Exhibit 4.1


 


SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as of March 1, 2018, between Gopher Protocol Inc.,
a Nevada corporation (the “Company”), and the purchaser identified on the signature pages hereto (including
its successors and assigns, the “Purchaser”).


 


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(b) promulgated thereunder, the Company desires to issue and
sell to the Purchaser, and the Purchaser 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 the 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 Debentures (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”
means each of the First Closing and the Second Closing.


 


“Closing
Date(s)” means, as applicable, the First Closing Date and the Second Closing Date.


 


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


 


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


 


“Common
Stock” means the common stock of the Company, no par value, 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, rights, options, warrants 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.


 






    1 


    


    

 


“Company”
means Gopher Protocol, Inc.


 


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


 


“Company
Counsel” means Fleming PLLC, 30 Wall Street, 8th Floor, New York, New York 10005.


 


“Debentures”
means the First Closing Debenture and the Second Closing Debenture, each in the form of Exhibit A attached hereto.


 


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


 


“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 or directors of the Company
pursuant to any stock or option plan duly adopted for such purpose, by the Board of Directors of the Company, (b) securities upon
the exercise or 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 the exercise, exchange
or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions approved by
a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person which is, itself
or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company
receives benefits in addition to the investment of funds, but 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.


 


“First Closing”
means the closing of the purchase and sale of the First Closing Debenture and the Shares pursuant to Section 2.1(a).


 


“First Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto pursuant to Section 2.2(a) and Section 2.2(b), and all conditions precedent to (i) Purchaser’s obligations
to pay the Subscription Amount as to the First Closing and (ii) the Company’s obligations to deliver the First Closing Debenture
and Shares as to the First Closing, in each case, have been satisfied or waived.


 


“First Closing
Debenture” means the Convertible Debenture having a principal balance of $750,000 due, subject to the terms therein,
eight (8) months from the First Closing Date, issued by the Company to the Purchaser hereunder at the First Closing.


 


“First Closing
Underlying Shares” means the Common Stock issuable upon conversion of the First Closing Debenture.


 


“First Closing
Subscription Amount” means the aggregate amount to be paid for the First Closing Debenture purchased hereunder as specified
in the Closing Statement under the heading “First Closing Subscription Amount,” in United States dollars and in immediately
available funds.


 






    2 


    


    

 


“First
Closing Warrant” means a Warrant to purchase 500,000 shares at $2.35 per share (subject to adjustment as provided in
the Warrant) in the form of Exhibit B attached hereto.


 


“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(gg).


 


“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).


 


“Legal
Counsel Opinion” shall have the meaning ascribed to such term in Section 4.1(c).


 


“Lien”
means a lien, charge, pledge, security interest, hypothecation, mortgage, 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.


 


“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.


 


“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.


 


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


 


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


 


“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon conversion in full of the Debentures
(including Underlying Shares issuable as payment of interest on the Debentures) and Warrant Shares issuable upon exercise of the
Warrant, ignoring any conversion or exercise limits set forth therein, multiplied by 1.0.


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


 


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


 


“Second Closing”
shall have the meaning ascribed to such term in Section 2.1(b).


 


“Second Closing
Date” means the date of the Second Closing.


 






    3 


    


    

 


“Second Closing
Debenture” means the means the 10% Convertible Debenture having a principal balance of $750,000 due, subject to the terms
therein, eight (8) months from the Second Closing Date, issued by the Company to the Purchaser hereunder at the Second Closing,
if any.


 


“Second Closing
Subscription Amount” means the aggregate amount to be paid for the Second Closing Debenture purchased hereunder as specified
in the Closing Statement under the heading “Second Closing Subscription Amount,” in United States dollars and in immediately
available funds.


 


“Second Closing
Underlying Shares” means the Common Stock issuable upon conversion of the Second Closing Debenture.


 


“Second
Closing Warrant” means a Warrant to purchase 500,000 shares at $2.35 per share (subject to adjustment as provided in
the Warrant) in the form of Exhibit B attached hereto.


 


“Securities”
means the Debentures, the Escrow Shares, the Underlying Shares and the Warrant, and the Warrant Shares issued to the Purchaser
pursuant to this Agreement.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Shell
Company” means and entity that fits within the definition of a “Shell Company” under Section 12b-2 of the Exchange
Act.


 


“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 the location and/or reservation of borrowable shares of Common Stock).


 


“Subsidiary”
means UGOPHERSERVICES LIMITED, incorporated in England and Wales, and UGOPHERSERVICES CORP, incorporated in the State of Georgia,
wholly-owned subsidiaries of the Company, and with respect to any other entity at any date, any direct or indirect corporation,
limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity of
which (A) more than 30% of (i) the outstanding capital stock having (in the absence of contingencies) ordinary voting power to
elect a majority of the board of directors or other managing body of such entity, (ii) in the case of a partnership or limited
liability company, the interest in the capital or profits of such partnership or limited liability company or (iii) in the case
of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other
entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries,
by such entity, or (B) is under the actual control of the Company.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” means 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, the New York
Stock Exchange, or the OTCQB maintained by the OTC Markets Group, Inc.


 


“Transaction
Documents” means this Agreement, the Debentures, the Warrant, all exhibits and schedules thereto and hereto and any other
documents or agreements executed in connection with the transactions contemplated hereunder.


 






    4 


    


    

 


“Transfer
Agent” means Empire Stock Transfer, Inc. and any successor transfer agent of the Company.


 


“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Debentures and issued
and issuable in lieu of the cash payment of interest on the Debentures in accordance with the terms of the Debentures.


 


“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 the Common Stock is not quoted on a Trading Market
but is quoted on the OTC Pink , the most recent bid price per share of the Common Stock for such date (or the nearest preceding
date) on the OTC Pink as then listed or quoted for trading by OTC Markets Group, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), or (c) in all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Purchaser and reasonably acceptable to the Company, the fees and expenses
of which shall be paid by the Company.


 


“Warrant
Shares” means the shares of Common Stock issued and issuable upon exercise of the First Closing Warrant and/or the Second
Closing Warrant.


 


ARTICLE II.


PURCHASE AND
SALE


 


2.1      Purchase and
Closing.


 


(a)     First Closing.
On the First Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchaser
agrees to purchase, the First Closing Debenture. Purchaser shall deliver to the Company, via wire transfer immediately available
funds equal to the First Closing Subscription Amount, and the Company shall deliver to the Purchaser the First Closing Debenture
on the First Closing Date, and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable
at the First Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the First Closing shall
occur at such location as the parties shall mutually agree.


 


(b)     Second Closing.
On the Second Closing Date, which shall occur or about the 60 day following the date hereof subject to the consent of the Purchaser,
upon the terms and conditions set forth herein, the Company agrees to sell, and the Purchaser agrees to purchase, the Second Closing
Debenture. Purchaser shall deliver to the Company, via wire transfer immediately available funds equal to Purchaser’s Second
Closing Subscription Amount, and the Company shall deliver to the Purchaser the Second Closing Debenture on the Second Closing
Date, and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the First Closing.
Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Second Closing shall occur at the offices
of Purchaser Counsel or such other location as the parties shall mutually agree. For the avoidance of doubt, and notwithstanding
anything in this Agreement to the contrary, the occurrence of the Second Closing will be in the discretion of the Purchaser and
not in the discretion of the Company (subject only to the applicable conditions to closing set forth in Section 2.2).


 






    5 


    


    

 


2.2      Deliveries.


 


(a)     On
or prior to each Closing, the Company shall deliver or cause to be delivered to the Purchaser the following:


 


		(i)	as to the First Closing, this Agreement duly executed
by the Company;



 


		(ii)	the Escrow Shares to be held in escrow pursuant to Section 4.18 hereof;



 


		(iii)	as to the First Closing, a First Closing Debenture registered in the name of the Purchaser;



 


		(iv)	as to the First Closing, the First Closing Warrant;



 


		(v)	as to the First Closing, an irrevocable transfer agent letter to reserve the number of shares of
Common Stock issuable upon conversion of the First Closing Debenture which letter shall be in a form reasonably acceptable to the
Purchaser;



 


		(vi)	Reserved.;



 


		(vii)	as to the Second Closing, a Second Closing Debenture Second Closing Warrant registered in the name
of the Purchaser (the First Closing Warrant and Second Closing Warrant are collectively referred to herein as the Warrant”)
and the second Escrow Shares to be held in escrow pursuant to Section 4.18; and



 


		(viii)	as to the Second Closing, an irrevocable transfer agent letter to reserve the number of shares
of Common Stock issuable upon conversion of the Second Closing Debenture and Second Closing Warrant which letter shall be in a
form reasonably acceptable to the Purchaser; and



 


		(ix)	as to the Second Closing, a certificate duly executed by the Company’s chief executive officer
in a form that is acceptable to the Purchaser, stating that no Material Adverse Event has occurred since the First Closing, other
than ordinary course of the Company business (which include acquiring assets and/or companies) and the Company has not breached
the terms of this Agreement or the First Closing Debenture.



 


(b)     On
or prior to each Closing, the Purchaser shall deliver or cause to be delivered to the Company the following:


 


		(i)	as to the First Closing, this Agreement duly executed by the Purchaser;



 


		(ii)	Reserved;



 


		(iii)	as to the First Closing, the First Closing Subscription Amount subject to the closing by wire transfer;
and



 


		(iv)	as to the Second Closing, the Second Closing Subscription Amount subject to the closing by wire
transfer.



 






    6 


    


    

 


2.3      Closing Conditions.


 


(a)     The
obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:


 


		(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 date of the applicable Closing of the representations
and warranties of the Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate as
of such date);



 


		(ii)	all obligations, covenants and agreements of Purchaser required to be performed at or prior to
a Closing Date shall have been performed; and



 


		(iii)	the delivery by Purchaser of the items set forth in Section 2.2(b) of this Agreement; and



 


(b)     The
obligation of the Purchaser hereunder in connection with each Closing are subject to the following conditions being met:


 


		(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 date of the applicable Closing 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 obligations, covenants and agreements of the Company required to be performed at or prior to
an 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 the Company shall not be in breach of any Transaction Document; and



 


		(v)	from the date hereof to a Closing Date, trading in the Common Stock shall not have been suspended
by the SEC or the Company’s principal Trading Market, and, at any time prior to a 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 the Purchaser, makes it impracticable or inadvisable to purchase the
Securities on the Closing Date.



 


		(vi)	With respect to the Second Closing, the consent of the Purchaser to such closing, which it may
provide in its sole discretion.



 






    7 


    


    

 


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 as of the date hereof:


 


(a)     Subsidiaries. The Company owns, directly or indirectly, 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 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.


 


(c)     Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the 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 therewith other than in connection with
the Required Filings and Approvals. Each 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.


 






    8 


    


    

 


(d)     No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the consummation by
it to which it is a party of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate
any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational
or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would
become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary
is bound or affected, or (iii) subject to the Required Filings and Approvals, conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have
or reasonably be expected to result in a Material Adverse Effect.


 


(e)     Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than:
(i) the filings required pursuant to Section 4.6, (ii) the filing of a Form D with the Commission and such filings as are required
to be made under applicable state securities laws such filings and approvals set forth in clauses (i), and (ii) this Section 3.1(e)
are the “Required Filings and Approvals”).


 


(f)      Issuance
of the Securities. The issuance of the Debenture and Warrant being issued pursuant to this Agreement (i) have been duly authorized,
validly issued and paid for in accordance with the applicable Transaction Documents, (ii), and have been duly and validly issued,
fully paid are nonassessable, and (iii) are free and clear of all Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. The Underlying Shares, and Warrant 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 the Required Minimum for
issuance of the Underlying Shares, Escrow Shares and Warrant Shares.


 


(g)     Capitalization. Except as provided in Schedule 3.1(g), the capitalization of the Company immediately prior to the
First Closing is, in all material respects, as set forth in the SEC Reports. Except as provided in Schedule 3.1(g), no Person
has (i) any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents except for such, if any, as will have been validly waived before each Closing and (ii)
except pursuant to the operation of agreements filed as exhibits to the SEC Reports before the date of this Agreement, the issuance
and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other
than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are 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.
Except as filed as exhibits to the SEC Reports, there are no stockholder’s 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.


 






    9 


    


    

 


(h)     SEC Reports; Financial Statements. The Company has filed all Quarterly Reports on Form 10-Q and all Annual Reports on Form
10-K required to be filed by the Company under Section 13 or 15(d) of the Exchange Act for the two years preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, in addition
to all schedules, forms, statements and other documents filed with the Commission for the two years preceding the date hereof,
including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading. The 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 generally accepted accounting principles (“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.


 


(i)      Material Changes. Since the date of the latest financial statements included in 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 equity incentive 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, no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries
or their respective business, properties, operations 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 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.


 






    10 


    


    

 


(k)     Labor Relations. No material 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. No executive officer, to the knowledge
of the Company, 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. To the Company’s knowledge, 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 material 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 order
of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws
that affect the environment, except in each of the foregoing cases as could not have or reasonably be expected to result in a Material
Adverse Effect.


 


(m)    Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses, 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.


 


(n)     Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property and
good and marketable title in all personal property owned by it that, in each case, is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for 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
and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties
in any material respect. 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.


 






    11 


    


    

 


(o)     Patents and Trademarks. To the Company’s knowledge (without having conducted any independent investigation): (i) the
Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar
rights as described in the SEC Reports as necessary or material for use in connection with their respective businesses and which
the failure to so have could reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”); (ii) neither the Company nor any Subsidiary has received a notice (written or otherwise) that any
of the Intellectual Property Rights violates or infringes upon the rights of any Person; (iii) all such Intellectual Property Rights
are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights, except where
the failure to be so enforceable or for such infringements as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect; and (iv) the Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 


(p)     Transactions with Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of
the Company and, to the knowledge of the Company, none of the employees of the Company 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, 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 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.


 


(q)     Environmental Laws. The Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval, except in each of the above cases where noncompliance
could not be reasonably expected to have a Material Adverse Effect.


 


(r)      Sarbanes-Oxley; Internal Accounting Controls. Except as set forth in the SEC Reports, the Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it. 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 has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company 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 Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s 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 Company’s internal
control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.


 






    12 


    


    

 


(s)     Certain Fees. Except as set forth on Schedule 3.1(s), no brokerage or finder’s fees or commissions are or will be
payable by the Company 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 Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 


(t)      Private Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2,
no registration under the Securities Act is required for the offer and sale of the Debenture by the Company to the Purchaser as
contemplated hereby. The issuance and sale of the Debenture hereunder does not contravene the rules and regulations of the Trading
Market.


 


(u)     Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act
of 1940, as amended.


 


(v)     Registration Rights. Except as set forth in the Transaction Documents or SEC Reports, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities of the Company.


 


(w)    Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. Except as disclosed in the SEC Reports, the Company has not, in the 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 not presently and has not been since at least January 1, 2017, an issuer identified as a “Shell Company”.



 


(x)      Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s articles of incorporation (or similar charter
documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser
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 Purchaser’s ownership of the Securities.


 






    13 


    


    

 


(y)     Disclosure. Except with respect to (i) the material terms and conditions of the transactions contemplated by the Transaction
Documents and (ii) information given to the Investor, if any, which the Company hereby confirms will not constitute material non-public
information six months from the date hereof, the Company confirms that neither it nor any other Person acting on its behalf has
provided the Purchaser or their agents or counsel with any information that it believes constitutes or might constitute material,
nonpublic information. The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting
transactions in securities of the Company. All disclosure furnished in writing by or on behalf of the Company to the Purchaser
regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement,
is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press
releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain
any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were made and when made, not misleading.


 


The Company acknowledges
and agrees that the Purchaser has not made any representations or warranties with respect to the transactions contemplated hereby
other than those specifically set forth in Section 3.2 hereof.


 


(z)      No Integrated Offering. Assuming the accuracy of the Purchaser’s 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 the Securities Act which would
require the registration of any such securities under the Securities Act.


 


(aa)   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 each Subsidiary has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.


 


(bb)
 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 Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


(cc)
  Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on
behalf of the Company, 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 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 the Foreign Corrupt Practices Act of 1977, as amended.


 






    14 


    


    

 


(dd) 
No Disagreements with Accountants and Lawyers; Outstanding SEC Comments. 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 or immediately after the First Closing Date will be current with respect to any fees
owed to its accountants which could affect the Company’s ability to perform any of its obligations under any of the Transaction
Documents. There are no unresolved comments or inquiries received by the Company or its Affiliates from the Commission which remain
unresolved as of the date hereof.


 


(ee)
  Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser
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 the 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 Purchaser’s purchase of the Securities. The Company further
represents to the 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.


 


(ff)   
Disqualification. No executive officer, member of the Board of Directors of the Company or shareholder of the Company beneficially
owning more than 10% of the Company’s securities is currently subject to a Disqualifying Event. For purposes of this Agreement,
“Disqualifying Event” means any conviction, order, judgment, decree, suspension, expulsion, event or other matter set
out in Rule 506(d)(1)(i) through (viii) of Regulation D that is currently in effect or which occurred within the periods set out
in Rule 506(d)(1)(i) through (viii).


 


(gg)  
Solvency. Based on the consolidated financial condition of the Company, 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. As of the date hereof, the Company has no intention to file
for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the First
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 $10,000 (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 $10,000 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. On each Closing the
Debenture shall be senior to the Company’s existing debt and there are no existing Liens or security interest on any of the
Company’s assets or any Subsidiary of the Company.


 






    15 


    


    

 


3.2     
Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof to the
Company as follows:


 


(a)     Organization;
Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with full right, corporate or partnership 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. Each Transaction
Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of the 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.


 


(b)     Own
Account. The 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 (this representation and warranty not limiting the Purchaser’s
right to sell the Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state securities law. The Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.


 


(c)     Purchaser
Status. At the time the Purchaser was offered the Debenture, it was, and as of the date hereof it is, and on each date on which
it converts the Debenture it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act. The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.


 


(d)     Experience
of the Purchaser. The 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. The 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. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.


 






    16 


    


    

 


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 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, including
the representations and warranties made by each Purchaser herein, and shall have the rights of a Purchaser under this Agreement.


 


(b)     The
Purchaser agrees 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 AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE COMPANY TO SUCH EFFECT, OR COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES, UNLESS OTHERWISE PROHIBITED BY FEDERAL
OR STATE SECURITIES LAWS.


 


The Company acknowledges
and agrees that the Purchaser may from time to time grant a security interest in some or all of the Securities (with respect to
the Escrow Shares Purchaser may not grant a security interest in the Escrow Shares until and unless such shares are released from
escrow to the Purchaser pursuant to the terms of this Agreement) to a financial institution that is an “accredited investor”
as defined in Rule 501(a) under the Securities Act and who agrees in writing with the Company to be bound by the provisions of
this Agreement and, if required under the terms of such arrangement and subject to compliance with applicable federal and state
securities laws, the Purchaser may transfer secured Securities to the secured parties. Absent special circumstances, such a transfer
would not be subject to approval of the Company and no legal opinion of legal counsel of the secured party shall be required in
connection therewith. At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a
secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.


 






    17 


    


    

 


(c)     Certificates
evidencing the Escrow Shares (provided such shares have been released from escrow to the Purchaser), Warrant Shares or Underlying
Shares (or, if the Warrant Shares or Underlying Shares are issued in uncertificated form, comparable share notices) shall not contain
any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement covering the resale of
such security is effective under the Securities Act, or (ii) following any sale of such the Escrow Shares (provided such shares
have been released from escrow to the Purchaser), Warrant Shares or Underlying Shares pursuant to Rule 144, or (iii) if such Warrant
Shares or Underlying Shares are eligible for sale 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 the Escrow Shares (provided such shares have been released from
escrow to the Purchaser), Warrant Shares or Underlying Shares and without volume or manner-of-sale restrictions, or (iv) 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), as reasonably determined by the Company. Upon the Purchaser’s request in connection
with a proposed sale of the Escrow Shares (provided such shares have been released to the Purchaser from Escrow), Warrant Shares
or Underlying Shares pursuant to Rule 144 and if the Company reasonably determines it is so required, upon receipt of customary
documentation from Purchaser’s broker (with respect to the if the Escrow Shares (provided such shares have been released
from escrow to the Purchaser), Warrant Shares or Underlying Shares are sold in brokers transactions), the Company shall, at its
own cost and effort, retain legal counsel to provide an opinion letter to the Company’s transfer agent opining that the Escrow
Shares (provided such shares have been released from escrow to the Purchaser), Warrant Shares or Underlying Shares may be resold
without registration under the Securities Act, pursuant to Rule 144, promulgated thereunder, so long as the requirements of Rule
144 are met for any Escrow Shares (provided such shares have been released from escrow to the Purchaser), Warrant Shares or Underlying
Shares to be resold thereunder (the “Legal Counsel Opinion”). The Company shall arrange for any such opinion letter
to be provided not later than three (3) business days after the date of delivery to and receipt by the Company of a written request
by the Purchaser together with (if required in order to render the opinion) any broker’s representation letter of other customary
documentation reasonably requested by the Company evidencing compliance with Rule 144 (the “Legend Removal Date”).


 


(d)     In
addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares, Warrant Shares and/or Escrow Shares (based on the VWAP of the
Common Stock on the date such Underlying Shares, Warrant Shares and/or Escrow Shares are submitted to the Transfer Agent) delivered
for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day for each Trading Day after the Legend
Removal Date until such certificate (or, if the Underlying Shares, Warrant Shares or Escrow Shares are in uncertificated form,
a comparable notice of share ownership) is delivered without a legend. Nothing herein shall limit the Purchaser’s right to
pursue actual damages for the Company’s failure to deliver certificates representing any Underlying Shares, Warrant Shares
and/or Escrow as required by the Transaction Documents, and the 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.


 


(e)     The
Purchaser agrees that the Purchaser will sell any Securities only pursuant to either an exemption from registration or a registration
statement under the Securities Act, including any applicable prospectus delivery requirements, 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.


 


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 Warrant Shares, Underlying
Shares and Escrow 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
the Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the
Company.


 






    18 


    


    

 


4.3      Furnishing of Information. Until the earlier to occur of the time that (i) the Purchaser owns no Securities, or (ii) 18
months from the date hereof, the Company covenants that it will maintain the registration of the Common Stock under Section 12(b)
or 12(g) of the Exchange Act and to use all commercially reasonable efforts 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. Subject to the requirements of the preceeding sentence, as long as the Purchaser owns Securities, if the Company
is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and make publicly available
in accordance with Rule 144(c) such information as is required for the Purchaser to sell the Securities under Rule 144. The Company
further covenants that it will use all commercially reasonable efforts to take such further action as any holder of Securities
may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration
under the Securities Act within the requirements of the exemption provided by Rule 144.


 


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 to the
Purchaser in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchaser.


 


4.5      Conversion Procedures. The form of Notice of Conversion included in the Debenture sets forth the totality of the procedures
required of the Purchaser in order to convert the Debenture. No additional legal opinion, other information or instructions shall
be required of the Purchaser to convert its Debenture. The Company shall honor conversions of the Debenture and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents. The form of Notice of
Exercise included in the Warrant sets forth the totality of the procedures required of the Purchaser in order to exercise the Warrant.
No additional legal opinion, other information or instructions shall be required of the Purchaser to exercise its Warrant. The
Company shall honor exercises of the of the Warrant and shall deliver Warrant Shares in accordance with the terms, conditions and
time periods set forth in the Transaction Documents.


 


4.6      Securities Laws Disclosure; Publicity. The Company shall, by 9:30 a.m. (New York City time) on the next Trading Day following
the date hereof, disclose the material terms of the transactions contemplated hereby by issuing a Current Report on Form 8-K regarding
the transaction with the Transaction Documents included as exhibits. The Company and the Purchaser shall consult with each other
in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall
issue any such press release nor otherwise make any such public statement (other than in the Company’s SEC Reports after
the Closing Dates or exhibits filed therewith) without the prior consent of the Company, with respect to any press release of the
Purchaser, or without the prior consent of the 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, other
than in connection with the Company’s SEC Reports or disclosures to any regulatory agency or Trading Market that the Company
determines are necessary or appropriate, the Company shall not publicly disclose the name of the Purchaser, or include the name
of the Purchaser, in any press release or similar public statement, without the prior written consent of the Purchaser.


 


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 the 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 that
the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under
the Transaction Documents or any other agreement between the Company and the Purchaser.


 






    19 


    


    

 


4.8      Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the
Transaction Documents, and except as provided by Section 4.17, the Company covenants and agrees that after the First Closing Date
neither it, nor any other Person acting on its behalf, will provide the Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless prior thereto the Purchaser shall have executed a
written agreement regarding the confidentiality and use of such information. The Company understands and confirms that the Purchaser
shall be relying on the foregoing covenant in effecting transactions in securities of the Company. Purchaser acknowledges that
it is aware that the United States securities laws prohibit any person who has material non-public information about a company
from purchasing or selling securities of such company, or from communicating such information to any other person under circumstances
in which it is reasonably foreseeable that such person is likely to purchase or sell such securities, and Purchaser agrees not
to engage in any unlawful trading in securities of the Company or unlawful misuse or misappropriation of any such information.
Purchaser agrees to maintain the confidentiality of and not disclose or use (except for purposes relating to the transactions contemplated
by this Agreement) any confidential, proprietary or non-public information disclosed by the Company to Purchaser.


 


4.9      Use of Proceeds. The Company shall not use any of the net proceeds from the sale of the Debenture for: (a) 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) the redemption of any Common Stock or Common Stock Equivalents or (c) the settlement of any
litigation. From the Purchaser’s First Closing Subscription Amount, the Purchaser may withhold up to $15,000 for its due
diligence and/or counsel fees.


 


4.10    Indemnification of Purchaser. Subject to the provisions of this Section 4.10, the Company will indemnify and hold the 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 the 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 person (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to any action, suit, claim or proceeding brought by a third party against
such Purchaser Party arising out of or relating to (a) any breach of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in
any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of the Purchaser,
with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of
such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings
the Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any
conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be
brought against the 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 such separate 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.


 






    20 


    


    

 


4.11    Reservation and Listing of Securities.


 


(a)     The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.


 


(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 60th calendar 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 on such Trading Market as soon as possible thereafter, (iii) provide to the Purchaser evidence of such listing and (iv)
maintain the listing 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.


 


4.12    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 the 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 Purchaser
at each 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 the Purchaser.


 


4.13    Promotional Stock Activities. Neither the Company, nor any of its officers, directors, affiliates or agents, have engaged
in any stock promotional activity that could give rise to a complaint or inquiry by the Commission alleging (i) a violation of
the anti-fraud provisions of the U.S. federal securities laws, (ii) violations of the anti-touting provisions of the U.S. federal
securities laws, (iii) improper “gun-jumping” under applicable law or (iv) improper promotion of the Company or its
securities without adequate disclosure of compensation information.


 


4.14    Transfer Agent. The Company covenants and agrees that it will at all times while the Debenture remains outstanding maintain
a duly qualified independent transfer agent.


 



    21 


    


    


 


4.15    No
Short Selling.  The Purchaser has and shall not, directly or indirectly, his, her or itself, through related parties,
affiliates or otherwise, (i) sell “short” or “short against the box” (as those terms are generally understood)
any equity security of the Company or (ii) otherwise engage in any transaction that involves hedging of the Purchaser’s position
in any equity security of the Company, until the Purchaser no longer owns any Securities.


 


4.16    Prohibition
on Variable Rate Transactions. From the date hereof until the nine (9) month anniversary from the First Closing, 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, as such
term is defined in the Debentures. The 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.


 


4.17    Corporate
Existence. So long as the Debentures remain outstanding, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, consolidation, sale of all or substantially all of the Company’s assets or any similar transaction
or related transactions, (each such transaction, an “Organizational Change”) unless the Company provides the Purchaser
with five (5) Trading Days written notice of such Organizational Change


 


4.18    Limited Make Whole.


 


(a)         
In addition on the First Closing the Company shall deliver 1,000,000 shares of Common Stock to the Company Counsel (“Escrow
Shares”) who will act as escrow agent. The 1,000,000 escrow shares (and 1,000,000 Second Closing escrow shares if the second
tranche is closed and funded) are to be utilized for the purpose of limited price protection which is set forth as follows: (i)
if, beginning on the 7th monthly anniversary of the issuance of the 1,000,000 escrow shares (and the 1,000,000
escrow shares if the Second Closing has occurred ), the Purchaser has sold any of the Underling Shares of Common Stock (or 1,000,000
shares as the case may be) at a sales price of less than $1.10 per share ($1.20 in the case of the Second Closing Debenture), then
that number of shares shall be released from escrow to the Purchaser as a limited make whole using the following formula: (($1.00($1.20
in the case of these Second Closing Debenture – closing price on 1st day of each monthly anniversary beginning
on the 1st day of the 7th month (and continuing monthly until all shares are sold) / closing price
of the 1st monthly day in question) * number of shares sold at a price less than $1.10. For example in certain
month 100,000 shares been sold and, if the closing price was $0.50 per share (Proceeds then from sale $50,000), then $0.60 cents
per share would be applied for each share sold during the prior month and the escrow agent would release 120,000 escrow shares
for each share sold (as 120,000 escrow shares time $0.50 per shares equal $60,000 – and then $50,000 from sale of 100,000
shares plus $60,000 from selling escrow shares will make $110,000, which comply with the $1.10 price protection).


 


(b)        
if the Second Closing Conditions have been met but the Purchaser does not fund the purchase of the 750,000 shares of Common
Stock then Purchaser shall not receive the 1,000,000 Second Closing escrow shares. 


 


(c)         
At the end of the true up period which shall be the earlier of (i) such time as the Purchaser has sold all its shares or
(ii) 6 months anniversary from the date of actual conversion of the debentures, any remaining shares shall be delivered back to
the Company for cancellation and returned to treasury.


 



    22 


     


    

 


(d)         
The Company represents to the Purchaser that the Company has been advised by securities counsel to the Company that the
acquisition of the Escrow Shares for purposes of Rule 144 under the Securities Act tacks back to the date of this Agreement (the
“Tacking”). Upon the request of the Purchaser, the Company at the Company’s costs and expense shall cause securities
counsel to issue an appropriate opinion that the Escrow Shares tack back to the date of this Agreement and the failure of the Company
to procure such opinion shall be an Event of Default under the Debenture.


 


4.19   Selling
Restrictions. Provided that the Company is not in default of the Debentures or in breach of this Agreement, at any time during
which the Purchaser owns a Debenture, Purchaser commits to limit in aggregate all sales of the Underlying Shares and the Warrant
Shares to the greater of not more than (i) 10.00% of the daily trading volume for the Company’s common stock as reported
on a Trading Market for that day or (ii) $35,000. Breach of this leak-out provision will be considered a material breach by Purchaser.


 


ARTICLE V.


MISCELLANEOUS


 


5.1      Termination.
This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the Purchaser, by written notice to the other parties, if the First Closing
has not been consummated on or before March 5, 2018; provided, however, that such termination will not
affect the right of any party to sue for any breach by the other party (or parties). The Company’s representations and warranties
shall survive the termination of this Agreement.


 


5.2      Fees
and Expenses.  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, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser. The
Purchaser may withhold $15,000 from the purchase price of the Debenture for due diligence and/or counsel fees.


 


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 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) one Trading Day after the date of transmission, if such notice or communication
is delivered via, email to the email address set forth on the signature pages attached hereto, set forth on the signature pages
attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, with written confirmation of successful transmission,
(b) the next Trading Day after the date of transmission, if such notice or communication is delivered via, email, to the email
address 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 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.


 


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 the Purchaser or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought.  No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder
in any manner impair the exercise of any such right.


 



    23 


     


    

 


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 the Purchaser (other than by merger).  The Purchaser may assign any or all of its rights under this Agreement to any Person
to whom the Purchaser assigns or transfers any Securities, provided that such transfer complies with all applicable federal and
state securities laws and that such transferee agrees in writing with the Company to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the Purchaser.


 


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, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  
If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such action or proceeding.


 


5.10    Survival. 
The representations and warranties shall survive each Closing and the delivery of the Debentures until, with respect to the Purchaser,
the Purchaser no longer holds any at which time they shall expire and shall no longer be of any force or effect.


 



    24 


     


    

 


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 the other party, it being
understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.


 


5.12    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 the 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 the 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 Purchaser shall be required to return any shares of Common
Stock subject to any such rescinded conversion or exercise notice.


 


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 Purchaser 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 agrees 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 the Purchaser pursuant to any Transaction Document
or the 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.


 



    25 


     


    

 


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 claim, action or proceeding that may be brought by the 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 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 the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall
be applied by the 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 the Purchaser’s election.


 


5.18    Liquidated
Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.


 


5.19    Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.


 


5.20    Construction.
The parties agree that each of them and/or their respective counsel has 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 hereto.


 


5.21   WAIVER
OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE
PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.


 


(Signature Pages
Follow)


 



    26 


     


    

 





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


 


	GOPHER PROTOCOL, INC. 	 
	 	 	 
	By:	 	 
	 	Name:
Gregory Bauer	 
	 	Title: Chief
Executive Officer	 



 


Gopher Protocol Inc.


2500 Broadway, Suite F-125


Santa Monica, California 90404


Email address for Notice: Mansour.khatib@gopherprotocol.com


 


With a copy to (which shall not constitute
notice):


 


Fleming PLLC


30 Wall Street, 8th Floor


New York, New York 10005


Email: smf@flemingpllc.com


 


[REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE
FOR PURCHASER FOLLOWS]


 



    27 


     


    

 





[PURCHASER SIGNATURE
PAGE TO AGREEMENT]


 


IN
WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed by its authorized signatory as of the date first
indicated above.


 


Name of Purchaser:
BellRidge Capital LP


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 of Purchaser:


 


Robert Klimov 


 


Managing Partner


 


Bellridge Capital, LLC.

515 E. Las Olas Boulevard Suite 120A

Fort Lauderdale  Florida           33301

D 416-898-6142  |  T 954-745-7989  |  F 954-745-7988

robertk@bellridgecapital.com  www.bellridgecapital.com


 


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


  (will be provided in conversion
or exercise notices.


 


 EIN Number:  [PROVIDE
THIS UNDER SEPARATE COVER]


 



    28