Exhibit 10.1


 


SECURITIES PURCHASE
AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of April 24, 2015, between Nxt-ID, Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each, including its successors and
permitted assigns, a “Purchaser” and collectively, the “Purchasers”).


 


WHEREAS, subject
to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser,
and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described
in this Agreement (the “Offering”).


 


NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:


 


ARTICLE I. 


DEFINITIONS


 


1.1         
Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the Notes (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 required by law or other governmental action to close.


 


“Closing”
shall have the meaning ascribed to such term in Section 2.1.


 


“Closing
Date” means the Business Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount at such Closing,
and (ii) the Company’s obligations to deliver the Securities to be issued and sold at such Closing, in each case, have been
satisfied or waived, but in no event later than the tenth Business Day following the date hereof.


 


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


 






    	1



    	 



    

 


“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.


 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.


 


“Company
Counsel” means, Robinson Brog Leinwand Greene Genovese & Gluck P.C., with offices at 875 Third Avenue, 9th
Floor, New York, New York 10022, Attn: David E. Danovitch, facsimile: (212) 956-2164.


 


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


 


“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.


 


“Effective
Date” means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission,
or (b) all of the Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement
for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale
restrictions and Company counsel has delivered to the Transfer Agent and holders a standing written unqualified opinion that resales
may then be made by such holders of the Underlying Shares pursuant to such exemption which opinion shall be in form and substance
reasonably acceptable to such holders.


 


“Escrow
Agreement” means the escrow agreement to be employed in connection with the sale of the Securities, a copy of which is
annexed hereto as Exhibit C.


 


“Equity
Line of Credit” shall have the meaning ascribed to such term in Section 4.13.


 


“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).


 


“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 and options to officers, directors, or employees of the Company,
prior to and after the Closing Date up to the amounts and on the terms set forth on Schedule 3.1(g), (b) securities upon
the exercise or exchange of or conversion of any Securities issued hereunder (subject to adjustment for forward and reverse stock
splits and the like that occur after the date hereof) 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 and any term thereof
have not been amended since the date of this Agreement to increase the number of such securities or to decrease the issue price,
exercise price, exchange price or conversion price of such securities and which securities and the principal terms thereof are
set forth on Schedule 3.1(g), and described in the SEC Reports filed not later than ten (10) days before the Closing Date,
(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 (or to the equityholders of a Person) which is, itself
or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company
and shall be intended to provide to the Company substantial additional 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, (d) as set forth on Schedule 3.1(g), and (e) securities issued or issuable
pursuant to this Agreement, the Notes or the Warrants including, without limitation, Section 4.17, or upon exercise or conversion
of any such securities.


 






    	2



    	 



    

 


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


 


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


  


“Form 8-K” shall have
the meaning ascribed to such term in Section 4.6.


  


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


 


“G&M”
shall mean Grushko & Mittman, P.C., with offices located at 515 Rockaway Avenue, Valley Stream, New York 11581, Fax: 212-697-3575.


 


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


 


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


 


“Legal
Opinion” shall have the meaning ascribed to such term in Section 2.2(a)(ii).


 


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


 


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


 


“Listing
Default” shall have the meaning ascribed to such term in Section 4.11(c).


 


“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.


 


“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(gg).


 


“Notes”
means senior secured the convertible notes due twelve (12) months after their issue date, in the form of Exhibit A hereto.


 


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


 


“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.17(a).


 






    	3



    	 



    

 


“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.


 


“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.17(b).


 


“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.


 


“Pro-Rata
Portion” shall have the meaning ascribed to such term in Section 4.17(e).


 


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


 


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


 


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


 


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


 


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


 


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


 


“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants
or conversion in full of all Notes, ignoring any conversion or exercise limits set forth therein, and assuming that any previously
unconverted Notes will be held until the third anniversary of the Closing Date.


 


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


 


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


  


“Securities”
means the Notes, the Warrants, and the Underlying Shares.


 


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


 


“Security
Agreement” means the Security Agreement to be employed in connection with the sale of the Securities, a copy of which
is annexed hereto as Exhibit E.


 






    	4



    	 



    

 


“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). 


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for the Notes and Warrants purchased hereunder as
specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.


 


“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.17(a).


 


“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.17(b).


 


“Subsidiary”
means with respect to any 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.


 


“Termination
Date” shall have the meaning ascribed to such term in Section 2.1.


 


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


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the New
York Stock Exchange, the OTC Bulletin Board, the OTCQB, or the OTCQX (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Registration Rights Agreement, the Security Agreement, the Notes, the Warrants,
the Escrow Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection
with the transactions contemplated hereunder.


 


“Transfer
Agent” means Vstock Transfer, LLC, and any successor transfer agent of the Company.


 


“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Notes and upon exercise of the Warrants
and issued and issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes and any
other shares of Common Stock issued or issuable to a Purchaser in connection with or pursuant to the Securities or Transaction
Documents.


 


“Unlegended
Shares” shall have the meaning ascribed to such term in Section 4.1(c).


 






    	5



    	 



    

 


“Variable
Priced Equity Linked Instruments” shall have the meaning ascribed to such term in Section 4.13.


 


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


 


“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 any of the NASDAQ markets or exchanges
is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices
for the Common Stock are then reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or
a similar organization or agency succeeding to its functions of reporting prices), the volume weighted average price of the Common
Stock on the first such facility (or a similar organization or agency succeeding to its functions of reporting prices), or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.


 


“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable after 180 days from the original issuance date thereof until the date that is 5 years
from such original issuance date, in the forms of Exhibits B-1 and B-2 attached hereto.


 


“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.


 


ARTICLE II. 


PURCHASE AND SALE


 


2.1         
Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with
the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and
not jointly, agree to purchase, an aggregate of $1,575,000 (inclusive of a due diligence fee of $75,000 to be deemed a Subscription
Amount) of principal amount of Notes representing $1.00 of Note Principal for each $1.00 of such Purchaser’s Subscription
Amount as set forth on the signature page hereto executed by such Purchaser, and Warrants as determined pursuant to Section 2.2(a)
(such purchase and sale being the “Closing”). Each Purchaser shall deliver to the Company such Purchaser’s
Subscription Amount, and the Company shall deliver to each Purchaser its respective Note and Warrants, as determined pursuant to
Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.
Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of
G&M or such other location as the parties shall mutually agree. Notwithstanding anything herein to the contrary, the Closing
Date shall occur on or before April 30, 2015 (“Termination Date”). If the Closing is not held on or before the
Termination Date, the Escrow Agent shall return all subscription documents and funds to be returned, without interest or deduction
to each prospective Purchaser.


 






    	6



    	 



    

 


2.2         
Deliveries.


 


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


 


(i)          this Agreement duly executed by the Company;


 

(ii)         a legal opinion of Company Counsel, substantially in the form of Exhibit F attached hereto;


 


(iii)        a Note with a principal amount equal to each Purchaser’s Subscription Amount registered in the name of such Purchaser;


 


(iv)        a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 75% of such Purchaser’s
Subscription Amount divided by the Conversion Price, with a per share purchase price equal to 120% of the initial Conversion Price,
and a Warrant to purchase a like amount of shares of Common Stock with a per share purchase price of $5.00, subject to adjustment
as provided therein;


 


(v)         the Security Agreement duly executed by the Company;


 


(vi)        the Registration Rights Agreement duly executed by the Company; and


 


(vii)       the
Escrow Agreement duly executed by the Company and Escrow Agent. 


 


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


 


(i)          this Agreement duly executed by such Purchaser;

 


(ii)         the Registration Rights Agreement
duly executed by such Purchaser;


 


(iii)        such Purchaser’s Subscription Amount by wire transfer or as otherwise permitted under the Escrow Agreement, to the Escrow
Agent;


 


(iv)        the Escrow Agreement duly executed by such Purchaser; and


 


(v)         the Security
Agreement duly executed by each Purchaser and the Collateral Agent.


 


2.3         
Closing Conditions.


 


(a)           The obligations of the Company hereunder to effect the Closing are subject to the following conditions being met:


 


(i)          the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);


 






    	7



    	 



    

 


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


 


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


 


(b)           The respective obligations of a Purchaser hereunder to effect the Closing, unless waived by such Purchaser, are subject to the
following conditions being met:


 


(i)          the accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date);


 


(ii)         all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
including but not limited to having obtained the Required Approvals.


 


(iii)        the Company shall have received executed signature pages to this Agreement with an aggregate cash Subscription Amount of not less
than $1,500,000 prior to the Closing;


 


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


 


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


 


(vi)        from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the
Closing.


 






    	8



    	 



    

 


ARTICLE III.


REPRESENTATIONS AND WARRANTIES


 


3.1         
Representations and Warranties of the Company. Except as set forth in the SEC Reports or the Disclosure Schedules, which
Disclosure Schedules shall be deemed a part hereof and shall qualify any representation made herein only to the extent of the disclosure
contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and
warranties to each Purchaser:


 


(a)           Subsidiaries. All of the direct and indirect subsidiaries of the Company and the Company’s ownership interests therein
are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests
of each Subsidiary 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.


 


(b)          Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, or
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 this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action
on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction
Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.


 






    	9



    	 



    

 


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


 


(e)          Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than:
(i) the filing with the Commission of the Registration Statement, (ii) the filings required pursuant to Section 4.6 of this Agreement,
(iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Notes and Warrant Shares
and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, and (iv) the filing of Form
D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required
Approvals”). The Company represents that it will not require the approval of the NASDAQ Capital Market to comply with
its obligations under the Transaction Documents.


 


(f)            Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the
Underlying Shares at least equal to the Required Minimum on the date hereof.


 


(g)           Capitalization. The capitalization of the Company is as set forth in Schedule 3.1(g). The Company has not issued
any capital stock since its most recently filed periodic report under the Exchange Act. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction
Documents. Except as disclosed on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents. Except as set forth on Schedule 3.1(g), the issuance and sale of the Securities will
not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will
not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any
of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid
and nonassessable, have been issued in material compliance with all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities.
There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.


 






    	10



    	 



    

 


(h)           SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) 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, other than for the Form 10-Q for the quarter
ended March 13, 2013. 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 United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to be in compliance with all its reporting requirements
under the Securities Act and Exchange Act.


 


(i)            Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (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 material 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. 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, fact, circumstance, occurrence or development has occurred or exists or is
reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties,
operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws
at the time this representation is made or deemed made that has not been publicly disclosed at least two Trading Days prior to
the date that this representation is made.


 






    	11



    	 



    

 


(j)            Litigation. Except as set forth in the SEC Reports, 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. Except as set forth in the SEC Reports, 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.


 


(k)           Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.


 


(l)            Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree
or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except
in each case as could not have or reasonably be expected to result in a Material Adverse Effect.


 


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


 






    	12



    	 



    

 


(n)           
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property (if
any) owned by them and good and marketable title in all personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value
of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and
the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made
in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. 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.


 


(o)           Intellectual Property. All of the Company’s and Subsidiary’s Intellectual Property Rights are described in the
SEC Reports.


 


(i)          The term “Intellectual Property Rights” includes:


 


	 	1.	the name of the Company and each Subsidiary, all fictional business names, trading names, registered and unregistered trademarks, service marks, and applications of the Company and each Subsidiary (collectively, “Marks'');


 


	 	2.	all patents and patent applications of the Company and each Subsidiary (collectively, “Patents'');


 


	 	3.	all copyrights in both published works and published works of the Company and each Subsidiary (collectively, “Copyrights”);


 


	 	4.	all rights in mask works of the Company and each Subsidiary (collectively, “Rights in Mask Works''); and


 


	 	5.	all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints (collectively, “Trade Secrets''); owned, used, or licensed by the Company and each Subsidiary as licensee or licensor.


 


(ii)          Agreements. Except
as set forth in the SEC Reports, there are no outstanding and, to Company’s knowledge, no threatened disputes or disagreements
with respect to any agreements relating to any Intellectual Property Rights to which the Company is a party or by which the Company
is bound.


 






    	13



    	 



    

 


(iii)        Know-How Necessary for the Business. Except as set forth in the SEC Reports, the Intellectual Property Rights are all those
necessary for the operation of the Company’s businesses as it is currently conducted or as represented, in writing, to the
Purchaser to be conducted. The Company is the owner of all right, title, and interest in and to each of the Intellectual Property
Rights, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, and has the
right to use all of the Intellectual Property Rights. To the Company’s knowledge, no employee of the Company has entered
into any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires
the employee to transfer, assign, or disclose information concerning his work to anyone other than of the Company.


 


(iv)        Patents. Except as set forth in the SEC Reports, the Company is the owner of all right, title and interest in and to each
of the Patents, free and clear of all Liens and other adverse claims. All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use), are valid
and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the Closing
Date. No Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding. Except as set
forth in the SEC Reports, to the Company’s knowledge: (1) there is no potentially interfering patent or patent application
of any third party, and (2) no Patent is infringed or has been challenged or threatened in any way. To the Company’s knowledge,
none of the products manufactured and sold, nor any process or know-how used, by the Company infringes or is alleged to infringe
any patent or other proprietary right of any other Person.


 


(v)        Trademarks. The
Company is the owner of all right, title, and interest in and to each of the Marks, free and clear of all Liens and other adverse
claims. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with
all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date. No Mark has been or is now involved in any opposition, invalidation, or cancellation and, to the Company’s
knowledge, no such action is threatened with respect to any of the Marks. To the Company’s knowledge: (1) there is no potentially
interfering trademark or trademark application of any third party, and (2) no Mark is infringed or has been challenged or threatened
in any way. To the Company’s knowledge, none of the Marks used by the Company infringes or is alleged to infringe any trade
name, trademark, or service mark of any third party.


 


(vi)        Copyrights. The Company is the owner of all right, title, and interest in and to each of the Copyrights, free and clear
of all Liens and other adverse claims. All the Copyrights have been registered and are currently in compliance with formal requirements,
are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after
the date of the Closing. No Copyright is infringed or, to the Company’s knowledge, has been challenged or threatened in any
way. To the Company’s knowledge, none of the subject matter of any of the Copyrights infringes or is alleged to infringe
any copyright of any third party or is a derivative work based on the work of a third party. All works encompassed by the Copyrights
have been marked with the proper copyright notice.


 






    	14



    	 



    

 


(vii)       Trade Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate,
and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge
or memory of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value
of its Trade Secrets. The Company has good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets.
The Trade Secrets are not part of the public knowledge or literature, and, to the Company’s knowledge, have not been used,
divulged, or appropriated either for the benefit of any Person (other the Company) or to the detriment of the Company. No Trade
Secret is subject to any adverse claim or has been challenged or threatened in any way.


 


(p)           Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription
Amount. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.


 


(q)           Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of
the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently
a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $50,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company or any Subsidiary, and (iii) other employee benefits, including stock option agreements under
any stock option plan of the Company except as disclosed on Schedule 3.1(g).


 


(r)            Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date.
The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s
certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries
as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the
certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined
in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries.


 






    	15



    	 



    

 


(s)           Certain
Fees. Except as set forth on Schedule 3.1(s), no brokerage, finder’s fees, commissions or due diligence fees
are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers
shall have no obligation with respect to any such fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section 3.1(s) that may be due in connection with the transactions contemplated by the Transaction
Documents. The Due Diligence Fee recipient identified on Schedule 3.1(s) may participate in this Offering and may utilize
its Note in lieu of a cash payment for such Due Diligence Fee recipient’s Subscription Amount.


 


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


 


(u)           Registration Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the
Securities Act of any securities of the Company or any Subsidiary, except for the Purchasers and as set forth on Schedule 3.1(u).


 


(v)           Reporting Company/Shell Company. The Company is a publicly-held company subject to reporting obligations pursuant to Sections
12(b) and 13 of the Exchange Act. Pursuant to the provisions of the Exchange Act, the Company has timely filed all reports and
other materials required to be filed by the Company thereunder with the SEC during the preceding twelve months. As of the Closing
Date, the Company is not a “shell company” (as defined in Rule 405 of the Securities Act and has never been a “shell
company”.


 


(w)          Application of Takeover Protections. The Company and the Board of Directors will have taken as of the Closing Date all necessary
action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation
(or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as
a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents,
including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership
of the Securities.


 






    	16



    	 



    

 


(x)           Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or might constitute material, non-public information.
The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in
securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company
and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules
to this Agreement, when taken together as a whole, 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 no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.


 


(y)           No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the
Offering of the Securities to be integrated with prior offerings by the Company for purposes of: (i) the Securities Act which would
require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated. 


 


(z)            Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, and the Company’s good
faith estimate of the fair market value of its assets, after giving effect to the receipt by the Company of the proceeds from the
sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required
to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities)
as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business
conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current
cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking
into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of
any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(z) sets forth as of the date
hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money
or amounts owed in excess of $100,000 in the aggregate (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 $100,000 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.


 






    	17



    	 



    

 


(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 its Subsidiaries each (i) has made or filed all United States federal, state and
local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it
is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the
payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the
Company or of any Subsidiary know of no basis for any such claim.


 


(bb)         Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material
respect any provision of FCPA.


 


(cc)         Accountants. The Company’s accounting firm is set forth on Schedule 3.1(cc) of the Disclosure Schedules. To
the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange
Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report
for the fiscal year ending December 31, 2015.


 


(dd)         Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to
each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 






    	18



    	 



    

 


(ee)         Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Sections 3.2(e) and 4.16 hereof), it is understood and acknowledged by the Company that: (i) none of
the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to
hold the Securities for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future
private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii)
any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or
indirectly, may presently have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to
have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The
Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times
during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the
Underlying Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce
the value of the existing stockholders' equity interests in the Company at and after the time that the hedging activities are being
conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with
respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations
under any of the Transaction Documents.


 


(ff)         Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company.


 


(gg)         Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.


 


(hh)         Stock
Option Plans. Excluding stock options not issued pursuant to stock option plans approved by the Company’s shareholders,
each stock option granted by the Company under the stock option plan was granted (i) in accordance with the terms of such stock
option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock
option would be considered granted under GAAP and applicable law. No stock option granted under any stock option plan has been
backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant,
stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement
of material information regarding the Company or its Subsidiaries or their financial results or prospects. 


 


(ii)           Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director,
officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”).


 






    	19



    	 



    

 


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


 


(kk)         No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to
the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


(ll)           Indebtedness and Seniority. As of the date hereof, all Indebtedness and Liens are as set forth on Schedule 3.1(ll).
Except as set forth on Schedule 3.1(ll), as of the Closing Date, no Indebtedness or other equity of the Company is senior
to the Notes in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than
indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital
lease obligations (which is senior only as to the property covered thereby).


 


(mm)       Listing and Maintenance Requirements.  The Common Stock is listed on the NASDAQ Capital Market under the symbol NXTD.
The Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.


 


(nn)         FDA.  The Company has no applications pending before the jurisdiction of the U.S. Food and Drug Administration (“FDA”).


 


(oo)         No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under
the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”
and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.


 


(pp)         Survival. The foregoing representations and warranties shall survive the Closing.


 






    	20



    	 



    

 


3.2           Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents
and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):


 


(a)           Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership,
limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents
and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.


 


(b)           Understandings or Arrangements. Such Purchaser understands that the Securities are “restricted securities” and
have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation
of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any
other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable
state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant
to a registration statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business.


 


(c)           Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on
each date on which it exercises any Warrants or converts any Notes 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. Such Purchaser is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act. Such Purchaser has the authority and is duly and legally qualified to purchase and own the
Securities. Such Purchaser is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof.
Such Purchaser has provided the information in the Accredited Investor Questionnaire attached hereto as Exhibit G (the “Investor
Questionnaire”). The information set forth on the signature pages hereto and the Investor Questionnaire regarding such
Purchaser is true and complete in all respects. Except as disclosed in the Investor Questionnaire, such Purchaser has had no position,
office or other material relationship within the past three years with the Company or Persons (as defined below) known to such
Purchaser to be affiliates of the Company, and is not a member of the Financial Industry Regulatory Authority or an “associated
person” (as such term is defined under the FINRA Membership and Registration Rules Section 1011).


 


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


 






    	21



    	 



    

 


(e)           Information on Company. Such Purchaser has been furnished with or has had access to the EDGAR Website of the Commission
to the Company’s filings made with the Commission during the period from the date that is two years preceding the date hereof
through the tenth business day preceding the Closing Date in which such Purchaser purchases Securities hereunder, including the
Company’s Annual Report on Form 10-K filed with the Commission on March 6, 2015 together with the Form 8-K (hereinafter referred
to collectively as the “Reports”).  Purchasers are not deemed to have any knowledge of any information
not included in the Reports unless such information is delivered in the manner described in the next sentence.  In addition,
such Purchaser may have received in writing from the Company such other information concerning its operations, financial condition
and other matters as such Purchaser has requested, identified thereon as OTHER WRITTEN INFORMATION (such other information is collectively,
the “Other Written Information”), and considered all factors such Purchaser deems material in deciding on the
advisability of investing in the Securities.  Such Purchaser was afforded (i) the opportunity to ask such questions as
such Purchaser deemed necessary of, and to receive answers from, representatives of the Company concerning the merits and risks
of acquiring the Securities; (ii) the right of access to information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable such Purchaser to evaluate the Securities; and
(iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort
or expense that is necessary to make an informed investment decision with respect to acquiring the Securities.


 


(f)            Compliance with Securities Act; Reliance on Exemptions. Such Purchaser understands and agrees that the Securities have not
been registered under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does
not require registration under the 1933 Act, and that such Securities must be held indefinitely unless a subsequent disposition
is registered under the 1933 Act or any applicable state securities laws or is exempt from such registration. Such Purchaser understands
and agrees that the Securities are being offered and sold to such Purchaser in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and regulations and that the Company is relying in part upon the
truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility
of such Purchaser to acquire the Securities.


 


(g)            Communication of Offer. Such Purchaser is not purchasing the Securities as a result of any “general solicitation”
or “general advertising,” as such terms are defined in Regulation D, which includes, but is not limited to, any advertisement,
article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or on the
internet or broadcast over television, radio or the internet or presented at any seminar or any other general solicitation or general
advertisement.


 


(h)            No Governmental Review. Such Purchaser understands that no United States federal or state agency or any other governmental
or state agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the Offering.


 






    	22



    	 



    

 


(i)            No Conflicts. The execution, delivery and performance of this Agreement and performance under the other Transaction Documents
and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto or thereto do not
and will not (i) result in a violation of such Purchaser’s charter documents, bylaws or other organizational documents, if
applicable, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become a
default) under any agreement to which such Purchaser is a party, nor (iii) result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or perform under the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided that
for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.


 


(j)            Survival.
The foregoing representations and warranties shall survive the Closing.


 


The Company acknowledges and agrees
that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any
other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the
consummation of the transaction contemplated hereby.


 


ARTICLE IV. 


OTHER AGREEMENTS OF THE PARTIES


 


4.1           Transfer
Restrictions.


 


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


 


(b)           The Purchasers agree
to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:


 


[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 






    	23



    	 



    

 


The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledge
or secure Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further,
no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are subject to registration pursuant to a Registration Rights Agreement,
the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.


 


(c)           Certificates evidencing
the Underlying Shares shall not contain any legend (“Unlegended Shares”) (including the legend set forth in Section
4.1(b) hereof): (i) while a registration statement (including the Registration Statement) covering the resale of such security
is effective under the Securities Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144, (iii) if such Underlying
Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or (iv) if such
legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly
after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. If all or any Notes are
converted or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale
of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required under
applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the
Commission) then such Underlying Shares shall be issued free of all legends. The Company agrees that following such time as such
legend is no longer required under this Section 4.1(c), it will, no later than five Trading Days following the delivery by a Purchaser
to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive
legend (such fifth Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser
a certificate representing such shares that is free from all restrictive and other legends (however, the Corporation shall use
reasonable best efforts to deliver such shares within three (3) Trading Days). The Company may not make any notation on its records
or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates
for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting
the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser.


 






    	24



    	 



    

 


(d)           In addition to such
Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not
as a penalty, for each $1,000 of Underlying Shares (based on the higher of the actual purchase price or VWAP of the Common Stock
on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to
Section 4.1(c), $10 per Trading Day for each Trading Day after the Legend Removal Date (increasing to $20 per Trading Day after
the fifth Trading Day) until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s
right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required
by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.           


 


(e)           DWAC. In
lieu of delivering physical certificates representing the Unlegended Shares, upon request of a Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon,
the Company shall cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Purchaser’s
prime broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system, provided that the Company’s
Common Stock is DTC eligible and the Company’s transfer agent participates in the Deposit Withdrawal at Custodian system.
Such delivery must be made on or before the Legend Removal Date.


 


(f)           Injunction.
In the event a Purchaser shall request delivery of Unlegended Shares as described in this Section 4.1 and the Company is required
to deliver such Unlegended Shares, the Company may not refuse to deliver Unlegended Shares based on any claim that such Purchaser
or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction
Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and
or enjoining delivery of such Unlegended Shares shall have been sought and obtained by the Company and the Company has posted a
surety bond for the benefit of such Purchaser in the amount of the greater of (i) 120% of the amount of the aggregate purchase
price of the Underlying Shares to be subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock
on the trading day before the issue date of the injunction multiplied by the number of Unlegended Shares to be subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall
be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.


 


(g)           Buy-In. In
addition to any other rights available to Purchaser, if the Company fails to deliver to a Purchaser Unlegended Shares as required
pursuant to this Agreement and after the Legend Removal Date the Purchaser, or a broker on the Purchaser’s behalf, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of the
shares of Common Stock which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock delivered to the Company for
reissuance as Unlegended Shares together with interest thereon at a rate of 15% per annum accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of Shares delivered to the Company for reissuance as Unlegended Shares, the Company shall be required to pay the Purchaser
$1,000, plus interest, if any. The Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser
in respect of the Buy-In.


 






    	25



    	 



    

 


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


 


4.2           Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless
of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the Company.


 


4.3           Furnishing of Information; Public Information.


 


(a)            Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to
file all periodic reports with the Commission pursuant to Section 15(d) of the Exchange Act and under Section 12(b) or 12(g) of
the 1934 Act, maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file
(or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the
Exchange Act.


 


(b)            At any time commencing on the Closing Date and ending at such time that all of the Securities may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if
the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser,
in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell
the Securities, an amount in cash equal to two percent (2.0%) of the aggregate principal amount of Notes and accrued interest held
by such Purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling
less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time
that such public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The
payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar
month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event
or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information
Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages
for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or injunctive relief.


 






    	26



    	 



    

 


4.4           Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of
the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval
prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.




 


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


 


4.6           Securities
Laws Disclosure; Publicity. The Company shall, by 9:30 a.m. (New York City time) on the fourth Trading Day following the Closing
Date, file a Current Report on Form 8-K including the Transaction Documents as exhibits thereto with the Commission within the
time required by the Exchange Act (“Form 8-K”). A form of the Form 8-K is annexed hereto as Exhibit H.
Such Exhibit H will be identical to the Form 8-K which will be filed with the Commission except for the omission of signatures
thereto by the Company and auditors providing the financial statements. From and after the filing of the Form 8-K, the Company
represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the
Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection
with the transactions contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each other in
issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall
issue any press release nor otherwise make any such public statement without the prior consent of the Company, with respect to
any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company,
which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing
party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market unless the name of such Purchaser is already included in the body of the
Transaction Documents, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in
connection with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (b). The Company may file a Form 10-Q in lieu of the Form 8-K provided such filing contains the content
required to be included in the Form 8-K and the Form 10-Q is filed not later than one (1) Trading Day after the Form 8-K would
otherwise have been filed.


 






    	27



    	 



    

 


4.7           Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.


 


4.8           Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto
such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.


 


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


 


4.10         Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any 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 Purchaser
Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents
or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser
Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful
misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party
shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for
the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party
under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability
is attributable to any Purchaser Party’s breach of its representations, warranties or covenants under the Transaction Documents.
The indemnification required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be
in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the
Company may be subject to pursuant to law.


 






    	28



    	 



    

 


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, but not less than the
Required Minimum.


 


(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 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 day after such date.


 


(c)            The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such
Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required
Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for
listing or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing
or quotation and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market. The Company will then take all action necessary to continue the
listing or quotation and trading of its Common Stock on a Trading Market until the later of (i) at least five years after the Closing
Date, and (ii) for so long as the Warrants are outstanding, and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading Market at least until five years after the Closing Date and
for so long as the Warrants are outstanding. In the event the aforedescribed listing is not continuously maintained for five years
after the Closing Date (a “Listing Default”), then in addition to any other rights the Purchasers may have hereunder
or under applicable law, on the first day of a Listing Default and on each monthly anniversary of each such Listing Default date
(if the applicable Listing Default shall not have been cured by such date) until the applicable Listing Default is cured, the Company
shall pay to each Purchaser an amount in cash, as partial liquidated damages and not as a penalty, equal to 2% of the aggregate
Subscription Amount and purchase price of Warrant Shares held by such Purchaser on the day of a Listing Default and on every thirtieth
day (pro-rated for periods less than thirty days) thereafter until the date such Listing Default is cured. If the Company fails
to pay any liquidated damages pursuant to this Section in a timely manner, the Company will pay interest thereon at a rate of 1.5%
per month (pro-rated for partial months) to the Purchaser.


 


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 any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.


 






    	29



    	 



    

 


4.13        Subsequent
Equity Sales. From the date hereof until such time as the Notes and the Class A Common Stock Purchase Warrants, attached hereto
as Exhibit B-1, are no longer outstanding, the Company will not, without the consent of the Purchasers, enter into any Equity
Line of Credit or similar agreement, floating or Variable Priced Equity Linked Instruments nor any of the foregoing or equity with
price reset rights (subject to adjustment for stock splits, distributions, dividends, recapitalizations and the like) (collectively,
the “Variable Rate Transaction”).   For purposes hereof, “Equity Line of Credit”
shall include any transaction involving a written agreement between the Company and an investor or underwriter whereby the Company
has the right to “put” its securities to the investor or underwriter over an agreed period of time and at an agreed
price or price formula, and “Variable Priced Equity Linked Instruments” shall include: (A) any debt or equity
securities which are convertible into, exercisable or exchangeable for, or carry the right to receive additional shares of Common
Stock either (1) at any conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for Common Stock at any time after the initial issuance of such debt or equity security, or (2) with a
fixed conversion, exercise or exchange price that is subject to being reset at some future date at any time after the initial issuance
of such debt or equity security due to a change in the market price of the Company’s Common Stock since date of initial issuance,
and (B) any amortizing convertible security which amortizes prior to its maturity date, where the Company is required or has the
option to (or any investor in such transaction has the option to require the Company to) make such amortization payments in shares
of Common Stock which are valued at a price that is based upon and/or varies with the trading prices of or quotations for Common
Stock at any time after the initial issuance of such debt or equity security (whether or not such payments in stock are subject
to certain equity conditions).  For purposes of determining the total consideration for a convertible instrument (including
a right to purchase equity of the Company) issued, subject to an original issue or similar discount or which principal amount is
directly or indirectly increased after issuance, the consideration will be deemed to be the actual net cash amount received by
the Company in consideration of the original issuance of such convertible instrument. For so long as the Notes are outstanding,
the Company will not amend the terms of any securities or Common Stock Equivalents or of any agreement outstanding or in effect
as of the date of this Agreement pursuant to which same were or may be acquired, if such issuance or the result of such amendment
would be at an effective price per share of Common Stock less than the higher of the Conversion Price or Warrant Exercise Price
in effect at the time of such amendment.


 


4.14        Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration
is also offered on a ratable basis to all of the parties to this Agreement. For clarification purposes, this provision constitutes
a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group
with respect to the purchase, disposition or voting of Securities or otherwise. 


 


4.15        Capital
Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split
or reclassification of the Common Stock without 10 days prior written notice to the Purchasers.


 






    	30



    	 



    

 


4.16        Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to a press release or Form
8-K as described in Section 4.6.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until
such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to a press release
or Form 8-K as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction
and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes
any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to a press release or
Form 8-K as described in Section 4.6, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated
by this Agreement are first publicly announced pursuant to a press release or Form 8-K, and (iii) no Purchaser shall have any duty
of confidentiality to the Company or its Subsidiaries after the filing of the Form 8-K.  Notwithstanding the foregoing, in
the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by
this Agreement.


 


4.17        Participation
in Future Financing.


 


(a)           
From the date hereof until the Notes and the Class A Common Stock Purchase Warrants, attached hereto as Exhibit B-1, are
no longer outstanding, upon any proposed issuance by the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents
for cash consideration, Indebtedness or a combination thereof, other than (i) a rights offering to all holders of Common Stock
(which may include extending such rights offering to holders of Notes) or (ii) an Exempt Issuance, (a “Subsequent Financing”),
the Purchasers shall have the right to participate in up to an amount of the Subsequent Financing equal to 30% of the Subsequent
Financing (the “Participation Maximum”) pro rata to each other in proportion to their Subscription Amounts on
the same terms, conditions and price provided for in the Subsequent Financing, unless the Subsequent Financing is an underwritten
public offering, in which case the Company shall notify each Purchaser of such public offering when it is lawful for the Company
to do so, but no Purchaser shall be entitled to purchase any particular amount of such public offering without the approval of
the lead underwriter of such underwritten public offering.


 


(b)            At least five Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The
requesting Purchaser shall be deemed to have acknowledged that the Subsequent Financing Notice may contain material non-public
information. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.


 






    	31



    	 



    

 


(c)            Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than
5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice
that the Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and
representing and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth
in the Subsequent Financing Notice. If the Company receives no such notice from a Purchaser as of such fifth (5th) Trading
Day, such Purchaser shall be deemed to have notified the Company that it does not elect to participate.


 


(d)            If by 5:30 p.m. (New York City time) on the fifth (5th ) Trading Day after all of the Purchasers have received the Pre-Notice,
notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to
participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may affect the remaining
portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.


 


(e)            If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum.  “Pro Rata Portion” means the ratio of (x) the principal amount of Notes purchased
hereunder by a Purchaser participating under this Section 4.17 and (y) the sum of the aggregate principal amounts of Notes purchased
hereunder by all Purchasers participating under this Section 4.17.


 


(f)             The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right
of participation set forth above in this Section 4.18, if the Subsequent Financing subject to the initial Subsequent Financing
Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading
Days after the date of the initial Subsequent Financing Notice.


 


(g)            The Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to
any restrictions on trading as to any of the Securities purchased hereunder (for avoidance of doubt, the securities purchased in
the Subsequent Financing shall not be considered securities purchased hereunder) or be required to consent to any amendment to
or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written
consent of such Purchaser.


 


(h)           Notwithstanding
anything to the contrary in this Section 4.17 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent
Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such
transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries.


 






    	32



    	 



    

 


4.18        Purchaser’s
Exercise Limitations. The Company shall not effect any exercise of the rights granted in Section 4.17 of this Agreement, and
a Purchaser shall not have the right to exercise any portion of such rights granted in Section 4.17 to the extent that after giving
effect to such exercise, the Purchaser (together with the Purchaser’s Affiliates, and any other Persons acting as a group
together with the Purchaser or any of the Purchaser’s Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined in the Note), applied in the manner set forth in the Note.


 


4.19        Maintenance
of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its business, in good
working order and condition, ordinary wear and tear excepted.


 


4.20        Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises
in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might
reasonably have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.


 


4.21        DTC Program. At all
times that Notes or Warrants are outstanding, the Company shall use its best efforts to employ as the transfer agent for the Common
Stock and Warrant Shares a participant in the Depository Trust Company Automated Securities Transfer Program and cause the Common
Stock to be transferable pursuant to such program.


 


4.22        Reimbursement.
If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by such Purchaser to or with any current stockholder),
solely as a result of such Purchaser’s acquisition of the Securities under this Agreement, the Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and
conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company,
the Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement.


 


ARTICLE V. 


MISCELLANEOUS


 


5.1           Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder
only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the
other parties, if the Closing has not been consummated on or before April 30, 2015; provided, however, that such
termination will not affect the right of any party to sue for any breach by any other party (or parties).


 






    	33



    	 



    

 


5.2           Fees and Expenses. At the Closing, the Company has agreed to pay G&M for the legal fees in connection with the Closing
of some, but not all, of the Purchasers in the amount of $17,500. Except as expressly set forth in the Transaction Documents and
on Schedule 3.1(s), each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance
of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser),
stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.


 


5.3           Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


 


5.4           Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall
be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be: (i) if to the Company, to: Nxt-ID, Inc., 288 Christian Street, Oxford, CT 06478,
Attn: Gino Pereira, CEO, fax: (203) 266-2106, with a copy by fax only to: Robinson Brog Leinwand Greene Genovese & Gluck P.C.,
875 Third Avenue, 9th Floor, New York, New York 10022, Attn: David E. Danovitch, Esq., fax: (212) 956-2164, and (ii)
if to the Purchasers, to: the addresses and fax numbers indicated on the signature pages hereto, with an additional copy by fax
only to (which shall not constitute notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, fax:
(212) 697-3575.


 


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 Purchasers holding at least a majority in interest of the
component of the affected Securities then outstanding 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.


 


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.


 






    	34



    	 



    

 


5.7           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written
consent of each Purchaser (other than by merger). Following the Closing, any Purchaser may assign any or all of its rights under
this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the
“Purchasers.”


 


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


 


5.9           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any action, suit 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, in addition to the
obligations of the Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by
the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.


 


5.10         Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.


 


5.11         Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other
party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.


 


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.


 






    	35



    	 



    

 


5.13         Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar
provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under
a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then
such Purchaser may, at any time prior to the Company’s performance of such obligations, 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 Note or exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any
such rescinded conversion or exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid
to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).


 


5.14         Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.


 


5.15         Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of
damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained
in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


5.16         Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction
Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.


 






    	36



    	 



    

 


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 any Purchaser in order
to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the Closing Date thereof
forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such
excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser’s election.


 


5.18         Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction
Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way
for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained
herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated
by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for
any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented
by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience
only, each Purchaser and its respective counsel have chosen to communicate with the Company through G&M. The Company has elected
to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in
this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company
and the Purchasers collectively and not between and among the Purchasers.


 


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


 


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


 


5.21         Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to
revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto.
In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement.


 






    	37



    	 



    

 


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


 


5.23         Equitable Adjustment. Trading volume amounts, price/volume amounts and similar figures in the Transaction Documents shall
be equitably adjusted (but without duplication) to offset the effect of stock splits, similar events and as otherwise described
in this Agreement and Warrants.


 


(Signature Pages Follow)


 






    	38



    	 



    

 


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


 





	NXT-ID, INC.  	 	
        Address for Notice:

         

        288 Christian Street

        Oxford, CT 06478

        Fax: (203) 266-2106

	By:		 	 
	 	
        Name: GINO PEREIRA

        Title: Chief Executive Officer
	 	 




 


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

         

        Robinson Brog Leinwand Greene Genovese & Gluck
P.C. 

        875 Third Avenue, 9th Floor 

        New York, New York 10022 

        Attn: David E. Danovitch, Esq. 

        Fax: (212) 956-2164
	 





 


[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK 


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 






    	39



    	 



    

 


[PURCHASER
SIGNATURE PAGE TO NXT-ID, INC.


SECURITIES
PURCHASE AGREEMENT]


  


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


 


Name
of Purchaser: ________________________________________________________


 


Signature
of Authorized Signatory of Purchaser: __________________________________


 


Name
of Authorized Signatory: ____________________________________________________


 


Title
of Authorized Signatory: _____________________________________________________


 


Email
Address of Authorized Signatory: _____________________________________________


 


Facsimile
Number of Authorized Signatory: __________________________________________


 


State of
Residence of Purchaser: _________________________________________________


 


Address
for Notice to Purchaser:


 


 


 


 


 


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


 


 


 


 


  


Aggregate
Closing Subscription Amount: US$________________


 


Note Principal
Amount: US$___________________ 


 


Warrants:
___________________  


 


EIN Number,
if applicable, will be provided under separate cover: ________________________


  


Date: ___________________________


 


[SIGNATURE
PAGES CONTINUE]


 






    	40



    	 



    

 


EXHIBITS AND SCHEDULES


 





	Exhibit A	Form of Note
	Exhibit B-1	Form of Class A Warrant
	Exhibit B-2	Form of Class B Warrant
	Exhibit C	Escrow Agreement
	Exhibit D	Registration Rights Agreement
	Exhibit E	Form of Security Agreement
	Exhibit F	Form of Legal Opinion
	Exhibit G	Form of Investor Questionnaire and Rule 506 Bad Actor
    Disqualification Questionnaire
	Exhibit H	Form-K




 


Schedule 3.1(a)


Schedule 3.1(g)


Schedule 3.1(s)


Schedule 3.1(u)


Schedule 3.1(z)


Schedule 3.1(cc)


Schedule 3.1(ll)


Schedule 4.9


 






    	41



    	 



    

 


 


EXHIBIT F


 


ACCREDITED INVESTOR QUESTIONNAIRE 


IN CONNECTION WITH INVESTMENT IN
SENIOR SECURED CONVERTIBLE NOTE 


NXT-ID, INC., 


A DELAWARE CORPORATION 


PURSUANT TO SECURITIES PURCHASE AGREEMENT
DATED APRIL 24, 2015 


  


TO :       Nxt-ID,
Inc. 


288 Christian Street


Oxford, CT 06478


Fax: (203) 266-2106


 


INSTRUCTIONS


 


PLEASE ANSWER ALL
QUESTIONS. If the appropriate answer is “None” or “Not Applicable”, so state. Please print or type your
answers to all questions. Attach additional sheets if necessary to complete your answers to any item.


 


Your answers will
be kept strictly confidential at all times. However, Nxt-ID, Inc. (the “Company”) may present this Questionnaire to
such parties as it deems appropriate in order to assure itself that the offer and sale of securities of the Company will not result
in a violation of the registration provisions of the Securities Act of 1933, as amended, or a violation of the securities laws
of any state.


 


1.           Please provide the following information:


 


Name:________________________________________________________________________           


 


Name of additional purchaser:______________________________________________________           

(Please complete information in Question 5)


 


Date of birth, or if other than an individual, year of organization
or incorporation:


 


_______________________________________________________________________________           


 


_______________________________________________________________________________           


 


2.           Residence address, or if other than an individual,
principal office address:


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


Telephone number:______________________________________________________________           


 


Social Security Number:___________________________________________________________           


 


Taxpayer Identification Number:____________________________________________________           


 






    	42



    	 



    

 


3. Business address:_____________________________________________________________           


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


Business telephone number:________________________________________________________           


 


4. Send mail to:           Residence ______           Business _______


 


5.           With respect to tenants in common, joint tenants and
tenants by the entirety, complete only if information differs from that above:


 


Residence address:_______________________________________________________________           


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


Telephone number:______________________________________________________________           


 


Social Security Number:___________________________________________________________           


 


Taxpayer Identification Number:____________________________________________________           


 


Business address:________________________________________________________________           


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


Business telephone number:________________________________________________________           


 


Send Mail to:            Residence _______           Business _______


 


6.           Please describe your present or
most recent business or occupation and indicate such information as the nature of your employment, how long you have been employed
there, the principal business of your employer, the principal activities under your management or supervision and the scope (e.g.
dollar volume, industry rank, etc.) of such activities:


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


7.           Please
state whether you (i) are associated with or affiliated with a member of the Financial Industry Regulatory Association, Inc. (“FINRA”),
(ii) are an owner of stock or other securities of FINRA member (other than stock or other securities purchased on the open market),
or (iii) have made a subordinated loan to any FINRA member:


 





	 	 	 	 	 
	 	Yes	 	No	 











    	43



    	 



    

 


If you answered yes to any of (i) – (iii) above, please
indicate the applicable answer and briefly describe the facts below:


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


8A.           Applicable to Individuals ONLY.
Please answer the following questions concerning your financial condition as an “accredited investor” (within the meaning
of Rule 501 of Regulation D). If the purchaser is more than one individual, each individual must initial an answer where the question
indicates a “yes” or “no” response and must answer any other question fully, indicating to which individual
such answer applies. If the purchaser is purchasing jointly with his or her spouse, one answer may be indicated for the couple
as a whole:


 


8.1           Does
your net worth* (or joint net worth with your spouse) exceed $1,000,000?


 





	 	 	 	 	 
	 	Yes	 	No	 


 


8.2           Did
you have an individual income** in excess of $200,000 or joint income together with your spouse in excess of $300,000 in each
of the two most recent years and do you reasonably expect to reach the same income level in the current year?


 





	 	 	 	 	 
	 	Yes	 	No	 


 


8.3           Are you an executive officer of the Company?


 





	 	 	 	 	 
	 	Yes	 	No	 


 


* For purposes hereof, net worth shall
be deemed to include ALL of your assets, liquid or illiquid MINUS any liabilities.


 


** For purposes hereof, the term “income”
is not limited to “adjusted gross income” as that term is defined for federal income tax purposes, but rather includes
certain items of income which are deducted in computing “adjusted gross income”. For investors who are salaried employees,
the gross salary of such investor, minus any significant expenses personally incurred by such investor in connection with earning
the salary, plus any income from any other source including unearned income, is a fair measure of “income” for purposes
hereof. For investors who are self-employed, “income” is generally construed to mean total revenues received during
the calendar year minus significant expenses incurred in connection with earning such revenues.


 






    	44



    	 



    

 


8.B           Applicable to Corporations, Partnerships, Trusts,
Limited Liability Companies and other Entities ONLY:


 


The purchaser is an accredited investor
because the purchaser falls within at least one of the following categories (Check all appropriate lines):


 


	 	___	(i) a bank as defined in Section 3(a)(2) of the Act or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity;


 


	 	___	(ii) a broker-dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended;


 


	 	___	(iii) an insurance company as defined in Section 2(13) of the Act;


 


	 	___	(iv) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Act”) or a business development company as defined in Section 2(a)(48) of the Investment Act;


 


	 	___	(v) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;


 


	 	___	(vi) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, where such plan has total assets in excess of $5,000,000;


 


	 	___	(vii) an employee benefit plan within the meaning of Title 1 of the Employee Retirement Income Security Act of 1974, as amended (the “Employee Act”), where the investment decision is made by a plan fiduciary, as defined in Section 3(21) of the Employee Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or an employee benefit plan that has total assets in excess of $5,000,000, or a self-directed plan the investment decisions of which are made solely by persons that are accredited investors;


 


	 	___	(viii) a private business development company, as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;
	 	 	 


	 	___	(ix) an organization described in Section 501(c)(3) of the Internal Revenue Code, a
    corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring
    the securities offered, with total assets in excess of $5,000,000;
	 	 	 




	 	___	(x) a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a “sophisticated” person, as described in Rule 506(b)(2)(ii) promulgated under the Act, who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment;


 


	 	___	(xi) an entity in which all of the equity investors are persons or entities described above (“accredited investors”). ALL EQUITY OWNERS MUST COMPLETE “EXHIBIT A” ATTACHED HERETO.


 






    	45



    	 



    

 


9.A           Do
you have sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and
risks associated with investing in the Company?


 





	 	 	 	 	 
	 	Yes	 	No	 


 


ANSWER QUESTION 9B ONLY IF THE ANSWER TO QUESTION 9A WAS
“NO.”


 


9.B           If
the answer to Question 9A was “NO,” do you have a financial or investment adviser (a) that is acting in the capacity
as a purchaser representative and (b) who has sufficient knowledge and experience in financial and business matters so as to be
capable of evaluating the merits and risks associated with investing in the Company?


 





	 	 	 	 	 
	 	Yes	 	No	 


 


If you have a financial or investment
adviser(s), please identify each such person and indicate his or her business address and telephone number in the space below.
(Each such person must complete, and you must review and acknowledge, a separate Purchaser Representative Questionnaire which will
be supplied at your request).


 


______________________________________________________________________________           


 


______________________________________________________________________________           


 


10.           You have the right, will be afforded
an opportunity, and are encouraged to investigate the Company and review relevant factors and documents pertaining to the officers
of the Company, and the Company and its business and to ask questions of a qualified representative of the Company regarding this
investment and the properties, operations, and methods of doing business of the Company.


 


Have you or has your purchaser representative,
if any, conducted any such investigation, sought such documents or asked questions of a qualified representative of the Company
regarding this investment and the properties, operations, and methods of doing business of the Company?


 





	 	 	 	 	 
	 	Yes	 	No	 


 


If so, briefly describe:____________________________________________________________           


 


______________________________________________________________________________           


 


If so, have you completed your investigation
and/or received satisfactory answers to your questions?


 





	 	 	 	 	 
	 	Yes	 	No	 


 


11.           Do you understand the nature of an investment in the
Company and the risks associated with such an investment?


 





	 	 	 	 	 
	 	Yes	 	No	 





 






    	46



    	 



    

 


12.           Do you understand that there
is no guarantee of any financial return on this investment and that you will be exposed to the risk of losing your entire investment?


 


	 	 	 	 	 
	 	Yes	 	No	 


 


13.           Do you understand that this investment is not liquid?


 


	 	 	 	 	 
	 	Yes	 	No	 





 


14.           Do you have adequate means of
providing for your current needs and personal contingencies in view of the fact that this is not a liquid investment?


 


	 	 	 	 	 
	 	Yes	 	No	 


 


15.           Are you aware of the Company’s
business affairs and financial condition, and have you acquired all such information about the Company as you deem necessary and
appropriate to enable you to reach an informed and knowledgeable decision to acquire the Interests?


 


	 	 	 	 	 
	 	Yes	 	No	 





 


16.           Do you have a “pre-existing
relationship” with the Company or any of the officers of the Company?


 





	 	 	 	 	 
	 	Yes	 	No	 


 


(For purposes hereof, “pre-existing
relationship” means any relationship consisting of personal or business contacts of a nature and duration such as would enable
a reasonably prudent investor to be aware of the character, business acumen, and general business and financial circumstances of
the person with whom such relationship exists.)


 


If so, please name the individual or
other person with whom you have a pre-existing relationship and describe the relationship:


 


______________________________________________________________________________


 


______________________________________________________________________________


 






    	47



    	 



    

 


17.           Exceptions to the representations
and warranties made in Section 3.2 of the Securities Purchase Agreement (if no exceptions, write “none” – if
left blank, the response will be deemed to be “none”): ___________________________________________________


 


_____________________________________________________________________________


 


Dated: __________________, 2015


 


If purchaser is one or more individuals (all individuals
must sign):


 


______________________________________________________________________________           

(Type or print name of prospective purchaser)


 


______________________________________________________________________________           

Signature of prospective purchaser


 


______________________________________________________________________________           

Social Security Number


 


______________________________________________________________________________           

(Type or print name of additional purchaser)


 


______________________________________________________________________________           

Signature of spouse, joint tenant, tenant in common or other signature, if required


 


______________________________________________________________________________           

Social Security Number


 






    	48



    	 



    

 


Annex A


 


Definition of Accredited Investor


 


The securities will
only be sold to investors who represent in writing in the Securities Purchase Agreement that they are accredited investors, as
defined in Regulation D, Rule 501 under the Act which definition is set forth below:


 


1.           A natural person whose net worth,
or joint net worth with spouse, at the time of purchase exceeds $1 million (excluding home); or


 


2.           A natural person whose individual
gross income exceeded $200,000 or whose joint income with that person’s spouse exceeded $300,000 in each of the last two
years, and who reasonably expects to exceed such income level in the current year; or


 


3.           A trust with total assets in excess
of $5 million, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated
person described in Regulation D; or


 


4.           A director or executive officer
of the Company; or


 


5.           The investor is an entity, all
of the owners of which are accredited investors; or


 


6.(a) bank as defined in Section
3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, (b) any
broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (c) an insurance Company as defined
in Section 2(13) of the Act, (d) an investment Company registered under the Investment Company Act of 1940 or a business development
Company as defined in Section 2(a)(48) of such Act, (e) a Small Business Investment Company licensed by the United States Small
Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, (f) an employee benefit plan
established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political
subdivisions, if such plan has total assets in excess of $5 million, (g) an employee benefit plan within the meaning of Title I
of the Employee Retirement Income Securities Act of 1974, and the employee benefit plan has assets in excess of $5 million, or
the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, that is either a bank, savings and
loan institution, insurance Company, or registered investment advisor, or, if a self-directed plan, with an investment decisions
made solely by persons that are accredited investors, (h) a private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940, or (i) an organization described in Section 501(c)(3) of the Internal Revenue code, corporation,
Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered,
with assets in excess of $5 million.


  






    	49



    	 



    

 


EXHIBIT “A” TO ACCREDITED
INVESTOR QUESTIONNAIRE


 


ACCREDITED CORPORATIONS, PARTNERSHIPS,
LIMITED LIABILITY COMPANIES, TRUSTS OR OTHER ENTITIES INITIALING QUESTION 8B(xi) MUST PROVIDE THE FOLLOWING INFORMATION.


 


I hereby certify that set forth below
is a complete list of all equity owners in __________________ [NAME OF ENTITY], a                                   
[TYPE OF ENTITY] formed pursuant to the laws of the State of                                 
. I also certify that EACH SUCH OWNER HAS INITIALED THE SPACE OPPOSITE HIS OR HER NAME and that each such owner understands
that by initialing that space he or she is representing that he or she is an accredited individual investor satisfying the test
for accredited individual investors indicated under “Type of Accredited Investor.”


 


__________________________________________


 


signature of authorized corporate officer, general
partner or trustee


 





		Name of Equity Owner	 	Type of Accredited Investor1
	1.	 	 	 
	2.	 	 	 
	3.	 	 	 
	4.	 	 	 
	5.	 	 	 
	6.	 	 	 
	7.	 	 	 
	8.	 	 	 
	9.	 	 	 
	10.	 	 	 

  


 






1     Indicate
which Subparagraph of 8.1 - 8.3 the equity owner satisfies.


 



    	50



    	 



    

 


RULE 506 BAD ACTOR DISQUALIFICATION
QUESTIONNAIRE


 


____________________________________           ______________
___, 2015


 


Name           


  


Nxt-ID,
Inc. (the “Company”) is about to close a private placement of secured convertible Notes and warrants pursuant to the
terms of a Securities Purchase Agreement. Under an SEC Rule effective September 23, 2013, the Company is requesting each director
and executive officer to complete and execute this questionnaire. Please answer yes or no to all questions listed below. 


 


 


	
        DEFINITION OF PROMOTERS

         

        Under the Securities Act of 1933 (the “Act”)
        Rule 405 defines a promoter as any person—individual or legal entity—that either alone or with others, directly or
        indirectly takes initiative in founding the business or enterprise of the issuer, or, in connection with such founding or organization,
        directly or indirectly receives 10% or more of any class of issuer securities or 10% or more of the proceeds from the sale of any
        class of issuer securities (other than securities received solely as underwriting commissions or solely in exchange for property). 
        The test considers activities “alone or together with others, directly or indirectly”; therefore, the result does not
        change if there are other legal entities (which may themselves be promoters) in the chain between that person and the issuer.
        

         

        DEFINITION OF INVESTMENT MANAGERS AND PRINCIPALS OF POOLED
        INVESTMENT FUND ISSUERS

         

        For issuers that are pooled investment funds, the
rule covers investment advisers and other investment managers of the fund; the directors, general partners, managing members,
executive officers and other officers participating in the offering of such investment managers; and the directors, executive
officers and other officers participating in the offering of the investment managers’ general partners or managing members. 

         

        DEFINITION OF COMPENSATED SOLICITORS 

         

        Persons compensated for soliciting investors
        as well as their directors, general partners, managing members, executive officers and officers participating in the offering. 
        This category covers any persons compensated for soliciting investors but will typically involve broker-dealers and other intermediaries.

         

        DEFINITION OF DIRECTORS, GENERAL PARTNERS AND MANAGING
        MEMBERS OF THE ISSUER

         

        Members of the Board of Directors (for
        issuers that are corporations), general partners (for issuers that are partnerships) and managing members (for issuers that are
        limited liability companies). 

          

        DEFINITION OF EXECUTIVE OFFICERS
        AND PARTICIPATING OFFICERS OF THE ISSUER

          

        The term “executive officer”
        means a company’s president, any vice president in charge of a principal business unit, division or function (such as sales,
        administration or finance), any other officer who performs a policy-making function or any other person who performs similar policy-making
        functions. The term “officer” means a president, vice president, secretary, treasurer or principal financial officer,
        comptroller or principal accounting officer, as well as any person who routinely performs corresponding functions.  Participation
        in an offering would have to be more than transitory or incidental involvement, and could include activities such as participation
        or involvement in due diligence activities, involvement in the preparation of disclosure documents, and communication with the
        issuer, prospective investors or other offering participants.

         

        DEFINITION OF 20% BENEFICIAL
OWNERS OF THE ISSUER 

         

        Beneficial owners of 20% or more of
        the issuer’s outstanding equity securities, calculated on the basis of total voting power rather than on the basis of ownership
        of any single class of securities.

         

        NOTE ON REFERENCES TO THE COMPANY

         

        All references to the Company made herein
        include its predecessors and affiliated issuers.



 






    	51



    	 



    

 


1.           Criminal
Convictions: Within the past 10 years (or five years, in the of case the Company), have you or the Company been convicted of
any felony or misdemeanor


 


(a)           In connection
with the purchase or sale of a security


 





	 	 	 	 	 
	 	Yes	 	No	 





 


(b)           Involving the making of a
false filing with the Securities and Exchange Commission (the “SEC”)


 


	 	 	 	 	 
	 	Yes	 	No	 





 


(c)           Arising out of the conduct
of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers
of securities.


 


	 	 	 	 	 
	 	Yes	 	No	 


 


           2.           Court injunctions and restraining
orders: Within the past five years, have you or the Company been the subject of a court injunction or restraining order


 


           (a)           In connection with
the purchase or sale of a security


 





	 	 	 	 	 
	 	Yes	 	No	 


 


(b)           Involving the making of a
false filing with the SEC


 





	 	 	 	 	 
	 	Yes	 	No	 


 


(c)           Arising
out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid
solicitor of purchasers of securities.


 





	 	 	 	 	 
	 	Yes	 	No	 


 


           3.           Final orders of certain
state and federal regulators: Have you or the Company been the subject of any final orders of state regulators of securities,
insurance, banking, savings associations or credit unions; federal banking agencies; the Commodity Futures Trading Commission and
the National Credit Union Administration that


 


           (a)
           Bar you or the Company from associating with a regulated entity,
engaging in the business of securities, insurance or banking, or engaging in savings association or credit union activities or


 





	 	 	 	 	 
	 	Yes	 	No	 





 



    	52



    	 



    

 


 


(b) Are based on
a violation of a law or regulation that prohibits fraudulent, manipulative, or deceptive conduct and were issued within the last
10 years


 





	 	 	 	 	 
	 	Yes	 	No	 


 


           4.           SEC
disciplinary orders: Are you or the Company currently the subject of any SEC disciplinary orders relating to brokers, dealers,
municipal securities dealers, investment companies, and investment advisers and their associated persons under Section 15(b) or
15B(c) of the Securities Exchange Act of 1934, or Section 203(e) or (f) of the Investment Advisers Act that


 


(a)
Suspends or revokes your or the Company’s registration as a broker, dealer, municipal securities dealer or investment adviser

 





	 	 	 	 	 
	 	Yes	 	No	 


 


(1)
Places limitations on your or the Company’s activities, functions or operations         


  





	 	 	 	 	 
	 	Yes	 	No	 


 


(2) Bars you or
the Company from being associated with any entity or from participating in the offering of any penny stock


 





	 	 	 	 	 
	 	Yes	 	No	 


 


           5.           SEC cease-and-desist orders:
Within the last five years, have you or the Company been the subject of SEC orders to cease and desist from committing or causing
a violation or future violations of 


 


(a) The scienter-based
anti-fraud provisions of the federal securities laws


 





	 	 	 	 	 
	 	Yes	 	No	 


 


(b) Section 5 of
the Act


 





	 	 	 	 	 
	 	Yes	 	No	 


 


6.           Suspension
or expulsion from membership in an SRO or from association with an SRO member: Have you or the Company been suspended or expelled
from membership in, or suspended or barred from association with a member of, a securities self-regulatory organization or “SRO”
(i.e., a registered national securities exchange or national securities association, such as FINRA) for any act or omission
to act constituting conduct inconsistent with just and equitable principles of trade.


 





	 	 	 	 	 
	 	Yes	 	No	 


 


           7.           SEC stop orders: 


 


(a) Within the last
five years, have you, as an officer or director of an issuer, or the Company filed a registration statement or Regulation A offering
statement that was the subject of a SEC refusal order, stop order or order suspending the Regulation A exemption, or are you now
the subject of an investigation or proceeding to determine whether such an order should be issued.


 





	 	 	 	 	 
	 	Yes	 	No	 


 






    	53



    	 



    

 


(b) Within the last
five years, have you or the Company been, or been named as, an underwriter of securities under a registration statement or Regulation
A offering statement that was the subject of a Commission refusal order, stop order or order suspending the Regulation A exemption,
or are you now the subject of an investigation or proceeding to determine whether such an order should be issued.


 





	 	 	 	 	 
	 	Yes	 	No	 


 


8.           U.S.
Postal Service false representation orders: Within the last five years have you or the Company been subject to a U. S Postal
Service false representation order, temporary restraining order or preliminary injunction with respect to conduct alleged by the
U.S. Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.


 


	 	 	 	 	 
	 	Yes	 	No	 


 


The foregoing answers
are true and correct in all respects. I understand that a “yes” answer will disqualify the issuer from relying on
exemption under Rule 506 under the Securities Act of 1933.


 





	Dated:                                     ,
    201    	 	 
	 	 	Signature




 


 


54