NYSE Company Guide. The Company filed this Form 10-K on October 16,
2017. The Company must submit a plan to the NYSE American by May 18, 2017,
advising of actions it has taken or will take to regain compliance with the
continued listed standards. The Company has regained compliance with the NYSE
American listing standards by filing this Form 10-K with the SEC prior to
October 18, 2017. The letter from the NYSE American also notes that the NYSE
American may nevertheless commence delisting proceedings at any time if it deems
that the circumstances warrant.
Sale-Leaseback, CFI NNN Raiders, LLC
On June 26, 2017, CFI NNN Raiders, LLC ("CFI") filed a complaint against the
Company in connection to the Company's failure to meet the terms negotiated
under the triple net lease agreement (referred to as the "sale leaseback
agreement") executed on July 31, 2014, between CFI and the Company. In the
action, CFI is seeking restitution of the premises and costs associated with its
recovery of the same. CFI is in possession of a $4.4 million security deposit,
as of December 31, 2016, that was initially retained by CFI upon the effective
date of the sale leaseback agreement. As

--------------------------------------------------------------------------------

of May 11, 2017, CFI applied $941,000 of the security deposit towards unpaid
accounts. The lawsuit is currently set for a hearing on October 18, 2017,
however, CFI and the Company have come to an understanding that the entire
property would be sold and that The Longaberger Company would either vacate the
premises or in the alternative would lease an appropriate amount of space from
the new owner at a market rate. The sale process is underway as of September 27,
2017.
Tamala L. Longaberger
During the fiscal year 2014, Longaberger and Agel received promissory notes in
the combined principal amount of $1,000,000 from Tamala L. Longaberger. The
notes bear interest at the rate of 10% per annum, matured during the fiscal year
2015, and are guaranteed by the parent company, JRjr33, Inc. As of December 31,
2016, the principle and accrued interest of $251,000 related to the loans has
been included in "Related party payables" within current liabilities on the
consolidated balance sheets.
The Company determined not to make payment on the notes due to Tamala L.
Longaberger pursuant to the contractual agreements. As a result, in connection
with these notes, Ms. Longaberger filed a State Court Action seeking re-payment
of the notes on August 12, 2015. On August 17, 2016, the Court eliminated the
trial setting and further stated it will issue a new case schedule upon
conclusion of the arbitration scheduled for the week of December 4, 2017. The
Company’s position is that Ms. Longaberger's claims are inextricably tied to the
broader issues related to her terminated employment and the claims asserted
against Ms. Longaberger by the Company and The Longaberger Company. The Company
is claiming Ms. Longaberger was in breach of fiduciary duty, fraud, negligence,
conversion, misappropriation of company funds, civil theft, breach of contract,
and misappropriation of trade secrets, in an arbitration action in Columbus,
Ohio. Therefore, as a result of Ms. Longaberger's misconduct, the Company
believes it is owed more in damages that the amounts owed on the loans.
The Company has recorded a payable of approximately $715,000 as a result of an
amended tax increment financing agreement between TLC and Licking County entered
into on April 3, 2007. The agreement relates to the development of the
infrastructure and local improvements near the corporate headquarters of TLC.
The liability was not disclosed during the due diligence process by the seller
and as a result, the Company filed a complaint against the seller on September
22, 2016. The complaint may potentially result in the reimbursement of or the
assumption of the liability by the seller. A contingent asset, related to the
filed complaint, is not included on the consolidated balance sheet.
Rachel Longaberger-Stukey
On November 7, 2016, Rachel Longaberger-Stukey filed a complaint against The
Longaberger Company and JRjr33, Inc. in the Court of Common Pleas of Franklin
County, Ohio. Ms. Stukey alleges counts of breach of note, breach of guarantee,
unjust enrichment, and promissory estoppel in the amount of damages to be
determined at trial, but in excess of $25,000 per count.  The note referenced in
Ms. Stckey’s complaint is a March 14, 2013 Promissory Note in the original
amount of $4,000,000 executed by Ms. Stukey’s sister, Tamala L. Longaberger as
the then President of The Longaberger Company. The note referenced in Ms.
Stukey's complaint is also guaranteed by Tamala L. Longaberger in a guarantee
agreement. A formal answer was filed by the Company on February 8, 2017. The
Clerk of the Franklin County Common Pleas Court has set a trial assignment of
December 11, 2017. As of December 31, 2016, the Company has recorded a liability
of $2,750,000, all of which is included in "Current portion of long-term debt"
on the consolidated balance sheets.
Licking County
On April 5, 2017, Licking County Ohio filed an action in foreclosure to collect
$715,000 of delinquent real estate taxes, assessments, interests, and penalties
due and/ or owing on the former Longaberger headquarters. The Company timely
filed its answer to the action. The matter is currently scheduled for a non-oral
hearing on October 16, 2017. The County may direct the sale of the property to
collect from the proceeds of the sale if the amount is not paid in full. The
Company currently has a book value of $1.0 million for the property mentioned in
this lawsuit. The Company is currently engaged in discussions with the County in
hopes of resolving the matter upon the sale of the former Longaberger
headquarters.

--------------------------------------------------------------------------------

Schedule 3.1(n) - Liens
Tax Liens related to The Longaberger Company
Tax Liens
Amount
Notes
RE Taxes- Parcel No. 055-282708-00.000
94,472.21
Each half of 2016
Tax Judgment - 2016JD177276
4,019
Filed Feb 5, 2016
Tax Judgment - 2016JD178059
$21,938.37
Filed May 6, 2016
Tax Judgment - 2016Jd178062
$13,628
Filed May 6, 2016
Tax Judgment - 2016JR17104
15,487.63
Filed May 16, 2016
Tax Judgment - 2016JD178999
13,620.20
Filed July 29, 2016
Tax Judgment - 2016JD179440
17,851.04
Filed August 5, 2016
Tax Judgment - 2016JD179944
13,572.93
Filed September 6, 2016
Tax Judgment - 2017JD181202
10,451.42
Filed March 22, 2017
Special assessment Taxes
252.45
Each half of 2016
Special Assessment Taxes
191.8
Prior Years
Other Liens
 
 
Lawsuit Judgment - 2017JD182836
16547.9
Filed May 2, 2017
Lawsuit Judgment - 2017JD182957
21,000
Filed May 23, 2017

Other Liens

Convertible Note-Dominion Capital and Rochon Capital

Liens on the assets of the Company and the subsidiaries securing the $1,000,000
note issued to Rochon Capital Partners, Ltd in June 2017.

Senior Secured debt - HSBC Bank PLC
Liens with respect to the $3.0 million in cash securing senior secured debt from
HSBC Bank PLC, with a term of two years and an annual interest rate
of 0.60% over the Bank of England Base Rate as published from time to time.
Promissory Note-Lega Enterprises, LLC
Liens secured by all of the assets of Agel Enterprises, Inc. with respect to a
$1.7 million Promissory Note issued to Lega Enterprises, LLC (formerly Agel
Enterprises, LLC) and assigned to AK Holding Company, LC and S2 Investments, LLC
in connection with Agel Enterprises, Inc.’s acquisition of assets from Agel
Enterprises LLC.
UBS Margin Loan
Liens in connection with the Company’s margin loan agreement with UBS that
allows us to purchase investments. Capital Leases
Liens with respect to $4,414,000 in cash held in a separate account as a
security deposit for the Sale Leaseback Agreement entered into on July 31, 2014,
between the Company’s subsidiary, The Longaberger Company, and CFI.
Letter of Credit

--------------------------------------------------------------------------------

Liens related to the Company’s UBS Bank Account irrevocable standby letter of
credit in favor of the Ohio Bureau of Workers’ Compensation in the amount of
$405,000 as amended.