SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as of December 3, 2018, between xG Technology, Inc.,
a Delaware 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


 


1.1 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 Transaction Documents (as defined herein), and (b) the following terms have the
meanings set forth in this Section 1.1:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.


 


“Action”
shall have the meaning ascribed 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.


 


“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(s)”
means the one or more closings of the purchase and sale of the Securities pursuant to Section
2.1.


 


“Closing
Dates” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchasers’ obligations to pay the
Subscription Amount as to such Closing and (ii) the Company’s obligations to deliver the Securities as to such Closing,
in each case, have been satisfied or waived


 






    	 



    	 



    

 


“Closing
Statement” means the Closing Statement in the form on Annex A attached hereto.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, par value $0.00001 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, 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 Robinson Brog Leinwand Greene Genovese & Gluck P.C., with offices located at 875 Third Avenue, 9th
Floor, New York, New York 10022.


 


“Conversion
Price” shall have the meaning ascribed to such term in the Debentures.


 


“Conversion
Shares” means the shares of Common Stock issued and issuable pursuant to the terms of the Debenture, including without
limitation, shares of Common Stock issued and issuable in lieu of the cash payment of interest on the Debentures in accordance
with the terms of the Debentures, in each case without respect to any limitation or restriction on the conversion of the Debentures.


 


“Debentures”
means the 10% Senior Secured Convertible Debentures due, subject to the terms therein, on September 30, 2019, issued by the Company
to the Purchasers hereunder, in the form of Exhibit A attached hereto.


 


“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.


 


“Disclosure
Time” means, (i) if this Agreement is signed prior to midnight on any Trading Day, 9:00 a.m. (New York City time) on
the Trading Day immediately following the date hereof, and (ii) if this Agreement is signed after midnight on any Trading Day,
9:00 a.m. (New York City time) on the date hereof.


 


“Effective
Date” means the earliest of the date that (a) the initial Registration Statement has been declared effective by the
Commission, (b) all of the Conversion Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the
requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume
or manner-of-sale restrictions, (c) following the one (1)-year anniversary of each Closing Date provided that a holder of the
Conversion Shares is not an Affiliate of the Company or (d) all of the Conversion Shares may be sold pursuant to an exemption
from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions and Company Counsel
has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Conversion
Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.


 






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“Evaluation
Date” shall have the meaning ascribed 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.


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors, advisors, or
independent contractors of the Company pursuant to any stock or option plan duly adopted for such purpose approved by a majority
of the disinterested directors of the Company or a majority of the members of a committee of non-employee directors established
for such purpose for services rendered to the Company (provided that such issuances to advisors and independent contractors, only,
shall not exceed $500,000, in the aggregate, per 12 month period), (b) securities upon the exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease exchange price or conversion price of such securities (other than in
connection with stock splits or combinations, or pursuant to contractual anti-dilution obligations that have not been materially
amended since the date of this Agreement) or to extend the term of such securities, and (c) securities issued pursuant to acquisitions
or strategic transactions approved by a majority of the disinterested directors of the Company, but any such shall not include
a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.


 


“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.


 


“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).


 


“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(bb).


 


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).


 


“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).


 


“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).


 


“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.


 






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“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.


 


“Pledged
Securities” means any and all certificates and other instruments representing or evidencing all of the capital stock
and other equity interests of the Subsidiaries.


 


“Principal
Amount” means, the amounts set forth below each Purchaser’s signature block on the signature pages hereto next
to the heading “Principal Amount,” in United States Dollars, which shall equal each Purchaser’s Subscription
Amount as to the applicable Closing.


 


“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 ascribed to such term in Section 4.3(b).


 


“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.


 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated on or about the date hereof, among the Company and
the Purchasers, in the form of Exhibit B attached hereto.


 


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Conversion Shares by each Purchaser as provided for in the Registration Rights Agreement.


 


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).


 


“Required
Minimum” means, as of any date, 200% of the maximum aggregate number of shares of Common Stock then issued or potentially
issuable in the future pursuant to the Transaction Documents, including any Conversion Shares issuable upon conversion in full
of all Debentures (including Conversion Shares issuable as payment of interest on the Debentures), ignoring any conversion limits
set forth therein, and assuming that the Conversion Price is at all times on and after the date of determination 75% of the then
Conversion Price on the Trading Day immediately prior to the date of determination.


 


“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.


 






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“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.


 


“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).


 


“Securities”
means the Debentures and the Conversion 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 and the Purchasers, in the form of
Exhibit C attached hereto.


 


“Security
Documents” shall mean the Security Agreement, the Subsidiary Guarantees, the original Pledged Securities, along with
medallion guaranteed executed blank stock powers to the Pledged Securities, and any other documents and filing required thereunder
in order to grant the Purchasers a first priority security interest in the assets of the Company and the Subsidiaries as provided
in the Security Agreement, including all UCC-1 filing receipts.


 


“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market
(or any successor entity) from the shareholders of the Company with respect to the transactions contemplated by the Transaction
Documents and the transaction documents related to that certain Securities Purchase Agreement, dated May 29, 2018 (the “May
Purchase Agreement”), by and among the Company and the purchaser signatories thereto, including, without limitation,
issuance of all of the Conversion Shares, and all shares of Common Stock underlying the debentures (as amended and restated) and
warrants issued pursuant to the May Purchase Agreement, in excess of 19.99% of the issued and outstanding Common Stock on the
closing date related to the May Purchase Agreement.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include locating and/or borrowing shares of Common Stock).


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Debentures 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.


 


“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.


 


“Subsidiary
Guarantee” means the Subsidiary Guarantee, dated the date hereof, by each Subsidiary in favor of the Purchasers, in
the form of Exhibit D attached hereto.


 






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“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 Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
or the New York Stock Exchange (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Debentures, the Registration Rights Agreement, the Security Agreement, the Subsidiary
Guarantee, the Voting Agreements, all exhibits and schedules thereto and hereto and any other documents or agreements executed
in connection with the transactions contemplated hereunder.


 


“Transfer
Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing
address of 17 Battery Place, 8th Floor, New York, New York 10004, and any successor transfer agent of the Company.


 


“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b).


 


“Voting
Agreement” means the written agreement, in the form of Exhibit E attached hereto, of all of the officers, directors
and stockholders holding more than 10% of the issued and outstanding shares of Common Stock on the date hereof to vote all Common
Stock over which such Persons have voting control as of the record date for the meeting of stockholders of the Company, amounting
to, in the aggregate, at least 50% of the issued and outstanding Common Stock.


 


“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. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX 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 (d)
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 of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.


 






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ARTICLE
II.


PURCHASE
AND SALE


 


2.1 Closings.
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, up to an aggregate of $3,500,000 in Subscription Amount of Debentures, corresponding
to an aggregate of up to $3,684,211 in principal amount of such Debentures in
one or more Closings on the respective Closing Dates. 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,
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 applicable Closing. Upon satisfaction of Company Counsel or such other location as the parties
shall mutually agree.


 


2.2 Deliveries.


 


(a)
On or prior to each 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)
a legal opinion of Company Counsel;


 


(iii)
a Debenture with a principal amount equal to such Purchaser’s Principal Amount, registered in the name of such
Purchaser;


 


(iv)
the Company shall have provided each Purchaser with the Company’s wire instructions, on Company letterhead and executed
by the Chief Executive Officer or Chief Financial Officer


 


(v)
the Security Agreement, duly executed by the Company and each Subsidiary, along with all of the Security Documents, including
the Subsidiary Guarantee, duly executed by the parties thereto, the original Pledged Securities and corresponding stock
powers;


 


(vi)
the Voting Agreements; and


 


(vii)
the Registration Rights Agreement duly executed by the Company.


 


(b)
On or prior to each 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;


 


(iii)
the Security Agreement duly executed by such Purchaser; and


 


(iv)
the Registration Rights Agreement duly executed by such Purchaser.


 






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2.3 Closing
Conditions.


 


(a)
The obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met,
any of which may be waived by the Company:


 


(i)
the accuracy in all material respects on (or, to the extent representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) the applicable Closing Date of the representations and warranties of the Purchasers
contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);


 


(ii)
all material (x) obligations, (y) covenants and (z) agreements of each Purchaser required to be performed at or prior to the
applicable 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 each Closing are subject to the following
conditions being met, any of which may be waived by the Purchasers:


 


(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) when made and on the applicable 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);


 


(ii)
all material (x) obligations, (y) covenants and (z) agreements of the Company required to be performed at or prior to the
applicable Closing Date shall have been performed;


 


(iii)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;


 


(iv)
there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and


 


(v)
from the date hereof to the applicable 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 applicable 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
and without regarding to any factors unique to such Purchaser, makes it impracticable or inadvisable to purchase the
Securities at the applicable 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 to each Purchaser:


 


(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth in the SEC Reports (as defined below). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any
Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no
subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be
disregarded.


 


(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, prospects or condition (financial or otherwise) of the Company
and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 






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(c) Authorization;
Enforcement.


 


(i)
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.


 


(ii)
With respect to the Subsidiary Guarantee, each of the Subsidiaries has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by such agreement and otherwise to carry out its obligations thereunder.
The execution and delivery of the Subsidiary Guarantee and the consummation by the Company of the transactions contemplated
thereby have been duly authorized by all necessary action on the part of the Company, and no further action is required by
the respective Subsidiary, its managers or its members in connection therewith. The Subsidiary Guarantee has been (or upon
delivery will have been) duly executed by the respective Subsidiaries and, when delivered in accordance with the terms
thereof, will constitute the valid and binding obligation of the respective Subsidiary enforceable against such Subsidiary in
accordance with its terms, except (A) as listed by general equitable principals and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally,
(B) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies
and (C) insofar as indemnification and contribution provisions may be limited by applicable law.


 


(d) No
Conflicts. Except as set forth on Schedule 3.1(d), 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 (except Liens in favor of the Purchasers)
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.


 






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(e) Filings,
Consents and Approvals. Except as set forth on Schedule 3.1(e), 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 filing with the Commission pursuant to the Registration Rights Agreement, (iii) the notice and/or application(s) to
each applicable Trading Market for the issuance and sale of the Securities and the listing of the Conversion Shares for
trading thereon in the time and manner required thereby, (iv) the filing of Form D with the Commission and such filings as
are required to be made under applicable state securities laws and (v) Shareholder Approval (collectively, the
“Required Approvals”).


 


(f) Issuance
of the Securities. 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 Conversion 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 Conversion
Shares at least equal to the Required Minimum on the date hereof.


 


(g) Capitalization.
The capitalization of the Company is set forth in the SEC Reports (as defined below). 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. Other than as set forth in the SEC Reports and as a result of the purchase and sale of the
Securities, 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 the capital stock of any Subsidiary, 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 or capital stock of any Subsidiary. Other than as set forth in
the SEC Reports, the issuance and sale of the Securities will not obligate the Company or any Subsidiary 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. Other than as
set forth in the SEC Reports there are no outstanding securities or instruments of the Company or any Subsidiary that contain
any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. 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. Other than as set forth on the SEC Reports, 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.


 






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(h) SEC
Reports; Financial Statements. 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, for the two (2) years preceding the date hereof (or such shorter period as the Company was required by law or
regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”). 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 has never been an issuer subject to Rule 144(i) under
the Securities Act. 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.


 






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(i) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, other than as set forth on the SEC Reports (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) the Company has
not 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 the SEC
Reports, 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, prospects, 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.
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
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.





 






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(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, 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 U.S. 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.


 


(l) Compliance.
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, environmental protection, occupational health and safety, product quality and safety
and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.


 


(m)
[Reserved]


 


(n) Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the
SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.


 


(o) 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, and (iii) the
Liens created pursuant to that certain Security Agreement, dated May 29, 2018, by and among the Company and the signatories
thereto. 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.


 






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(p) 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 necessary or required for use in connection with their respective businesses as presently
conducted 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, since the date of the latest audited financial statements included within the SEC Reports, 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 not 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.


 


(q)
[Reserved]


 


(r) Transactions
with Affiliates and Employees. Other than as set forth on the SEC Reports, 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.


 






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(s) Sarbanes-Oxley;
Internal Accounting Controls. 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 each Closing Date.
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 Evaluation Date. Since the
Evaluation Date, 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.


 


(t) Certain
Fees. Other than as set forth on Schedule 3.1(t), 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.


 


(u) Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2 and
except as set forth in the Registration Rights Agreement, 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.


 


(v) 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.


 






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(w) Registration
Rights. Other than each of the Purchasers as set forth in the Registration Rights Agreement and the purchaser
signatories of that certain Registration Rights Agreement, dated May 29, 2018, by and among the Company and such purchaser
signatories, no Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities
Act of any securities of the Company or any Subsidiaries.


 


(x) 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. Other than 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 is, and has no reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements. 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.


 


(y) 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.


 


(z) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the
Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents
or counsel with any information that it believes constitutes or might constitute material, non-public information. The
Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in
securities of the Company. 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 the light of the circumstances under which
they were made, not misleading. The press releases disseminated by the Company during the twelve 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 the 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.


 






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(aa) 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
shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or
designated.


 


(bb) Solvency.
Based on the consolidated financial condition of the Company as of each 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 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 (1) year from each Closing Date. The SEC Reports set 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. For the purposes of this Agreement, “Indebtedness” means
(x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet
(or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due
under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.


 






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(cc) 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.


 


(dd) 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.


 


(ee) 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.


 


(ff) Accountants.
The Company’s accounting firm is Marcum LLP. To the knowledge and belief of the Company, such accounting firm (i) is a
registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the
financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31,
2018.


 


(gg) Seniority.
Except for those certain debentures issued on connection with that certain Securities Purchase Agreement, dated May 29,
2018, by and among the Company and the purchase signatories thereto, 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 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).


 


(hh) 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.


 






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(ii) 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.


 


(jj) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Sections 3.2(f) and 4.16 hereof), 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) 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 Conversion 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.


 


(kk) 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) 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 other than, in the case of clauses (ii)
and (iii), compensation paid to the Company’s placement agent in connection with the placement of the
Securities.


 






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(ll) Form
S-3 Eligibility. The Company is eligible to register the resale of the Conversion Shares for resale by the Purchaser
on Form S-3 promulgated under the Securities Act.


 


(mm) 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.


 


(nn) 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 U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


 


(oo) U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. 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.


 


(pp) 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.


 


(qq) 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 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.


 






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(rr) 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 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.


 


(ss) 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
Securities.


 


(tt) Notice
of Disqualification Events. The Company will notify the Purchasers in writing, prior to each Closing Date of (i) any
Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become
a Disqualification Event relating to any Issuer Covered Person.


 


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 each Closing Date to the Company as follows (unless as of a specific date therein,
in which case they shall be accurate as of such date):


 


(a) 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.


 






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(b) 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, has no present intention of distributing any of such Securities in
violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the
Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s
right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and
state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its
business.


 


(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date
on which it converts any Debentures it will be an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act.


 


(d) Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear
the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such
investment.


 


(e) 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, to the knowledge of such Purchaser, any other general solicitation or general
advertisement.


 


(f) Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has
not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly
executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of
the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing
the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the
execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have
no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such
Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed
by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than
to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its
officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for the avoidance of doubt (except for Sections 3.2(f) and 4.16 hereof), nothing
contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the
borrowing of, arrangement to borrow, identification of the availability of, and/or securing of, securities of the Company in
order for such Purchaser (or its broker or other financial representative) to effect Short Sales or similar transactions in
the future.


 






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(g) No
Short Selling. Each Purchaser represents and warrants to the Company that from the date such Purchaser was first
contacted about the transactions contemplated hereunder until such time that such Purchaser no longer holds any Debentures,
such Purchaser, its agents, representatives or affiliates has not and will not engage in or effect, in any manner whatsoever,
directly or indirectly, any (i) “Net Short Position” (as such term is defined in section 4.16 of this Agreement)
of the Common Stock or (ii) hedging transaction, which establishes a Net Short Position with respect to the Common
Stock.


 


The
Company acknowledges and agrees that the representations contained in this 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 transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance
of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating
or borrowing shares in order to effect Short Sales or similar transactions in the future.


 


ARTICLE
IV.


OTHER
AGREEMENTS OF THE PARTIES


 


4.1 Transfer
Restrictions.


 


(a)
The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer
of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a
Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the
rights and obligations of a Purchaser under this Agreement and the Registration Rights Agreement.


 






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(b)
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 following form:


 


[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [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. THIS
SECURITY [AND THE SECURITIES ISSUABLE UPON [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 provision 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 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, including,
if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights Agreement) thereunder.


 


(c)
Certificates evidencing the Conversion Shares shall not contain any legend (including the legend set forth in Section 4.1(b)
hereof): (i) while a registration statement (including the Registration Statement) covering the resale of such security is
effective under the Securities Act, (ii) following any sale of such Conversion Shares pursuant to Rule 144, (iii) if such
Conversion Shares are eligible for sale under Rule 144 or (iv) 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 shall cause its counsel (or at a Purchaser’s option, counsel selected by such Purchaser and reasonably
acceptable to the Company at the expense of the Company) to issue a legal opinion to the Transfer Agent or the Purchaser
promptly if required by the Transfer Agent to effect the removal of the legend hereunder, or if requested by a Purchaser,
respectively. If all or any portion of a Debenture is converted when there is an effective registration statement to cover
the resale of the Conversion Shares, or if such Conversion Shares may be sold under Rule 144 without the requirement for the
Company to be in compliance with the current public information required under Rule 144 as to such Conversion Shares and
without volume or manner-of-sale restrictions or if such legend is not otherwise required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then
such Conversion Shares shall be issued free of all legends. The Company agrees that following such time as such legend is no
longer required under this Section 4.1(c), it will, no later than the earlier of (i) two (2) Trading Days and (ii) the number
of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by a Purchaser to the
Company or the Transfer Agent of a certificate representing Conversion Shares, as applicable, issued with a restrictive
legend (such date, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a
certificate representing such shares that is free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in
this Section 4. Certificates for Conversion Shares subject to legend removal hereunder shall be transmitted by the Transfer
Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company
System as directed by such Purchaser. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the
Common Stock as in effect on the date of delivery of a certificate representing Conversion Shares, as applicable, issued with
a restrictive legend.


 






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(d)
In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, (i) as partial
liquidated damages and not as a penalty, for each $1,000 of Conversion Shares (based on the VWAP of the Common Stock on the
date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to
Section 4.1(c), $5 per Trading Day (increasing to $10 per Trading Day five (5) Trading Days after such damages have begun to
accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend and (ii) if
the Company fails to (a) issue and deliver (or cause to be delivered) to a Purchaser by the Legend Removal Date a certificate
representing the Securities so delivered to the Company by such Purchaser that is free from all restrictive and other legends
and (b) if after the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of shares of Common
Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock
that such Purchaser anticipated receiving from the Company without any restrictive legend, then, an amount equal to the
excess of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if
any) for the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses, if any)
(the “Buy-In Price”) over the product of (A) such number of
Conversion Shares that the Company was required to deliver to such Purchaser by the Legend Removal Date multiplied by (B) the
lowest closing sale price of the Common Stock on any Trading Day during the period commencing on the date of the delivery by
such Purchaser to the Company of the applicable Conversion Shares (as the case may be) and ending on the date of such
delivery and payment under this clause (ii).


 


(e)
Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell
any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus
delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they
will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance upon this understanding.


 






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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 Conversion
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.


 


(a)
Until the time that no Purchaser owns Securities, 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 (i) shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144 (i)(1)(i) or
becomes an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (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 two percent (2.0%) of the aggregate
Subscription Amount of such Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth
(30th) day (pro rated for periods totaling less than thirty days) 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 Conversion 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.” 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.


 






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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 shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.


 


4.5 Conversion
Procedures. Each of the form of Notice of Conversion included in the Debentures set forth the totality of the procedures
required of the Purchasers in order to convert the Debentures. Without limiting the preceding sentences, no ink-original
Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any
Notice of Conversion form be required in order to convert the Debentures. No additional legal opinion, other information or
instructions shall be required of the Purchasers to convert their Debentures. The Company shall honor conversions of the
Debentures and shall deliver Conversion 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 the Disclosure Time, (a) issue a press release disclosing the material
terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents
as exhibits thereto, with the Commission. From and after the issuance of such press release, 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. In addition, effective upon the issuance of such press
release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents,
employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall
terminate. 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 (i) any registration statement contemplated by the
Registration Rights Agreement and (ii) the filing of final Transaction Documents with the Commission and (b) to the extent
such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure permitted under this clause (b).


 






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4.7 Shareholder
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 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to Section 4.6, the Company covenants and agrees that neither it, nor any other
Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the
Company reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have
consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company
understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company. To the extent that the Company delivers any material, non-public information to a Purchaser
without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty
of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees
or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents,
employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Purchaser
shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document
constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the
Company.


 


4.9 Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital
purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than
payment of trade payables in the ordinary course of the Company’s business and prior practices); (b) for the redemption
of any Common Stock or Common Stock Equivalents; (c) for the settlement of any outstanding litigation; or (d) in violation of
FCPA or OFAC regulations.


 






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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, shareholders, 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, shareholders, 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, reasonable costs and expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any material breach of any of the material (i) representations, (ii) warranties, (iii) covenants or (iv)
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 solely based upon a material breach of such Purchaser Party’s material (i)
representations, (ii) warranties or (iii) covenants under the Transaction Documents or any agreements or understandings
such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal
securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute 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 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 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.


 






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4.11 Reservation
and Listing of Securities.


 


(a)
The Company shall maintain a reserve of the Required Minimum 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.


 


(b)
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 75th
day after such date.


 


(c)
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. In addition, the Company shall hold a special
meeting of shareholders (which may also be at the annual meeting of shareholders) on or prior to January 2, 2019, for the
purpose of obtaining Shareholder Approval, with the recommendation of the Company’s Board of Directors that such
proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner
as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies
in favor of such proposal. Such preliminary proxy statement shall be filed with the Commission within ten (10) business days
of the first Closing date. The Company shall use its reasonable best efforts to obtain such Shareholder Approval. If the
Company does not obtain Shareholder Approval at the first meeting, the Company shall call a meeting every two months
thereafter to seek Shareholder Approval until the earlier of the date Shareholder Approval is obtained or the Debentures are
no longer outstanding.


 


4.12
[RESERVED]


 


4.13 Subsequent
Equity Sales.


 


(a)
From the date hereof until ninety (90) days after the Effective Date, neither the Company nor any Subsidiary shall sell,
offer for sale or solicit offers to buy, issue, enter into any agreement to issue or announce the issuance or proposed
issuance of any shares of Common Stock or Common Stock Equivalents. In addition, until such time that the Debentures are no
longer outstanding, neither the Company nor any Subsidiary shall sell, offer for sale or solicit offers to buy, issue, enter
into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents at an effective per share purchase price less than $0.60 (subject to adjustment for forward and reverse stock
splits and the like after the date hereof).


 






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(b)
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 issuance by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate
Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either
(A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading
prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity
securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a
transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue
securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to any right to collect damages.


 


(c)
Unless Shareholder Approval has been obtained and deemed effective, neither the Company nor any Subsidiary shall make any
issuance whatsoever of Common Stock or Common Stock Equivalents which would cause any adjustment of the Conversion Price to
the extent the holders of Debentures would not be permitted, pursuant to Section 4(e) of the Debentures, to convert their
respective outstanding Debentures in full, ignoring for such purposes the other conversion limitations therein. Any Purchaser
shall be entitled to seek injunctive relief against the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages.


 


(d)
Notwithstanding the foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance, except that no Variable
Rate Transaction shall be an Exempt Issuance.


 


4.14 Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or
paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the
same consideration is also offered to all of the parties to such Transaction Documents. Further, the Company shall not make
any payment of principal or interest on the Debentures in amounts which are disproportionate to the respective principal
amounts outstanding on the Debentures at any applicable time. For clarification purposes, this provision constitutes a
separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a
group with respect to the purchase, disposition or voting of Securities or otherwise.


 






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4.15 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or
sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of
this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.6. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the
Company pursuant to the initial press release as described in Section 4.6, such Purchaser will maintain the confidentiality
of the existence and terms of this transaction and the information included in the Disclosure Schedules. Notwithstanding the
foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and
agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting
transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in Section 4.6, (ii) no Purchaser shall be restricted
or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws
from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.6 and (iii) no Purchaser shall have any duty of confidentiality or duty not
to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release
as described in Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such
Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.


 


4.16 No
Net Short Positions. Each Purchaser severally and not jointly, from the date of this Agreement until such time as such
Purchaser no longer hold any Debentures, neither such Purchaser(s) nor any of its agents, representatives or affiliates nor
any entity managed or controlled by such Purchaser(s) (collectively, the “Restricted Persons” and each of the
foregoing is referred to herein as a “Restricted Person”) shall maintain, in the aggregate, a Net Short
Position. For purposes hereof, a “Net Short Position” by a Restricted Person means a position whereby such
Restricted Person has executed one or more sales of Common Stock that is marked as a short sale (but not including any sale
marked “short exempt”) and that is executed at a time when such Restricted Person does not have an equivalent
offsetting long position in the Common Stock (or is deemed to have a long position hereunder or otherwise in accordance with
Regulation SHO under the Exchange Act); provided, further that no “short sale” shall be deemed to exist as a
result of any failure by the Company (or its agents) to deliver Conversion Shares, upon conversion of the Debentures, to such
Restricted Person converting such Debentures, as applicable. For purposes of determining whether a Restricted Person has an
equivalent offsetting long position in the Common Stock, such Restricted Person shall be deemed to hold “long”
all Common Stock that is either (i) then owned by such Restricted Person, if any, or (ii) then issuable to such Restricted
Person as Conversion Shares pursuant to any Debentures then held by such Restricted Person, if any, (without regard to any
limitations on conversion set forth in the Debentures. Notwithstanding the foregoing, nothing contained herein shall (without
implication that the contrary would otherwise be true) prohibit such Restricted Person from selling “long” (as
defined under Rule 200 promulgated under Regulation SHO under the 1934 Act) the Securities or any other Common Stock then
owned by such Restricted Person. For the avoidance of doubt, this Section 4.16 is applicable to each Purchaser individually,
and not collectively. For example, if Purchaser A still holds Securities but Purchaser B does not, only Purchaser A remains
subject to this Section 4.16, but Purchaser B does not.


 






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4.17 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 applicable 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.


 


4.18 Leak-Out.
The Purchasers may sell their aggregate Conversion Shares from each Monthly Redemption (as defined in the Debentures) at a
thirty-five percent (35%) leak-out if being sold below the Conversion Price (as defined in the Debentures). If the shares are
being sold above the Conversion Price, each Purchaser shall have no such selling limitations. Notwithstanding anything to the
contrary contained in this Section 4.18, upon an Event of Default (as defined in the Debentures), the selling restrictions
contained in this Section 4.18 shall be removed until such Event of Default (as defined in the Debentures) is
cured.


 


ARTICLE
V.





MISCELLANEOUS


 


5.1 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 first Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof, provided, however,
that no such termination will affect the right of any party to sue for any breach by any other party (or parties).


 


5.2 Fees
and Expenses. The Company shall deliver to each Purchaser, prior to each Closing, a completed and executed copy of the
Closing Statement, attached hereto as Annex A. 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 notice delivered by a Purchaser), stamp
taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.


 






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5.3 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.


 


5.4 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number or email attachment at the email address 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 U.S. 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. To the extent that
any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.


 


5.5 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 Purchasers which purchased at least 51% in interest of the Debentures
based on the initial Subscription Amounts hereunder (which shall include _____________ so long as _____________ holds any
Debentures) or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought,
provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of
Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. 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. Any proposed amendment or waiver that disproportionately, materially and adversely affects the
rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall
require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with this
Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.


 


5.6 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.


 


5.7 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.”


 






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5.8 No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except as otherwise set forth in Section 4.10.


 


5.9 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, shareholders, 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 Action or Proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such 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 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 any party shall commence an Action 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 or Proceeding shall be reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such
Action or Proceeding.


 


5.10
Survival. The representations and warranties contained herein shall survive the applicable Closing and the
delivery of the Securities for a period of the earlier of (i) until such time as no Purchaser holds any Debentures, and (ii)
eighteen (18) months.





 


5.11 Execution.
This Agreement may be executed in two 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.


 






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5.12 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.


 


5.13 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 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 of a Debenture, the applicable Purchaser shall be required to return any
shares of Common Stock subject to any such rescinded conversion.


 


5.14 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
under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the
issuance of such replacement Securities.


 


5.15 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.


 


5.16 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.


 






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5.17 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 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.


 


5.18 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. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the
Transaction Documents. 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. It is
expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is
between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and
among the Purchasers.


 


5.19 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.





 


5.20 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.


 


5.21 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.


 


5.22 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.


 


(Signature
Pages Follow)


 




    	38



    	 



    

 


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.


 


	xG Technology, Inc.	 	Address
    for Notice:
	 	 	 
	By:		 	240
    S. Pineapple Avenue, Suite 701, Sarasota, FL 34236
	Name:
    	Roger
    G. Branton	 	Email:
	Title:
    	Chief
    Executive Officer	 	rbranton@xgtechnology.com
	 	 	 	 
	With a copy to (which shall not constitute notice):	 	Fax:
    (941) 954-8595


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]


 




    	39



    	 



    

 


[PURCHASER
SIGNATURE PAGES TO XGTI 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 Purchaser: ________________________________________________________


 


Signature
of Authorized Signatory of Purchaser: __________________________________


 


Name
of Authorized Signatory: ____________________________________________________


 


Title
of Authorized Signatory: _____________________________________________________


 


Email
Address of Authorized Signatory: _____________________________________________


 


Facsimile
Number of Authorized Signatory: __________________________________________


Address
for Notice to Purchaser:


 


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


 


Subscription
Amount: $_____________


 


Principal
Amount: $_____________


 


EIN
Number: _______________________


 


[SIGNATURE
PAGES CONTINUE]


 




    	40



    	 



    

 


Annex
A


 


CLOSING
STATEMENT


 


Pursuant
to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers shall purchase up $3,500,000 in Subscription
Amount of Debentures, corresponding to an aggregate of up to $3,684,211 in
Principal Amount of such Debentures of xG Technology, Inc., a Delaware corporation (the “Company”).
All funds will be wired into an account maintained by the Company. All funds will be disbursed in accordance with this Closing
Statement.


 


Disbursement
Date: ________________, 2018





 


 


	I.
    PURCHASE PRICE	 	 
	 	 	 
	Gross
    Proceeds to be Received	$	 


 


	II.
    DISBURSEMENTS	 	 
	 	 	 
	Total
    Amount Disbursed:	$	 


 


WIRE
INSTRUCTIONS:


Please
see attached.


 


Acknowledged
and agreed to


this
____ day of _______________, 2018


 


	xG
    Technology, Inc.	 
	 	 	 
	By:	 	 
	Name:	Roger
    G. Branton	 
	Title:	Chief
    Executive Officer	 


 




    	41



    	 



    

 


EXHIBIT
A


 


Form
of Debenture


 


See
attached.


 




    	42



    	 



    

 


EXHIBIT
B


 


Form
of Registration Rights Agreement


 


See
attached.


 




    	43



    	 



    

 


EXHIBIT
C


 


Form
of Security Agreement


 


See
attached.




    	44



    	 



    

 


EXHIBIT
D


 


Form
of Subsidiary Guarantee


 


See
attached.


 




    	45



    	 



    

 


EXHIBIT
E


 


Form
of Voting Agreement


 


See
attached.


 




    	46



    	 



    

 


DISCLOSURE
SCHEDULES


(Securities
Purchase Agreement)


 


The
following are the Disclosure Schedules (the “Disclosure Schedules”) referred to in that certain Securities Purchase
Agreement, dated as of December 3, 2018 (the “Agreement”), by and between xG Technology, Inc., a Delaware corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively, the “Purchasers”).


 


All
capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement. By its acceptance
hereof, each Purchaser agrees that: (i) each section reference in the Disclosure Schedule is numbered to correspond to the applicable
section of the Agreement to which such section refers; and (ii) an exception or qualification set forth in the Disclosure Schedule
with respect to a particular representation and warranty shall be deemed to be an exception or qualification with respect to all
other applicable representations and warranties to the extent the description of the facts regarding the event, item or matter
disclosed is adequate so as to make reasonably clear or otherwise make each Purchaser reasonably aware that such exception or
qualification (and the description of the facts relating thereto) is applicable to such other representations and warranties,
whether or not such exception or qualification is no numbered.


 




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