Exhibit 10.1


 





EXECUTION COPY


 


SECURITIES
PURCHASE AGREEMENT


 


This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of March 30, 2018, is by and among Real Goods Solar, Inc.,
a Colorado corporation (the “Company”), and each of the investors listed on the Schedule of Buyers attached
hereto (individually, a “Buyer” and collectively, the “Buyers”).


 


RECITALS


 


A. The Company and
each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”)
as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.


 


B. The Company has
authorized two new series’ of convertible notes with an aggregate principal amount of $10,750,000 as follows: (i) a new series
of senior convertible notes of the Company, in the aggregate original principal amount of $5,750,000, substantially in the form
attached hereto as Exhibit A-1 (the “Series A Notes”), which Series A Notes shall be convertible
into shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant to the terms of the Series A Notes,
including, without limitation, upon conversion of any principal, interest, late charges or additional amount or otherwise thereunder,
collectively, the “Series A Conversion Shares”), in accordance with the terms of the Series A Notes; and (ii)
a new series of senior secured convertible notes of the Company, in the aggregate original principal amount of $5,000,000, substantially
in the form attached hereto as Exhibit A-2 (the “Series B Notes”, and together with the Series
A Notes, the “Notes”), which Series B Notes shall be convertible into shares of Common Stock (as defined below)
(the shares of Common Stock issuable pursuant to the terms of the Series B Notes, including, without limitation, upon conversion
of any principal, interest, late charges or additional amount or otherwise thereunder, collectively, the “Series B Conversion
Shares”, and together with the Series A Conversion Shares, the “Conversion Shares”), in accordance
with the terms of the Series B Notes.


 


C. Each Buyer wishes
to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) a Series A Note in the
aggregate original principal amount set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, (ii) a
Series B Note in the aggregate original principal amount set forth opposite such Buyer’s name in column (4) on the Schedule
of Buyers, and (iii) a warrant to initially acquire up to that aggregate number of additional shares of Common Stock set forth
opposite such Buyer’s name in column (5) on the Schedule of Buyers, substantially in the form attached hereto as Exhibit
B (the “Warrants”) (as exercised, collectively, the “Warrant Shares”).


 


D. At the Closing,
the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit C
(the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration
rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities laws.


 






     


     


    

 


E. The Notes, the Conversion
Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”


 


F. Concurrently herewith
the Company and each Buyer, separately, have entered into a Note Securities Purchase Agreement in the form attached hereto as Exhibit
D (each as amended, modified, supplemented, extended, renewed, restated or replaced from time to time, collectively, the
“Note Purchase Agreements”) pursuant to which the Company shall acquire a secured promissory note issued by
the applicable Buyer (each, an “Investor Note”, and collectively, the “Investor Notes”) as
payment of the Series B Purchase Price (as defined below) hereunder.


 


G. Concurrently herewith,
the Company and each Buyer, separately, are entering into that certain Master Netting Agreement, in substantially the form attached
hereto as Exhibit E (the “Master Netting Agreement”), to provide further clarification of their
rights (but not, in the case of each such Buyer only, its obligation) to Net (as defined below) certain Obligations (as defined
in the Master Netting Agreement) arising under and across this Agreement, the Investor Note, the Series B Notes and the Note Purchase
Agreement (collectively, the “Underlying Agreements”) and to treat the Master Netting Agreement, this Agreement
and the other Underlying Agreements as a single agreement for the purposes set forth herein and to treat this Agreement and the
Note Purchase Agreement each as a “securities contract” (11 U.S.C. § 741) or other similar agreements.


 


AGREEMENT


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:


 


1. PURCHASE AND
SALE OF NOTES AND WARRANTS.


 


(a) Purchase of
Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing
Date (as defined below) (a) a Series A Note in the original principal amount as is set forth opposite such Buyer’s name in
column (3) on the Schedule of Buyers, (b) a Series B Note in the aggregate original principal amount as is set forth opposite such
Buyer’s name in column (4) on the Schedule of Buyers and (c) Warrants to initially acquire up to that aggregate number of
Warrant Shares as is set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers.


 


(b) Closing.
The closing (the “Closing”) of the purchase of the Notes and the Warrants by the Buyers shall occur at the offices
of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178. The date and time of the Closing (the “Closing Date”)
shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections
6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer). As used herein
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York,
New York are authorized or required by law to remain closed.


 






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(c) Purchase Price.
The aggregate purchase price for the Notes and Warrants to be purchased by each Buyer (the “Purchase Price”)
shall be the aggregate amount as set forth opposite such Buyer’s name in column (6) on the Schedule of Buyers, consisting
of (a) a payment in cash of such aggregate amount as set forth opposite such Buyer’s name in column (7) on the Schedule of
Buyers (the “Series A Cash Purchase Price”) (less, in the case of any Buyer, the amounts withheld pursuant to
Section 4(g)) to the Company for the Series A Notes and the Warrants to be issued and sold to such Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the Flow of Funds Letter (as defined below) and (b) the aggregate amount
as set forth opposite such Buyer’s name in column (8) on the Schedule of Buyers (the “Series B Purchase Price”)
for the Series B Notes to be satisfied, in full, by the issuance by such Buyer of an Investor Note pursuant to the Note Purchase
Agreement in the aggregate original principal amount equal to the Series B Purchase Price. In addition, at the Closing, an authorized
person of such Buyer shall certify in a written certificate in the form attached hereto as Exhibit F (the “Investor
Collateral Certificate”) that as of the Closing Date the bank account described on Schedule I to such Investor Note,
which secures such Investor Note in accordance therewith, contains at least the Series B Purchase Price of Eligible Assets (as
defined in the Investor Note) as of the Closing Date. For the avoidance of doubt, each Buyer shall pay (x) approximately $1,000
for each $1,150 of principal amount of Series A Notes and related Warrants to be purchased by such Buyer at the Closing and (y)
approximately $1,000 for each $1,000 of principal amount of Series B Notes and related Warrants to be purchased by such Buyer at
the Closing. Each Buyer and the Company agree that the Notes and the Warrants constitute an “investment unit” for purposes
of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”). The Buyers and the Company
mutually agree that the allocation of the issue price of such investment unit between the Notes and the Warrants in accordance
with Section 1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall be an aggregate amount allocated to the Warrants
and the balance of the Purchase Price allocated to the Notes as mutually agreed by the Company and the Required Holders, and neither
the Buyers nor the Company shall take any position inconsistent with such allocation in any tax return or in any judicial or administrative
proceeding in respect of taxes.


 


(d) Form of Payment.
On the Closing Date, (i) each Buyer shall (x) pay its respective Series A Cash Purchase Price (less, in the case of any Buyer,
the amounts withheld pursuant to Section 4(g)) to the Company for the Series A Notes and the Warrants to be issued and sold
to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Flow of Funds Letter (as defined
below) and (y) in accordance with the instructions of the Company in the Flow of Funds Letter, maintain physical possession of
a duly executed Investor Note of such Buyer, in such original principal amount as is set forth across from such Buyer’s name
in column (7) of the Schedule of Buyers, issued pursuant to the Note Purchase Agreement of such Buyer, both as payment for, and
as Collateral (as defined in such Buyer’s Series B Note) securing, such Buyer’s Series B Note to be issued and sold
to such Buyer at the Closing and (ii) the Company shall deliver to each Buyer (A) a Series A Note in the aggregate original
principal amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers, and (B) a Series B Note
in the aggregate original principal amount as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers
and (C) a Warrant pursuant to which such Buyer shall have the right to initially acquire up to such aggregate number of Warrant
Shares as is set forth opposite such Buyer’s name in column (5) of the Schedule of Buyers, in each case, duly executed on
behalf of the Company and registered in the name of such Buyer or its designee.


 






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(e) Securities Contract;
Netting Safe Harbor. The Company hereby acknowledges and agrees that the rights and obligations of each Buyer under the Note
Purchase Agreement of such Buyer, under the Investor Note of such Buyer, under the Series B Note to be issued hereunder to such
Buyer and the rights and obligations of the Company hereunder, under each such Investor Note, under each such Series B Note and
under each such Note Purchase Agreement, respectively, arise in a single integrated transaction and constitute related and interdependent
obligations within such transaction. The Company and each Buyer, severally, hereby acknowledge and agree that this Agreement and
the Note Purchase Agreement each are a “securities contract” as defined in 11 U.S.C. § 741 and that each such
Buyer shall have all rights in respect of the Master Netting Agreement, this Agreement and the other Underlying Agreements as are
set forth in 11 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including, without limitation, all rights of credit, deduction,
setoff, offset, recoupment, and netting (each, a “Net”, and collectively, “Netting”) as are
available under the Master Netting Agreement, this Agreement and the other Underlying Agreements, and all Netting provisions of
the Master Netting Agreement, each Series B Note and each Investor Note, including without limitation the provisions set forth
in Section 7 of each Investor Note, are hereby incorporated in this Agreement and made a part hereof as if such provisions were
set forth herein.


 


2. BUYER’S
REPRESENTATIONS AND WARRANTIES.


 


Each Buyer, severally
and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of the Closing
Date:


 


(a) Organization;
Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.


 


(b) No Public Sale
or Distribution. Such Buyer (i) is acquiring its Notes and Warrants, (ii) upon conversion of its Notes will acquire the Conversion
Shares issuable upon conversion thereof, and (iii) upon exercise of its Warrants (other than pursuant to a Cashless Exercise
(as defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise thereof, in each case, for its own account
and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable
securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations
herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration
statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws. For purposes
of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity (as defined below) or any
department or agency thereof.


 






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(c) Accredited Investor
Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.


 


(d) Reliance on
Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of such Buyer to acquire the Securities.


 


(e) Information.
Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and
its advisors, if any, have been afforded the opportunity to ask questions of the Company and receive answers from the Company concerning
the terms and conditions of the offering of the Securities, the merits and risks of investing in the Securities and the business,
finances and operations of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer
or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company's
representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves a high degree
of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.


 


(f) No Governmental
Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.


 


(g) Transfer or
Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and Section 4(h) hereof: (i) the
Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for
sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company
(if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities
to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C)
such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”);
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company
nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection
with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities
shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities
shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this
Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2.


 






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(h) Validity; Enforcement.
The Transaction Documents (as defined below) have been duly and validly authorized, executed and delivered on behalf of such Buyer
and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their
respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.


 


(i) No Conflicts.
The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement and the consummation
by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents
of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture
or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for
such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to result
in an material adverse effect on the ability of such Buyer to perform its obligations hereunder.


 


(j) Access to Information.
Such Buyer acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules
thereto) and the SEC Documents and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and
to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and
the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; 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 the investment. Such Buyer acknowledges and agrees
that neither the Placement Agent nor any affiliate of the Placement Agent has provided such Buyer with any information or advice
with respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any affiliate
has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any affiliate
may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided to it. In
connection with the issuance of the Securities to such Buyer, neither the Placement Agent nor any of its affiliates has acted as
a financial advisor or fiduciary to such Buyer.


 


(k) Residency.
Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.


 






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3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.


 


The Company represents
and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:


 


(a) Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in
good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not reasonably be expected to result in a Material
Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise)
or prospects of the Company or any Subsidiary (as defined below), individually or taken as a whole, (ii) the transactions contemplated
hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith
or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations
under any of the Transaction Documents (as defined below). Other than the Persons set forth in Schedule 3(a), the Company
has no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly or indirectly, (I) owns
any of the outstanding capital stock or holds any equity or similar interest of such Person or (II) controls or operates all or
any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein
as a “Subsidiary.”


 


(b) Authorization;
Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform its obligations
under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof.
Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents
to which it is a party. The execution and delivery of this Agreement and the other Transaction Documents by the Company and its
Subsidiaries, and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Notes and the reservation for issuance and issuance of the Conversion Shares issuable upon
conversion of the Notes and the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable
upon exercise of the Warrants) have been duly authorized by the Company’s board of directors and each of its Subsidiaries’
board of directors or other governing body, as applicable, and, other than (i) the filing with the SEC of one or more Registration
Statements in accordance with the requirements of the Registration Rights Agreement, (ii) a Form D with the SEC and any other filings
as may be required by any state securities agencies, (iii) the 8-K Filing (as defined below), (iv) a Listing of Additional Shares
Notification with the Principal Market, (v) the Stockholder Approval (as defined below), and (vi) a waiver of certain covenants
set forth in Section 4.12(b) of the Securities Purchase Agreement, dated January 2, 2018, and Section 16 of the Senior Secured
Convertible Notes, dated April 1, 2016 (collectively, the “Required Filings and Approvals”), no further filing,
consent or authorization is required by the Company, its Subsidiaries, their respective boards of directors or their stockholders
or other governing body. This Agreement has been, and the other Transaction Documents to which it is a party will be prior to the
Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification
and to contribution may be limited by federal or state securities law. Prior to the Closing, the Transaction Documents to which
each Subsidiary is a party will be duly executed and delivered by each such Subsidiary, and shall constitute the legal, valid and
binding obligations of each such Subsidiary, enforceable against each such Subsidiary in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights
and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction
Documents” means, collectively, this Agreement, the Notes, the Warrants, the Note Purchase Agreements, the Master Netting
Agreement, the Registration Rights Agreement, the Investor Note, the Irrevocable Transfer Agent Instructions (as defined below)
and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the
transactions contemplated hereby and thereby, as may be amended from time to time.


 






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(c) Issuance of
Securities. The issuance of the Notes and the Warrants are duly authorized and upon issuance in accordance with the terms of
the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights,
mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other
encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing, the Company shall
have reserved from its duly authorized capital stock not less than 200% of the sum of (i) the maximum number of Conversion Shares
issuable upon conversion of the Notes (assuming for purposes hereof that (x) the Notes are convertible at the Alternate Conversion
Price (as defined in the Notes) as of the Closing Date and (y) any such conversion shall not take into account any limitations
on the conversion of the Notes set forth in the Notes), and (ii) the maximum number of Warrant Shares initially issuable upon exercise
of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth therein). Upon issuance
or conversion in accordance with the Notes or exercise in accordance with the Warrants (as the case may be), the Conversion Shares
and the Warrant Shares, respectively, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive
or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder
of Common Stock. Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, the offer and issuance
by the Company of the Securities is exempt from registration under the 1933 Act.


 


(d) No Conflicts.
The execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries and the consummation by
the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the issuance
of the Notes, the Warrants, the Conversion Shares and the Warrant Shares and the reservation for issuance of the Conversion Shares
and the Warrant Shares) will not (i) result in a violation of the Articles of Incorporation (as defined below) (including, without
limitation, any certificate of designation contained therein), Bylaws (as defined below), certificate of formation, memorandum
of association, articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or
any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any
of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of the Nasdaq Capital
Market (the “Principal Market”) and including all applicable foreign, federal and state laws, rules and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries
is bound or affected, assuming, with respect to subsections (ii) and (iii), the making and receipt of the Required Filings and
Approvals.


 


(e) Consents.
Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or
registration with (other than the Required Filings and Approvals), any Governmental Entity (as defined below) or any regulatory
or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations
under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. Other than the
Required Filings and Approvals, all consents, authorizations, orders, filings and registrations which the Company or any Subsidiary
is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Closing Date,
and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or
any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction
Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances
which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity”
means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state,
local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing.


 






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(f) Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor or
fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and
the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection
with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s
purchase of the Securities. The Company further represents to each Buyer that the Company’s and each Subsidiary’s decision
to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by the Company,
each Subsidiary and their respective representatives.


 


(g) No General Solicitation;
Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its
or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s
fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor)
relating to or arising out of the transactions contemplated hereby, including, without limitation, placement agent fees payable
to the WestPark Capital, Inc., as placement agent (the “Placement Agent”) in connection with the sale of the
Securities. The fees and expenses of the Placement Agent to be paid by the Company or any of its Subsidiaries are as set forth
in Schedule 3(g). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney's fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges
that it has engaged the Placement Agent in connection with the sale of the Securities. Other than the Placement Agent, neither
the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the offer or sale of
the Securities.


 


(h) No Integrated
Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on 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
require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings
or otherwise, or caused this offering of the Securities to require approval of stockholders of the Company for purposes of the
1933 Act or under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation,
other than the Stockholder Approval to permit the conversion in full of the Notes and Warrants in accordance therewith. None of
the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would
require registration of the issuance of any of the Securities under the 1933 Act (other than pursuant to the Registration Rights
Agreement) or cause the offering of any of the Securities to be integrated with other offerings of securities of the Company.


 






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(i) Dilutive Effect.
The Company understands and acknowledges that the number of Conversion Shares and Warrant Shares will increase in certain circumstances.
The Company further acknowledges that its obligation to issue the Conversion Shares pursuant to the terms of the Notes in accordance
with this Agreement and the Notes and the Warrant Shares upon exercise of the Warrants in accordance with this Agreement, the Notes
and the Warrants is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.


 


(j) Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including,
without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision
under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation
or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company
and its board of directors have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan
or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of the
Company or any of its Subsidiaries.


 


(k) SEC Documents;
Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all reports, schedules,
forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (reports filed in compliance with the time period specified in Rule 12b-25 promulgated under the 1934 Act shall
be considered timely for this purpose) (all of the foregoing filed prior to the date hereof and all exhibits and appendices included
therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter
referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyers or their
respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As
of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act, as applicable,
and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents,
at the time they were filed with the SEC, 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. As of their respective dates, the financial statements of the Company included in the SEC Documents
complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with
respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally
accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements,
to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either
individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are
reasonable based upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that
are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board
which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf
of the Company to any of the Buyers which is not included in the SEC Documents (including, without limitation, information referred
to in Section 2(e) or Section 2(j) of this Agreement or in the disclosure schedules to this Agreement) contains any untrue
statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading,
in the light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate
any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company
with respect thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently
aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case,
in order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company
has not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial
Statements or that there is any need for the Company to amend or restate any of the Financial Statements.


 






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(l) Absence of Certain
Changes. Except as set forth on Schedule 3(l), since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, there has been no material adverse change and no material adverse development in the business, assets,
liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company
or any of its Subsidiaries. Since the date of the Company’s most recent audited financial statements contained in a Form
10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually
or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or in the
aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek
protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding
up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend
to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do
so. The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving
effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes
of this Section 3(l), “Insolvent” means, (i) with respect to the Company and its Subsidiaries, on a consolidated
basis, (A) the present fair saleable value of the Company’s and its Subsidiaries’ assets is less than the amount required
to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below), (B) the Company and its Subsidiaries
are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute
and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond
their ability to pay as such debts mature; and (ii) with respect to the Company and each Subsidiary, individually, (A) the present
fair saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less than the amount required
to pay its respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable to pay its respective
debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C)
the Company or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond
its respective ability to pay as such debts mature. Except as set forth in Schedule 3(l), neither the Company nor any of
its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business or in any transaction,
for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small capital with which to conduct
the business in which it is engaged as such business is now conducted and is proposed to be conducted.


 


(m) No Undisclosed
Events, Liabilities, Developments or Circumstances. Except as set forth on Schedule 3(m), no event, liability, development
or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries
or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition
(financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not
been publicly announced, (ii) would be reasonably expected to result in a material adverse effect on any Buyer’s investment
hereunder or (iii) would reasonably be expected to result in a Material Adverse Effect.


 


(n) Conduct of Business;
Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under its
Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred stock
of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum of association,
articles of association, Articles of Incorporation or certificate of incorporation or bylaws, respectively. Neither the Company
nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation
of any of the foregoing, except in all cases for possible violations which would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation
of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that
could reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During
the two years prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market,
(ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) except as set forth in the
SEC Documents, the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries
or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually
or in the aggregate, which have not had and would not reasonably be expected to result in a Material Adverse Effect on the Company
or any of its Subsidiaries.


 






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(o) Foreign Corrupt
Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee, nor, to the knowledge
of the Company, any other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”)
have violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given,
promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official
capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually
and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate
knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Government Official, for the purpose of:


 


(i) (A) influencing
any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit
to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official
to influence or affect any act or decision of any Governmental Entity, or


 


(ii) assisting
the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.


 


(p) Sarbanes-Oxley
Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of
2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.


 


(q) Transactions
With Affiliates. Except as set forth in the SEC Documents, since January 1, 2016, no current or former employee, partner, director,
officer or stockholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company,
any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is
presently, or has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement
or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring
payments to, any such director, officer or stockholder or such associate or affiliate or relative Subsidiaries (other than for
ordinary course services as employees, officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or
indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or
customer of the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common
stock of a company whose securities are traded on or quoted through an Eligible Market (a defined below), nor does any such Person
receive income from any source other than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries
or should properly accrue to the Company or its Subsidiaries. No employee, officer, stockholder or director of the Company or any
of its Subsidiaries or member of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be,
nor is the Company or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them,
other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the
Company, and (iii) for other standard employee benefits made generally available to all employees or executives (including stock
option agreements outstanding under any stock option plan approved by the Board of Directors of the Company).


 






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(r) Equity Capitalization.


 


(i) Definitions:


 


(A) “Common
Stock” means (x) the Company’s shares of class A common stock, par value $0.0001 per share, and (y) any capital
stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common
stock.


 


(B) “Preferred
Stock” means (x) the Company’s blank check preferred stock, $0.0001 par value per share, the terms of which may
be designated by the board of directors of the Company in a certificate of designations and (y) any capital stock into which such
preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than
a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).


 


(ii) Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 150,000,000
shares of Common Stock, of which 10,351,845 are issued and outstanding, and 9,319,316 shares are reserved for issuance pursuant
to Convertible Securities (as defined below) (other than the Notes and the Warrants) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (B) 50,000,000 shares of Preferred Stock, none of which are issued and outstanding. No shares
of Common Stock are held in the treasury of the Company.


 


(iii) Valid
Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance
will be, validly issued and are fully paid and nonassessable. Schedule 3(r) sets forth the number of shares of Common Stock
that are (A) reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Notes and the Warrants)
and (B) that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933
Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued
and outstanding Common Stock are “affiliates” without conceding that any such Persons are “affiliates”
for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the Company’s knowledge, no Person
owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on the assumption that
all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised or
converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”)
contained therein without conceding that such identified Person is a 10% stockholder for purposes of federal securities laws).


 



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(iv) Existing
Securities; Obligations. Except as set forth in Schedule 3(r) or as disclosed in the SEC Documents: (A) none of the
Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar
rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional
shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable
for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933
Act (except pursuant to the Registration Rights Agreement); (D) there are no outstanding securities or instruments of the Company
or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered
by the issuance of the Securities; and (F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement.


 


(v) Organizational
Documents. The Company has furnished to the Buyers true, correct and complete copies of the Company’s Articles of Incorporation,
as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s bylaws,
as amended and as in effect on the date hereof (the “Bylaws”).


 


(s) Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as set forth in Schedule 3(r),
has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound, (ii) except as set forth in Schedule 3(s), is a party to any contract, agreement or instrument, the violation
of which, or default under which, by the other party(ies) to such contract, agreement or instrument would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect, (iii) except as set forth in Schedule 3(s),
has any financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries,
(iv) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except
where such violations and defaults would not, individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, or (v) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company’s officers, has or is, individually or in the aggregate, reasonably expected to result in
a Material Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed
in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s
or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or would not reasonably be
expected to result in a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other
than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property,
assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or
sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person
which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and
(y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise,
of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or
intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders
of such liability will be protected (in whole or in part) against loss with respect thereto.


 






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(t) Litigation.
There is no material action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’
officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, except as set forth in
Schedule 3(t). To the knowledge of the Company, no director, officer or employee of the Company or any of its subsidiaries
has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation
of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation
by the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the Company or any of
its Subsidiaries, except as set forth in Schedule 3(t). The SEC has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act. After reasonable inquiry
of its officers (as defined in Rule 16a-1(f) promulgated under the 1934 Act) and members of its board of directors, the Company
is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry
or other proceeding. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity.


 


(u) Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable 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 at a cost that would not, individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.


 


(v) Employee Relations.
Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union.
The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer (as defined in
Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of its Subsidiaries has notified the Company
or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary. To the knowledge of the Company, no executive officer or other key employee
of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement
or any restrictive covenant, and the continued employment of each such executive officer or other key employee (as the case may
be) does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The
Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure
to be in compliance would not, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse
Effect.


 


(w) Title.


 


(i) Real
Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, facilities
or other interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”)
(as applicable). The Real Property is free and clear of all Liens and is not subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current taxes not yet due and (b) zoning
laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. Any Real
Property held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings
by the Company or any of its Subsidiaries.


 






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(ii) Fixtures
and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in,
the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used
by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”).
The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which
they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient
for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior
to the Closing. Each of the Company and its Subsidiaries owns all of its owned Fixtures and Equipment free and clear of all Liens
except for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto.


 


(x) Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and
registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as
now conducted and presently proposed to be conducted. Neither the Company nor any of its Subsidiaries own any patents. None of
the Company's Intellectual Property Rights have expired or terminated or have been abandoned or are expected to expire or terminate
or are expected to be abandoned, within three years from the date of this Agreement. The Company does not have any knowledge of
any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or
any of its Subsidiaries regarding its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of
any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company
and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their
Intellectual Property Rights


 


(y) Environmental
Laws. (i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as defined below),
(B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in
each of the foregoing clauses (A), (B) and (C), the failure to so comply or having such permits, licenses or other approvals would
not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The term “Environmental
Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or
toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.


 






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(i) No Hazardous Materials:


 


(A) have
been disposed of or otherwise released from any Real Property in violation of any Environmental Laws to the Company’s knowledge;
or


 


(B) are
present on, over, beneath, in or upon a Real Property or any portion thereof in quantities that would constitute a violation of
any Environmental Laws to the Company’s knowledge. No prior use by the Company or any of its Subsidiaries of any Real Property
has occurred that violates any Environmental Laws, which violation would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect on the business of the Company or any of its Subsidiaries.


 


(ii) Neither the Company
nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of or otherwise
located on any Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated
biphenyls.


 


(iii) To the Company’s
knowledge, none of the Real Property are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related
Liens.


 


(z) Subsidiary Rights.
The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law)
to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.


 


(aa) Tax Status.
Except as set forth in Schedule 3(aa), the Company and each of its Subsidiaries (i) has timely made or filed all foreign,
federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has timely 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, except those being contested in good faith and (iii) has set aside on its
books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply, in each case, except as would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. 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 and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a
manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Code.


 






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(bb) Internal Accounting
and Disclosure Controls. The Company and each of its Subsidiaries maintains internal control over financial reporting (as such
term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles, including 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 and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing
assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring
that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation,
controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files
or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive
officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required
disclosure. Since the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, neither
the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other
Person relating to any potential material weakness or significant deficiency in any part of the internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) of the Company or any of its Subsidiaries.


 


(cc) Off Balance
Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries
and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings
and is not so disclosed or that otherwise would, individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.


 


(dd) Investment
Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,”
an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment company” as
such terms are defined in the Investment Company Act of 1940, as amended.


 






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(ee) Acknowledgement
Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure
of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been
asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries,
to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or
short) any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold
any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which
any such Buyer is a party, directly or indirectly, presently may have a “short” position in the Common Stock which
was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; (iii) each
Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative”
transaction; and (iv) each Buyer may rely on the Company’s obligation to timely deliver shares of Common Stock upon conversion,
exercise or exchange, as applicable, of the Securities as and when required pursuant to the Transaction Documents for purposes
of effecting trading in the Common Stock of the Company. The Company further understands and acknowledges that following the public
disclosure of the transactions contemplated by the Transaction Documents pursuant to the Press Release (as defined below) one or
more Buyers may engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of
borrowable shares of Common Stock) at various times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value and/or number of the Warrant Shares or Conversion Shares, as applicable, deliverable with respect
to the Securities are being determined and such hedging and/or trading activities (including, without limitation, the location
and/or reservation of borrowable shares of Common Stock), if any, can reduce the value of the existing stockholders’ equity
interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants
or any other Transaction Document or any of the documents executed in connection herewith or therewith.


 


(ff) Manipulation
of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their
behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company or any of its Subsidiaries 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 (other than the Placement
Agent), (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the
Company or any of its Subsidiaries in connection with the transactions contemplated by the Transaction Documents, or (iv) paid
or agreed to pay any Person for research services with respect to any securities of the Company or any of its Subsidiaries.


 


(gg) U.S. Real Property
Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any of the Securities
are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of
the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.


 






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(hh) Registration
Eligibility. The Company is eligible to register the Registrable Securities (as defined in the Registration Rights Agreement)
for resale by the Buyers using Form S-3 promulgated under the 1933 Act, subject to the ability of the staff of the SEC to limit
the number of Registrable Securities permitted to be registered in a secondary offering pursuant to Rule 415 promulgated under
the 1933 Act.


 


(ii) Transfer Taxes.
On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection
with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid
or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.


 


(jj) Bank Holding
Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended
(the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total
equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any
of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve.


 


(kk) Shell Company
Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).


 


(ll) Illegal or
Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the Company’s
knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other
representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or
any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution
or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person
or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for
personal political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.


 


(mm) Money Laundering.
The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001 and all
other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations
and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited,
to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in
31 CFR, Subtitle B, Chapter V.


 






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(nn) Management.
During the past five year period, no current or former officer or director or, to the knowledge of the Company, no current ten
percent (10%) or greater stockholder of the Company or any of its Subsidiaries has been the subject of:


 


(i) a petition
under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or similar
officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing
of such petition or such appointment, or any corporation or business association of which such person was an executive officer
at or within two years before the time of the filing of such petition or such appointment;


 


(ii) a conviction
in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate to
driving while intoxicated or driving under the influence);


 


(iii) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining any such person from, or otherwise limiting, the following activities:


 


(1) Acting as
a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of
the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or
employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct
or practice in connection with such activity;


 


(2) Engaging
in any particular type of business practice; or


 


(3) Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities
laws or commodities laws;


 


(iv) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph,
or to be associated with persons engaged in any such activity;


 


(v) a finding
by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation
or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed,
suspended or vacated; or


 


(vi) a finding
by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.


 






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(oo) Stock Option
Plans. Except as set forth in Schedule 3(oo), each stock option granted by the Company was granted (i) in accordance
with the terms of the applicable stock option plan of the Company and (ii) with an exercise price at least equal to the fair market
value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option
granted under the Company's stock option plan has been backdated. The Company has not knowingly granted, and there is no and has
been no policy or practice of the Company 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.


 


(pp) No Disagreements
with Accountants and Lawyers. There are no material 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. In addition, on or prior to the date hereof, the Company
had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions,
the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.


 


(qq) No Disqualification
Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation
D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer,
other officer of the Company participating in the offering contemplated hereby, 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 1933 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 1933 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 Buyers a copy of any disclosures provided thereunder.


 


(rr) Other Covered
Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid (directly
or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D
Securities under the Transaction Documents.


 


(ss) No Additional
Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction Documents.


 


(tt) Public Utility
Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.


 






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(uu) Federal Power
Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility” under the Federal
Power Act, as amended.


 


(vv) Ranking of
Notes. Except as set forth in Schedule 3(vv), no Indebtedness of the Company, at the Closing, will be senior to, or
pari passu with, the Notes in right of payment, whether with respect to payment or redemptions, interest, damages, upon
liquidation or dissolution or otherwise.


 


(ww) Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other
Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries,
their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf
of the Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of the Company or
any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken
as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will
not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company
or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain
any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they are made, not misleading. No event or circumstance
has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable
law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not
been so publicly disclosed. The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.


 


4. COVENANTS.


 


(a) Best Efforts.
Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as
provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the covenants hereunder
and conditions to be satisfied by it as provided in Section 7 of this Agreement.


 






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(b) Form D and Blue
Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, 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 Buyers at
the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely
make all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including,
without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall
comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering
and sale of the Securities to the Buyers.


 


(c) Reporting Status.
Until the date on which the Buyers shall have sold all of the Registrable Securities (the “Reporting Period”),
the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act (reports filed in compliance
with the time period specified in Rule 12b-25 promulgated under the 1934 Act shall be considered timely for this purpose), and
the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would no longer require or otherwise permit such termination. The Company shall use reasonable
best efforts to maintain its eligibility to register the Registrable Securities for resale by the Buyers on Form S-3.


 


(d) Use of Proceeds.
The Company will use the proceeds from the sale of the Securities (less reasonable fees and expenses of counsel to the Company,
the fees and expenses set forth in Section 4(g), and the reasonable fees and expenses of the Placement Agent) for general corporate
purposes, but not, directly or indirectly, for (i) the satisfaction of any indebtedness of the Company or any of its Subsidiaries,
(ii) the redemption or repurchase of any securities of the Company or any of its Subsidiaries, or (iii) the settlement of any outstanding
litigation.


 


(e) Financial Information.
The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement) during the Reporting
Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, stockholders’ equity statements
and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other
than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with the SEC through
EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the
release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries and (iii) unless the following
are filed with the SEC through EDGAR, copies of any notices and other information made available or given to the stockholders of
the Company generally, contemporaneously with the making available or giving thereof to the stockholders.


 






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(f) Listing.
The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities
upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated
for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for
quotation (as the case may be) of all Registrable Securities from time to time issuable under the terms of the Transaction Documents
on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing
or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE American, the
Nasdaq Global Market, the Nasdaq Global Select Market (each, an “Eligible Market). Neither the Company nor any of
its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Common
Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this
Section 4(f).


 


(g) Fees. The
Company shall reimburse the lead Buyer for all reasonable costs and expenses incurred by it or its affiliates in connection with
the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents (including,
without limitation, as applicable, all reasonable legal fees of outside counsel and disbursements of Kelley Drye & Warren LLP,
counsel to the lead Buyer), any other reasonable fees and expenses in connection with the structuring, documentation, negotiation
and closing of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection
therewith) (the “Transaction Expenses”) and such Transaction Expenses shall be withheld by the lead Buyer from
its Purchase Price at the Closing, less $25,000 previously paid by the Company to Kelley Drye & Warren LLP; provided, that
the Company shall promptly reimburse Kelley Drye & Warren LLP on demand for all Transaction Expenses not so reimbursed through
such withholding at the Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial
advisory fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions (other than for Persons engaged by
any Buyer) relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees or commissions
payable to the Placement Agent, who is the Company’s sole placement agent in connection with the transactions contemplated
by this Agreement). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such
payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers.


 


(h) Pledge of Securities.
Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the Securities may
be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured
by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder,
and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section
2(g) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(g) hereof
in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such
pledgee by a Buyer.


 



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(i) Disclosure of
Transactions and Other Material Information.


 


(i) Disclosure
of Transaction. The Company shall, on or before 9:30 a.m., New York time, on the first (1st) Business Day after
the date of this Agreement, issue a press release (the “Press Release”) reasonably acceptable to the Buyers
disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or before 9:30 a.m., New York
time, on the first (1st) Business Day after the date of this Agreement, the Company shall file a Current Report on Form
8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the
1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (and all schedules
to this Agreement), the form of Notes, the form of Investor Note, the form of the Warrants, the form of the Registration Rights
Agreement, the form of Master Netting Agreement and the form of Note Purchase Agreement) (including all attachments, the “8-K
Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information
(if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon
the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under
any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.


 


(ii) Limitations
on Disclosure. Other than as required under the Transaction Documents, the Company shall not, and the Company shall cause each
of its Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide any Buyer with
any material, non-public information regarding the Company or any of its Subsidiaries from and after the date hereof without the
express prior written consent of such Buyer (which may be granted or withheld in such Buyer’s sole discretion). In the event
of a breach of any of the foregoing covenants, including, without limitation, Section 4(o) of this Agreement, or any of the
covenants or agreements contained in any other Transaction Document, by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment of such Buyer),
in addition to any other remedy provided herein or in the Transaction Documents, such Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material, non-public information,
as applicable, without the prior approval by the Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries, or any of its or their
respective officers, directors, employees, affiliates, stockholders or agents, for any such disclosure. To the extent that the
Company delivers any material, non-public information to a Buyer without such Buyer's consent, the Company hereby covenants and
agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such
material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any
press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the Company
shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as
is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company
in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of
the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company shall not (and shall
cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement, release or otherwise,
except in the 8-K Filing and as otherwise may be required by applicable law. Notwithstanding anything contained in this Agreement
to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges and agrees
that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive and binding
agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer may bind any other Buyer
with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any material, non-public
information regarding the Company or any of its Subsidiaries.


 






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(iii) Other
Confidential Information. Disclosure Failures; Disclosure Delay Payments. In addition to other remedies set forth in this Section
4(i), and without limiting anything set forth in any other Transaction Document, at any time after the Closing Date if the Company,
any of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides any Buyer with material
non-public information relating to the Company or any of its Subsidiaries (each, the “Confidential Information”),
the Company shall, on or prior to the applicable Required Disclosure Date (as defined below), publicly disclose such Confidential
Information on a Current Report on Form 8-K or otherwise (each, a “Disclosure”). From and after such Disclosure,
the Company shall have disclosed all Confidential Information provided to such Buyer by the Company or any of its Subsidiaries
or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. In addition, effective upon such Disclosure, the Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their
respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates,
on the other hand, shall terminate. In the event that the Company fails to effect such Disclosure on or prior to the Required Disclosure
Date and such Buyer shall have possessed Confidential Information for at least ten (10) consecutive Trading Days (each, a “Disclosure
Failure”), then, as partial relief for the damages to such Buyer by reason of any such delay in, or reduction of, its
ability to buy or sell shares of Common Stock after such Required Disclosure Date (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to such Buyer an amount in cash equal to the greater of (I) one
and one-quarter percent (1.25%) of the aggregate Purchase Price and (II) the applicable Disclosure Restitution Amount (as defined
below), on each of the following dates (each, a “Disclosure Delay Payment Date”): (i) on the date of such Disclosure
Failure and (ii) on every thirty (30) day anniversary of such Disclosure Failure until the earlier of (x) the date such Disclosure
Failure is cured and (y) such time as all such non-public information provided to such Buyer shall cease to be Confidential Information
(as evidenced by a certificate, duly executed by an authorized officer of the Company to the foregoing effect) (such earlier date,
as applicable, a “Disclosure Cure Date”). Following the initial Disclosure Delay Payment for any particular
Disclosure Failure, without limiting the foregoing, if a Disclosure Cure Date occurs prior to any thirty (30) day anniversary of
such Disclosure Failure, then such Disclosure Delay Payment (prorated for such partial month) shall be made on the second (2nd)
Business Day after such Disclosure Cure Date. The payments to which a Buyer shall be entitled pursuant to this Section 4(l)(iii)
are referred to herein as “Disclosure Delay Payments.” In the event the Company fails to make Disclosure Delay
Payments in a timely manner in accordance with the foregoing, such Disclosure Delay Payments shall bear interest at the rate of
two percent (2%) per month (prorated for partial months) until paid in full.


 


(iv) For
the purpose of this Agreement the following definitions shall apply:


 


(1) “Disclosure
Failure Market Price” means, as of any Disclosure Delay Payment Date, the price computed as the quotient of (I) the sum
of the five (5) highest VWAPs (as defined in the Warrants) of the Common Stock during the applicable Disclosure Restitution Period
(as defined below), divided by (II) five (5) (such period, the “Disclosure Failure Measuring Period”). All such
determinations to be appropriately adjusted for any share dividend, share split, share combination, reclassification or similar
transaction that proportionately decreases or increases the Common Stock during such Disclosure Failure Measuring Period.


 


(2) “Disclosure
Restitution Amount” means, as of any Disclosure Delay Payment Date, the product of (x) difference of (I) the Disclosure
Failure Market Price less (II) the lowest purchase price, per share of Common Stock, of any Common Stock issued or issuable to
such Buyer pursuant to this Agreement or any other Transaction Documents, multiplied by (y) 10% of the aggregate daily dollar trading
volume (as reported on Bloomberg (as defined in the Warrants)) of the Common Stock on the Principal Market for each Trading Day
(as defined in the Warrants) either (1) with respect to the initial Disclosure Delay Payment Date, during the period commencing
on the applicable Required Disclosure Date through and including the Trading Day immediately prior to the initial Disclosure Delay
Payment Date or (2) with respect to each other Disclosure Delay Payment Date, during the period commencing the immediately preceding
Disclosure Delay Payment Date through and including the Trading Day immediately prior to such applicable Disclosure Delay Payment
Date (such applicable period, the “Disclosure Restitution Period”).


 


(3) “Required
Disclosure Date” means (x) if such Buyer authorized the delivery of such Confidential Information, either (I) if the
Company and such Buyer have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure of such Confidential
Information, such agreed upon date or (II) otherwise, the seventh (7th) calendar day after the date such Buyer first
received any Confidential Information or (y) if such Buyer did not authorize the delivery of such Confidential Information, the
first (1st) Business Day after such Buyer’s receipt of such Confidential Information.


 






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(j) Additional Registration
Statements. Until the Applicable Date (as defined below) and at any time thereafter while any Registration Statement is not
effective or the prospectus contained therein is not available for use or any Current Public Information Failure (as defined in
the Registration Rights Agreement) exists, the Company shall not file a registration statement or an offering statement under the
1933 Act relating to securities that are not the Registrable Securities (other than a registration statement on Form S-8 or such
supplements or amendments to registration statements that are outstanding and have been declared effective by the SEC as of the
date hereof (solely to the extent necessary to keep such registration statements effective and available and not with respect to
any Subsequent Placement) other than a resale registration statement for no more than 600,000 shares of Common Stock filed as required
by that certain the Cooperation Agreement, dated as of January 2, 2018, by and among the Company and the other parties thereto.
“Applicable Date” means the earlier of (x) the first date on which a Registration Statement for the resale by
the Buyers of all the Registrable Securities required to be filed on the initial Registration Statement (as defined in the Registration
Rights Agreement) pursuant to the Registration Rights Agreement is declared effective by the SEC (and each prospectus contained
therein is available for use on such date) or (y) the first date on which all of the Registrable Securities are eligible to be
resold by the Buyers pursuant to Rule 144 (or, if a Current Public Information Failure has occurred and is continuing, such later
date after which the Company has cured such Current Public Information Failure).


 


(k) Additional Issuance
of Securities. So long as any Buyer beneficially owns any Securities, the Company will not, without the prior written consent
of the Required Holders, issue any Notes (other than to the Buyers as contemplated hereby) and the Company shall not issue any
other securities that would cause a breach or default under the Notes or the Warrants. The Company agrees that for the period commencing
on the date hereof and ending on the date immediately following the 15th calendar day after the Applicable Date (provided
that such period shall be extended by the number of calendar days during such period and any extension thereof contemplated by
this proviso on which any Registration Statement is not effective or any prospectus contained therein is not available for use
or any Current Public Information Failure exists) (the “Restricted Period”), neither the Company nor any of
its Subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of
(or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or
any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined
under Rule 405 promulgated under the 1933 Act), any Convertible Securities (as defined below), any preferred stock or any purchase
rights) (any such issuance, offer, sale, grant, disposition or announcement (whether occurring during the Restricted Period or
at any time thereafter) is referred to as a “Subsequent Placement”). Notwithstanding the foregoing, this Section
4(k) shall not apply to (i) shares of Common Stock or standard options to purchase Common Stock or other incentive equity awards
issued to directors, officers, consultants or employees of the Company for services rendered to the Company in their capacity as
such pursuant to an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into account the shares
of Common Stock issuable upon exercise of such options) after the Subscription Date pursuant to this clause (i) do not, in the
aggregate, exceed more than 1,500,000 shares of the Common Stock (as adjusted for stock splits, stock dividends, stock combinations,
recapitalizations and similar events) issued and outstanding immediately prior to the Subscription Date and (B) the exercise price
of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none
of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the
Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities or Options (other than standard
options to purchase Common Stock or other incentive equity awards issued pursuant to an Approved Stock Plan that are covered by
clause (i) above) issued prior to the Subscription Date, provided that the conversion, exercise or other method of issuance (as
the case may be) of any such Convertible Security or Options (other than standard options to purchase Common Stock or other incentive
equity awards issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is made solely pursuant to the conversion,
exercise or other method of issuance (as the case may be) provisions of such Convertible Security or Options (other than standard
options to purchase Common Stock or other incentive equity awards issued pursuant to an Approved Stock Plan that are covered by
clause (i) above) that were in effect on the date immediately prior to the date of this Agreement, the conversion, exercise or
issuance price of any such Convertible Securities or Options (other than standard options to purchase Common Stock or other incentive
equity awards issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered (other than automatically
pursuant to the terms thereof that were in effect on the date immediately prior to the date of this Agreement), none of such Convertible
Securities or Options (other than standard options to purchase Common Stock or other incentive equity awards issued pursuant to
an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and
none of the terms or conditions of any such Convertible Securities or Options (other than standard options to purchase Common Stock
or other incentive equity awards issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise
materially changed in any manner that adversely affects any of the Buyers; provided that, if the Company does not receive any Mandatory
Prepayment (as defined in the Investor Notes) on or prior to the Mandatory Prepayment Date (as defined in the Investor Notes) the
Company may reduce the exercise price (solely with respect to cash exercises) of Options exercisable into up to 7.8 million shares
of Common Stock (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) that
are outstanding as of the Subscription Date (the “Eligible Reduction Options”); (iii) the shares of Common Stock
issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes; provided, that the terms of the Notes are
not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof
in effect as of the Subscription Date) and (iv) the shares of Common Stock issuable upon exercise of the Warrants; provided, that
the terms of the Warrant are not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments
pursuant to the terms thereof in effect as of the Subscription Date); (v) the shares of Common Stock issuable upon exercise of
Options issued to the Placement Agent (as defined in the Securities Purchase Agreement) in connection with the transactions contemplated
by the Transaction Documents (as defined in the Securities Purchase Agreement) ; provided, that the terms of such Options are not
amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof
in effect as of the Subscription Date); and (vi) the shares of Common Stock issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company; provided that such securities are issued as “restricted
securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration
statement in connection therewith until after the Applicable Date; and provided further 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 provide to the Company 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 (each of the foregoing in clauses (i) through
(vi), collectively the “Excluded Securities”). “Approved Stock Plan” means any employee benefit
plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which
shares of Common Stock, standard options to purchase Common Stock and other incentive equity awards that may be issued to any employee,
officer or director for services provided to the Company in their capacity as such. “Convertible Securities”
means any capital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances
directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire,
any capital stock or other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.


 






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(l) Reservation
of Shares. So long as any of the Notes or Warrants remain outstanding, the Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, no less than 200% of (i) the maximum number of shares of Common
Stock issuable upon conversion of all the Notes then outstanding (assuming for purposes hereof that (x) the Notes are convertible
at the Alternate Conversion Price then in effect, and (y) any such conversion shall not take into account any limitations on the
conversion of the Notes set forth in the Notes), and (ii) the maximum number of Warrant Shares issuable upon exercise of all the
Warrants then outstanding (without regard to any limitations on the exercise of the Warrants set forth therein) (collectively,
the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved
pursuant to this Section 4(l) be reduced other than in connection with any stock combination, reverse stock split or other similar
transaction or proportionally in connection with any conversion, exercise and/or redemption, as applicable, of Notes or Warrants.
If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required
Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares,
including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s
obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, obtain stockholder
approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase
in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve
Amount.


 


(m) Conduct of Business.
The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except where such violations would not reasonably be expected to have, either individually or in the aggregate,
in a Material Adverse Effect.


 


(n) Variable Rate
Transactions. So long as any Notes remain outstanding, the Company and each Subsidiary shall be prohibited from effecting or
entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible Securities either (A) at a conversion,
exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares
of Common Stock at any time after the initial issuance of such Convertible Securities (each, a “Variable Price”),
or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance
of such Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock, other than pursuant to a customary “weighted average” or “full-ratchet”
anti-dilution provisions that does not violate Section 4(k) above, or (ii) enters into any agreement (including, without limitation,
an equity line of credit or an “at-the-market” offering) whereby the Company or any Subsidiary may sell securities
at a future determined price (other than standard and customary “preemptive” or “participation” rights
that does not violate Section 4(k) above). For the avoidance of doubt, a single reset of the Eligible Reduction Options after the
date hereof (so long as such reset does not include a Variable Price) that does not violate Section 4(k) above, shall not be deemed
to be a Variable Rate Transaction hereunder. Each Buyer shall be entitled to obtain injunctive relief against the Company and its
Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect damages.


 


(o) Participation
Right. At any time on or prior to the first anniversary of the Closing Date, neither the Company nor any of its Subsidiaries
shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with this Section 4(o).
The Company acknowledges and agrees that the right set forth in this Section 4(o) is a right granted by the Company, separately,
to each Buyer.


 


(i) At least
five (5) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer a written
notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without
limitation, material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes or contains
material, non-public information, a statement asking whether the Buyer is willing to accept material non-public information or
(B) if the proposed Offer Notice does not constitute or contain material, non-public information, (x) a statement that the Company
proposes or intends to effect a Subsequent Placement, (y) a statement that the statement in clause (x) above does not constitute
material, non-public information and (z) a statement informing such Buyer that it is entitled to receive an Offer Notice (as defined
below) with respect to such Subsequent Placement upon its written request. Upon the written request of a Buyer within three (3)
Trading Days after the Company’s delivery to such Buyer of such Pre-Notice, and only upon a written request by such Buyer,
the Company shall promptly, but no later than one (1) Trading Day after such request, deliver to such Buyer an irrevocable written
notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”)
of the securities being offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall
(A) identify and describe the Offered Securities, (B) describe the price and other terms upon which they are to be issued, sold
or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (C) identify the Persons (if
known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (D) offer to issue and sell
to or exchange with such Buyer in accordance with the terms of the Offer such Buyer’s pro rata portion of 35% of the Offered
Securities, provided that the number of Offered Securities which such Buyer shall have the right to subscribe for under this Section
4(o) shall be (x) based on such Buyer’s pro rata portion of the aggregate original principal amount of the Notes purchased
hereunder by all Buyers (the “Basic Amount”), and (y) with respect to each Buyer that elects to purchase its
Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer
shall indicate it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription
Amount”), which process shall be repeated until each Buyer shall have an opportunity to subscribe for any remaining Undersubscription
Amount.


 






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(ii) To accept
an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the fifth (5th)
Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion
of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic
Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice of Acceptance”).
If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed
for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), each Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase
only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts
of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably
necessary. Notwithstanding the foregoing, if the Company desires to modify or amend the terms and conditions of the Offer prior
to the expiration of the Offer Period, the Company may deliver to each Buyer a new Offer Notice and the Offer Period shall expire
on the fifth (5th) Business Day after such Buyer’s receipt of such new Offer Notice.


 


(iii) The
Company shall have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all
or any part of such Offered Securities as to which a Notice of Acceptance has not been given by a Buyer (the “Refused
Securities”) pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only
to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to
the Company than those set forth in the Offer Notice and (B) to publicly announce (x) the execution of such Subsequent Placement
Agreement, and (y) either (I) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (II)
the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with
such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.


 


(iv) In the
event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 4(o)(iii) above), then each Buyer may, at its sole option and in its sole discretion, withdraw its Notice
of Acceptance or reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that
shall be not less than the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(o)(ii)
above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(o)
prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event
that any Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company
may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities
have again been offered to the Buyers in accordance with Section 4(o)(i) above.


 


(v) Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from
the Company, and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance,
as reduced pursuant to Section 4(o)(iv) above if such Buyer has so elected, upon the terms and conditions specified in the
Offer. The purchase by such Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery
by the Company and such Buyer of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form
and substance to such Buyer and its counsel.


 


(vi) Any
Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(o) may not be issued, sold or
exchanged until they are again offered to such Buyer under the procedures specified in this Agreement.


 


(vii) The
Company and each Buyer agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement
with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement
Documents”) shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on
trading as to any securities of the Company 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, any agreement previously entered into with the Company or any instrument received
from the Company, and (y) any registration rights set forth in such Subsequent Placement Documents shall be similar in all material
respects to the registration rights contained in the Registration Rights Agreement.


 






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(viii) Notwithstanding
anything to the contrary in this Section 4(o) and unless otherwise agreed to by such Buyer, the Company shall either confirm in
writing to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case, in such a manner such that such Buyer will not be in possession
of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice. If
by such fifth (5th) Business Day, no public disclosure regarding a transaction with respect to the Offered Securities
has been made, and no notice regarding the abandonment of such transaction has been received by such Buyer, such transaction shall
be deemed to have been abandoned and such Buyer shall not be in possession of any material, non-public information with respect
to the Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the Offered Securities,
the Company shall provide such Buyer with another Offer Notice and such Buyer will again have the right of participation set forth
in this Section 4(o). The Company shall not be permitted to deliver more than one such Offer Notice to such Buyer in any sixty
(60) day period, except as expressly contemplated by the last sentence of Section 4(o)(ii).


 


(ix) The
restrictions contained in this Section 4(o) shall not apply in connection with the issuance of any Excluded Securities. The Company
shall not circumvent the provisions of this Section 4(o) by providing terms or conditions to one Buyer that are not provided to
all.


 


(p) Dilutive Issuances.
For so long as any Notes or Warrants remain outstanding, the Company shall not, in any manner, enter into or affect any Dilutive
Issuance (as defined in the Notes) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon
conversion of any Notes or exercise of any Warrant any shares of Common Stock in excess of that number of shares of Common Stock
which the Company may issue upon conversion of the Notes and exercise of the Warrants without breaching the Company’s obligations
under the rules or regulations of the Principal Market.


 


(q) Passive Foreign
Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective businesses,
in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company within the
meaning of Section 1297 of the Code.


 


(r) Restriction
on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem,
or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent
of the Buyers, other than as required by the terms thereof as in effect on the date hereof.


 






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(s) Corporate Existence.
So long as any Buyer beneficially owns any Notes or Warrants, the Company shall not be party to any Fundamental Transaction (as
defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set
forth in the Notes and the Warrants.


 


(t) Stock Splits.
Until the Notes are no longer outstanding, the Company shall not effect any stock combination, reverse stock split or other similar
transaction (or make any public announcement or disclosure with respect to any of the foregoing) without the prior written consent
of the Required Holders (as defined below) except as required by any Principal Market to provide for the eligibility or continued
eligibility of the Common Stock for listing or quotation on such market.


 


(u) Conversion and
Exercise Procedures. Each of the form of Exercise Notice (as defined in the Warrants) included in the Warrants and the form
of Conversion Notice (as defined in the Notes) included in the Notes set forth the totality of the procedures required of the Buyers
in order to exercise the Warrants or convert the Notes. Except as provided in Section 5(d), no additional legal opinion, other
information or instructions shall be required of the Buyers to exercise their Warrants or convert their Notes. The Company shall
honor exercises of the Warrants and conversions of the Notes and shall deliver the Conversion Shares and Warrant Shares in accordance
with the terms, conditions and time periods set forth in the Notes and Warrants.


 


(v) Regulation M.
The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the
Securities contemplated hereby.


 


(w) General Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the
Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation
or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.


 


(x) Integration. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of
the Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration
of the Securities under the 1933 Act or require stockholder approval under the rules and regulations of the Principal Market and
the Company will take all action that is appropriate or necessary to assure that its offerings of other securities will not be
integrated for purposes of the 1933 Act or the rules and regulations of the Principal Market, with the issuance of Securities contemplated
hereby.


 


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


 






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(z) Stockholder
Approval. The Company shall provide each stockholder entitled to vote at a special or annual meeting of stockholders of the
Company (the “Stockholder Meeting”), which shall be promptly called and held not later than June 30, 2018 (the
“Stockholder Meeting Deadline”), a proxy statement, in a form reasonably acceptable to the Buyers and Kelley
Drye & Warren LLP, at the expense of the Company, with the Company obligated to reimburse the reasonable expenses of Kelley
Drye & Warren LLP incurred in connection therewith in an amount not to exceed $10,000, soliciting each such stockholder’s
affirmative vote at the Stockholder Meeting for approval of resolutions (“Stockholder Resolutions”) providing
for the approval of the issuance of all of the Securities in compliance with Nasdaq Rule 5635(d) (the “Stockholder Approval”,
and the date the Stockholder Approval is obtained, the “Stockholder Approval Date”), and the Company shall use
its reasonable best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors
of the Company to recommend to the stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain
the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company's reasonable best efforts the Stockholder
Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting
to be held on or prior to August 30, 2018. If, despite the Company's reasonable best efforts the Stockholder Approval is not obtained
after such subsequent stockholder meetings, the Company shall cause an additional Stockholder Meeting to be held quarterly thereafter
until such Stockholder Approval is obtained. Each Buyer acknowledges that, as required by the rules of the Principal Market, holders
of Conversion Shares and Warrant Shares are not eligible to vote such shares with respect to the Stockholder Resolutions and such
Buyer agrees to not vote any Conversion Shares or Warrant Shares held by such Buyer with respect to the Stockholder Resolutions.


 


(aa) Closing Documents.
On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to
each Buyer and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents, Securities and any other
document required to be delivered to any party pursuant to Section 7 hereof or otherwise (which may be in photocopies or pdf
versions of executed copies).


 


5. REGISTER; TRANSFER
AGENT INSTRUCTIONS; LEGEND.


 


(a) Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name and
address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each transferee),
the principal amount of the Notes held by such Person, the number of Conversion Shares issuable pursuant to the terms of the Notes
and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register
open and available at all times during business hours for inspection of any Buyer or its legal representatives.


 


(b) Transfer Agent
Instructions. Subject to the terms of this Agreement, the Notes and the Warrants, as applicable, the Company shall issue irrevocable
instructions to its transfer agent and any subsequent transfer agent (as applicable, the “Transfer Agent”) in
a form acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”) to issue certificates
or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in the
name of each Buyer or its respective nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as specified
from time to time by each Buyer to the Company upon conversion of the Notes or the exercise of the Warrants (as the case may be).
The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5(b), and stop transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer
agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of
the Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents and in compliance with
applicable law. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the Company
shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or, if such applicable
shares of Common Stock may then be resold by such Buyer pursuant to (A) an effective and available registration statement, (B)
Rule 144, if the Holder indicates on the applicable Exercise Notice or Conversion Notice, as the case may be, that the shares of
Common Stock issuable in connection with such Exercise Notice or Conversion Notice, as the case may be, are being resold either
(x) prior to, (y) contemporaneously with, or (z) within ten (10) Trading Days after, as applicable, the date of the applicable
Conversion Notice or Exercise Notice, as the case may be, by the Holder, or (C) Rule 144 without having to comply with the information
requirements under Rule 144(c)(1) (each, a “Permitted Securities Transaction”), credit shares to the applicable
balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment.
In the event that such sale, assignment or transfer involves Conversion Shares or Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to such
Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d) below. The
Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer
shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.
The Company shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the
Company’s transfer agent on each Effective Date (as defined in the Registration Rights Agreement). Any fees (with respect
to the transfer agent, counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any
legends on any of the Securities shall be borne by the Company.


 






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(c) Legends.
Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares and the Warrant
Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and
except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and
a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock
certificates):


 


[NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE
BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.


 


(d) Removal of Legends.
Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above or any other
legend (i) while a registration statement (including a Registration Statement) covering the resale of such Securities is effective
under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate
of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer
provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144
which shall not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other
than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable
form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable
requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without
limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to
the foregoing, the Company shall no later than two (2) Trading Days (or such earlier date as required pursuant to the 1934 Act
or other applicable law, rule or regulation for the settlement of a trade initiated on the date such Buyer delivers such legended
certificate representing such Securities to the Company) following the delivery by a Buyer to the Company or the transfer agent
(with notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries
from such Buyer as may be required above in this Section 5(d), as directed by such Buyer, either: (A) provided that the Company’s
transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such Conversion Shares or Warrant Shares
(as the case may be) may then be resold by such Buyer pursuant to a Permitted Securities Transaction, credit the aggregate number
of shares of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with
DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the
DTC Fast Automated Securities Transfer Program or such Conversion Shares or Warrant Shares (as the case may be) may not then be
resold by such Buyer pursuant to a Permitted Securities Transaction, issue and deliver (via reputable overnight courier) to such
Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of
such Buyer or its designee (the date by which such credit is so required to be made to the balance account of such Buyer’s
or such Buyer’s designee with DTC or such certificate is required to be delivered to such Buyer pursuant to the foregoing
is referred to herein as the “Required Delivery Date”, and the date such shares of Common Stock are actually
delivered without restrictive legend to such Buyer or such Buyer’s designee with DTC, as applicable, the “Share
Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance
of Securities or the removal of any legends with respect to any Securities in accordance herewith. Each Buyer acknowledges and
agrees that the Securities remain “restricted securities” as such term is defined in Rule 144 notwithstanding removal
of the legend set forth above until such Securities are sold or transferred in a Permitted Securities Transaction. In the event
the legend set forth above has been removed because the Securities are registered for resale under the 1933 Act, each Buyer agrees
to only resell such Securities in compliance with Section 2(g) above.


 






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(e) Failure to Timely
Deliver; Buy-In. If the Company fails to fail, for any reason or for no reason, to issue and deliver (or cause to be delivered)
to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program or such Conversion Shares or Warrant Shares (as the case may be) may not then be resold by
such Buyer pursuant to a Permitted Securities Transaction, a certificate for the number of Conversion Shares or Warrant Shares
(as the case may be) to which such Buyer is entitled and register such Conversion Shares or Warrant Shares (as the case may be)
on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer
Program and such Conversion Shares or Warrant Shares (as the case may be) may then be resold by such Buyer pursuant to a Permitted
Securities Transaction, to credit the balance account of such Buyer or such Buyer’s designee with DTC for such number of
Conversion Shares or Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above
or (II) if the Registration Statement covering the resale of the Conversion Shares or Warrant Shares (as the case may be) submitted
for legend removal by such Buyer pursuant to Section 5(d) above (the “Unavailable Shares”) is not available
for the resale of such Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant to
the Registration Rights Agreement, (x) so notify such Buyer and (y) deliver the Conversion Shares or Warrant Shares, as applicable,
electronically without any restrictive legend by crediting such aggregate number of Conversion Shares or Warrant Shares (as the
case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s
balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause
(II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above,
a “Delivery Failure”), then, in addition to all other remedies available to such Buyer, the Company shall pay
in cash to such Buyer on each day after the Share Delivery Date and during such Delivery Failure an amount equal to one and one-quarter
percent (1.25%) of the product of (A) the sum of the number of shares of Common Stock not issued to such Buyer on or prior to the
Required Delivery Date and to which such Buyer is entitled, and (B) any trading price of the Common Stock selected by such Buyer
in writing as in effect at any time during the period beginning on the date of the delivery by such Buyer to the Company of the
applicable Conversion Shares or Warrant Shares (as the case may be) and ending on the applicable Share Delivery Date. In addition
to the foregoing, if on or prior to the Required Delivery Date either (I) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program or such Conversion Shares or Warrant Shares (as the case may be) may not then be resold
by the applicable Buyer pursuant to a Permitted Securities Transaction, the Company shall fail to issue and deliver a certificate
to a Buyer and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program and such Conversion Shares or Warrant Shares (as the case may be) may then
be resold by such Buyer pursuant to a Permitted Securities Transaction, credit the balance account of such Buyer or such Buyer’s
designee with DTC for the number of shares of Common Stock to which such Buyer submitted for legend removal by such Buyer pursuant
to Section 5(d) above (ii) below or (II) a Notice Failure occurs, and if on or after such Trading Day such Buyer purchases (in
an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Buyer of shares of
Common Stock submitted for legend removal by such Buyer pursuant to Section 5(d) above that such Buyer is entitled to receive from
the Company (a “Buy-In”), then the Company shall, within two (2) Trading Days after such Buyer’s request
and in such Buyer’s discretion, either (i) pay cash to such Buyer in an amount equal to such Buyer’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any, for the shares of Common Stock so purchased) (the
“Buy-In Price”), at which point the Company’s obligation to so deliver such certificate or credit such
Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver
to such Buyer a certificate or certificates or credit the balance account of such Buyer or such Buyer’s designee with DTC
representing such number of shares of Common Stock, as applicable, that would have been so delivered if the Company timely complied
with its obligations hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the
product of (A) such number of shares of Conversion Shares or Warrant Shares (as the case may be) that the Company was required
to deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the Warrants)
of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Buyer to the Company of
the applicable Conversion Shares or Warrant Shares (as the case may be) and ending on the date of such delivery and payment under
this clause (ii). Nothing shall limit such Buyer’s right to pursue any other remedies available to it hereunder, at law or
in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common
Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Notice
Failure and/or Delivery Failure, this Section 5(e) shall not apply to the applicable Buyer the extent the Company has already paid
such amounts in full to such Buyer with respect to such Notice Failure and/or Delivery Failure, as applicable, pursuant to the
analogous sections of the Note or Warrant, as applicable, held by such Buyer.


 


(f) FAST Compliance.
While any Warrants remain outstanding, the Company shall maintain a transfer agent that participates in the DTC Fast Automated
Securities Transfer Program.


 






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6. CONDITIONS TO
THE COMPANY’S OBLIGATION TO SELL.


 


(a) The obligation
of the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice
thereof: 


 


(i) Such
Buyer shall have duly executed and delivered to the Company an Investor Collateral Certificate and, in accordance with the instructions
of the Company in the Flow of Funds Letter, maintained physical possession of a duly executed Investor Note of such Buyer, in such
original principal amount as is set forth across from such Buyer’s name in column (7) of the Schedule of Buyers, issued pursuant
to the Note Purchase Agreement of such Buyer, both as payment for, and as Collateral (as defined in such Buyer’s Series B
Note) securing, such Buyer’s Series B Note to be issued and sold to such Buyer at the Closing.


 


(ii) Such
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.


 


(iii) Such
Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(g)) for the Note and the related Warrants being purchased by such Buyer at the Closing by wire
transfer of immediately available funds in accordance with the Flow of Funds Letter.


 


(iv) The
representations and warranties of such Buyer shall be true and correct in all material respects (except for such representations
and warranties that are qualified by materiality or material adverse effect, which shall be true and correct in all respects) as
of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed,
satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Buyer at or prior to the Closing Date.


 


7. CONDITIONS TO
EACH BUYER’S OBLIGATION TO PURCHASE.


 


(a) The obligation
of each Buyer hereunder to purchase its Note and its related Warrants at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and
may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof: 


 


(i) The Company
shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall
have duly executed and delivered to such Buyer (A) a Series A Note in such original principal amount as is set forth across from
such Buyer’s name in column (3) of the Schedule of Buyers, (B) a Series B Note in the aggregate original principal amount
as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers and (C) a Warrants initially exercisable
for such aggregate number of Warrant Shares as is set forth across from such Buyer’s name in column (5) of the Schedule of
Buyers, in each case, as being purchased by such Buyer at the Closing pursuant to this Agreement.


 






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(ii) Such
Buyer shall have received the opinion of Brownstein Hyatt Farber Schreck, LLP, the Company’s counsel, dated as of the Closing
Date, in the form acceptable to such Buyer.


 


(iii) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such
Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.


 


(iv) The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company in such entity’s
jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date
within ten (10) days of the Closing Date.


 


(v) The Company
shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and
is required to so qualify, as of a date within ten (10) days of the Closing Date.


 


(vi) The
Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Colorado Secretary
of State within ten (10) days of the Closing Date.


 


(vii) The
Company shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of the
Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation of the Company and (iii) the
Bylaws of the Company as in effect at the Closing.


 


(viii) Each
and every representation and warranty of the Company shall be true and correct in all material respects (except for such representations
and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as
of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed,
satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive
Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form acceptable to such Buyer.


 






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(ix) The
Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of
Common Stock outstanding on the Closing Date immediately prior to the Closing.


 


(x) The Common
Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC
or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal Market
or (II) by falling below the minimum maintenance requirements of the Principal Market.


 


(xi) The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities, including without limitation, those required by the Principal Market, if any.


 


(xii) No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.


 


(xiii) Since
the date of execution of this Agreement, no event or series of events shall have occurred that would reasonably be expected to
result in a Material Adverse Effect.


 


(xiv) The
Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the Conversion
Shares and the Warrant Shares.


 


(xv) Within
two (2) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to each Buyer certified
copies of requests for copies of information on Form UCC-11, listing all effective financing statements which name as debtor the
Company and which are filed in such office or offices as may be necessary or, in the opinion of the Required Holders (as defined
below), desirable to perfect the security interests purported to be created by the Series B Notes, together with copies of such
financing statements, none of which, except as otherwise agreed in writing by the Required Holders, shall cover any of the Collateral
(as defined in each Series B Note), and the results of searches for any tax Lien and judgment Lien filed against such Person or
its property, which results, except as otherwise agreed to in writing by the Required Holders shall not show any such Liens.


 


(xvi) Such
Buyer shall have received a letter on the letterhead of the Company (the “Flow of Funds Letter”) (x) duly executed
by the Chief Executive Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions
of the Company and (y) directing each Buyer (or its designee) to maintain physical possession of a duly executed Investor Note
of such Buyer, in such original principal amount as is set forth across from such Buyer’s name in column (7) of the Schedule
of Buyers, issued pursuant to the Note Purchase Agreement of such Buyer, both as payment for, and as Collateral (as defined in
such Buyer’s Series B Note) securing, such Buyer’s Series B Note to be issued and sold to such Buyer at the Closing.


 


(xvii) The
Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.


 






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8. TERMINATION.


 


In the event that the
Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such Buyer shall have the
right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on
such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under
this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have
been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale
and purchase of the Notes and the Warrants shall be applicable only to such Buyer providing such written notice, provided further
that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses
described in Section 4(g) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability
for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction
Documents.


 


9. MISCELLANEOUS.


 


(a) Governing Law;
Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of New York. The Company 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 under any of the other Transaction Documents or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. 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 to such party at the address
for such 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 manner permitted
by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment
or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.


 






    39 


     


    

 


(b) Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that
any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page 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 signature page were an original thereof.


 


(c) Headings; Gender.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine,
neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and
words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision
in which they are found.


 


(d) Severability;
Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication
that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid
by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction
Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law)
exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection
by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such
obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer, the Company and its
Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary,
by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful
amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent
that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction
Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise
be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.


 






    40 


     


    

 


(e) Entire Agreement;
Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and
the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the Company,
its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by any Buyer
with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement, the other
Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein
contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however,
nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any
agreements any Buyer has entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries
prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or
amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any
other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries
and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries prior to the date hereof,
and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For
clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Required Holders (as defined below), and any amendment to any provision of
this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities,
as applicable; provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders
of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written
consent (which may be granted or withheld in such Buyer’s sole discretion). No waiver shall be effective unless it is in
writing and signed by an authorized representative of the waiving party, provided that the Required Holders may waive any provision
of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 9(e)
shall be binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be effective to the
extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a waiver as
to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which
may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement of legal fees) shall
be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the Transaction Documents, all holders of the Notes or all
holders of the Warrants (as the case may be). From the date hereof and while any Notes or Warrants are outstanding, the Company
shall not be permitted to receive any consideration from a Buyer or a holder of Notes or Warrants that is not otherwise contemplated
by the Transaction Documents in order to, directly or indirectly, induce the Company or any Subsidiary (i) to treat such Buyer
or holder of Notes or Warrants in a manner that is more favorable than to other similarly situated Buyers or holders of Notes or
Warrants, as applicable, or (ii) to treat any Buyer(s) or holder(s) of Notes or Warrants in a manner that is less favorable than
the Buyer or holder of Notes or Warrants that is paying such consideration; provided, however, that the determination of whether
a Buyer has been treated more or less favorably than another Buyer shall disregard any securities of the Company purchased or sold
by any Buyer. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions
of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting
the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or
has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for each
Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence or other investigation
or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely
on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained
in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document
is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC
Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any
of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document. “Required
Holders” means (I) prior to the Closing Date, each Buyer entitled to purchase Notes at the Closing and (II) on or after
the Closing Date, holders of a majority of the Registrable Securities as of such time (excluding any Registrable Securities held
by the Company or any of its Subsidiaries as of such time) issued or issuable hereunder or pursuant to the Notes and/or the Warrants
(or the Buyers, with respect to any waiver or amendment of Section 4(o)).


 


(f) Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party
and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail
could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next
day delivery specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile numbers and
e-mail addresses for such communications shall be:


 



    41 


     


    

 





If to the Company:


 


Real Goods Solar, Inc.

110 16th Street, Suite 300

Denver, CO 80202

Telephone: (303) 222-8541

Facsimile: (303) 223-9206

Attention: Chief Executive Officer

E-Mail: dennis.lacey@rgsenergy.com


 


With a copy (for informational purposes only) to:


 


Brownstein Hyatt Farber Schreck

410 17th Street

Denver, CO 80202

Telephone: (303) 223-1232

Facsimile: (303) 223-8032

Attention: Rikard Lundberg

E-Mail: rlundberg@bhfs.com


 


If to the Transfer Agent:


 


Computershare

PO Box 505000

Louisville, KY 40233-5000

Telephone: (303) 262-0600

Facsimile: (312) 601-2312


 


If to a Buyer, to its address, e-mail address
and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the
Schedule of Buyers,


 


with a copy (for informational purposes only) to:


 


Kelley Drye & Warren LLP

101 Park Avenue

New York, NY 10178

Telephone: (212) 808-7540

Facsimile: (212) 808-7897

Attention: Michael A. Adelstein, Esq.

E-mail: madelstein@kelleydrye.com


 


or to such other address, e-mail address
and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP shall only
be provided copies of notices sent to the lead Buyer. Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine or
e-mail containing the time, date, recipient facsimile number and, with respect to each facsimile transmission, an image of the
first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.


 






    42 


     


    

 


(g) Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of any of the Notes and Warrants. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction
(as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights
hereunder in connection with any transfer of any of its Securities without the consent of the Company, in which event such assignee
shall be deemed to be a Buyer hereunder with respect to such assigned rights.


 


(h) No Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees
referred to in Section 9(k).


 


(i) Survival.
The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.


 


(j) Further Assurances.
Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.


 


(k) Indemnification.
In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation
or warranty made by the Company or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement
or obligation of the Company or any Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit,
proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from
(A) the execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to
be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure
properly made by such Buyer pursuant to Section 4(i), or (D) the status of such Buyer or holder of the Securities either as
an investor in the Company pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement
(including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable
relief). To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable
law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 9(k)
shall be the same as those set forth in Section 6 of the Registration Rights Agreement.


 



    43 


     


    

 





(l) Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality
or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock
and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock after
the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of,
arrangement to borrow, identification of the availability of, and/or securing of, securities of the Company in order for such Buyer
(or its broker or other financial representative) to effect short sales or similar transactions in the future.


 


(m) Remedies.
Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have
all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having
any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond
or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights
granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge
any or all of its or such Subsidiary’s (as the case may be) obligations under the Transaction Documents, any remedy at law
would inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to specific performance and/or
temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such
case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in this
Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under this Agreement
and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief).


 


(n) Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents,
whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any Subsidiary
does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant
notice, demand or election in whole or in part without prejudice to its future actions and rights.


 


(o) Payment Set
Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any of the
other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or 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, foreign, 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. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other
Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement
and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be
converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange
Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the
U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.


 


(p) Judgment Currency.


 


(i) If for
the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction Document
in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter
in this Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:


 


(1) the date
actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or


 


(2) the date
on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion
Date”).


 


(ii) If in
the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in
the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with
the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion
Date.


 






    44 


     


    

 


(iii) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.


 


(q) Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several and
not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations
of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action
taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the
Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption
that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert any such claim with
respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges
that the Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant
to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other
Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will
be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its
rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with
the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and
advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and
sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision of any Buyer, and
was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested to do so by
any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction
Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers
collectively and not between and among the Buyers.


 


(r) Performance
Date. If the date by which any obligation under any of the Transaction Documents must be performed occurs on a day other than
a Business Day, then the date by which such performance is required shall be the next Business Day following such date.


 


[signature pages follow]


 




    45 


     


    

 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.


 


	 	COMPANY:	 
	 	 	 	 
	 	REAL GOODS SOLAR, INC.  
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Dennis Lacey
	 	 	Name: 	Dennis Lacey
	 	 	Title:	Chief Executive Officer


 




     


     


    

 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.





 


	 	BUYER:
	 	 	 	 
	 	ALTO OPPORTUNITY MASTER FUND, SPC - SEGREGATED MASTER PORTFOLIO B
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Waqas Khatri
	 	 	Name:	Waqas Khatri
	 	 	Title:	Director





 




     


     


    

 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.


 


	 	BUYER:
	 	 	 	 
	 	HUDSON BAY MASTER FUND LTD
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ George Antonopoulos
	 	 	Name:	George Antonopoulos
	 	 	Title:	Authorized Signatory


 




     


     


    

 


SCHEDULE
OF BUYERS


 





	(1)	 	(2)	 	(3)	 	 	(4)	 	 	(5)	 	 	(6)	 	 	(7)	 	 	(8)	 	 	(9)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Buyer	 	Address and Facsimile Number	 	Original Principal Amount of Series A
 Notes	 	 	Original 
 Principal 
 Amount of 
 Series B
 Notes	 	 	Aggregate
 Number of
  Warrant Shares	 	 	Purchase Price	 	 	Aggregate
 Cash
 Wire 
 Amount	 	 	Original Principal Amount of Investor Notes	 	 	Legal Representative’s
 Address and Facsimile Number
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B	 	c/o Ayrton Capital LLC 
222 Broadway, 19th Floor 
New York, NY 10038 
Attention Waqas Khatri 
E-mail: wk@ayrtonllc.com 
	 	$	4,025,000	 	 	$	3,500,000	 	 	 	6,489,320	 	 	$	7,000,000	 	 	$	3,500,000	 	 	$	3,500,000	 	 	Kelley Drye & Warren LLP 
101 Park Avenue 
New York, NY 10178 
Telephone: (212) 808-7540 
Facsimile: (212) 808-7897 
Attention: Michael A. Adelstein, Esq.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Hudson Bay Master Fund Ltd.	 	Please deliver any notices other than Pre-Notices to: 
  
777 Third Avenue, 30th Floor
 New York, NY 10017
 Attention: Yoav Roth
 Facsimile: (212) 571-1279
 E-mail: investments@hudsonbaycapital.com
 Residence: Cayman Islands 
  
Please deliver any Pre-Notice to: 
  
777 Third Ave., 30th Floor 
New York, NY 10017 
Facsimile: (646) 214-7946 
Attention: Scott Black 
General Counsel and Chief Compliance Officer	 	$	1,725,000	 	 	$	1,500,000	 	 	 	2,781,137	 	 	$	3,000,000	 	 	$	1,500,000	 	 	$	1,500,000	 	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL	 	 	 	$	5,750,000	 	 	$	5,000,000	 	 	 	9,270,457	 	 	$	10,000,000	 	 	$	5,000,000	 	 	$	5,000,000	 	 	 





 









     


     


    

 





Disclosure Schedule to Securities Purchase
Agreement


Dated March 30, 2018


 


Schedule 3(a) Organization and Qualification


 


	Entity Name	 	State or country of 

Incorporation or Registration	 	 	 
	 	 	 	 	 	 
	Alteris Renewables, Inc.	 	Delaware	 	 	1	 
	Elemental Energy LLC	 	Hawaii	 	 	1	 
	Real Goods Energy Tech, Inc.	 	Colorado	 	 	1	 
	Real Goods Solar, Inc.	 	Colorado	 	 	 	 
	RGS Financing, Inc.	 	Colorado	 	 	1	 
	Mercury Energy, Inc.	 	Delaware	 	 	1	 
	Real Goods Solar, Inc. – Mercury Solar	 	New York	 	 	2	 
	 	 	 	 	 	 	 
	Other entities without material assets	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Alteris RPS, LLC	 	Delaware	 	 	3	 
	Real Goods Syndicated, Inc.	 	Delaware	 	 	1	 
	Sunetric Management LLC	 	Delaware	 	 	4	 
	Mercury Commercial Solar Fund I, LLC	 	New York	 	 	2	 
	Mercury Solar Birch, LLC	 	Delaware	 	 	2	 
	Mercury Solar Cedar, LLC	 	Delaware	 	 	2	 
	Mercury Solar Pine, LLC	 	Delaware	 	 	2	 
	Mercury Residential Solar Fund I, LLC	 	New York	 	 	2	 
	RGS Energy Asset Management, LLC	 	Delaware	 	 	1	 
	RGS Capital, LLC	 	Delaware	 	 	1	 



 





1. Subsidiary of Real Goods Solar, Inc.


2. Subsidiary of Mercury Energy, Inc.


3. Subsidiary of Alteris Renewables, Inc.


4. Subsidiary of Elemental Energy, LLC




 






     


     


    







 


Section 3(g) No General Solicitation;
Placement Agent’s Fees


 


The Company has agreed to pay the Placement Agent an aggregate
cash placement fee equal to 7% of the proceeds the Company receives from the Buyers, payable upon funding at the Closing and subsequent
thereto.


 


In addition to the cash fees set forth above, the Placement
Agent, as placement agent, has a right to purchase for the sum of $100 a warrant to purchase up to an aggregate of 8% of the aggregate
number of shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants (based on the initial conversion
price for the Notes). The Placement Agent warrant will have terms substantially identical to the terms of the Warrants.


 


The Company also has agreed to reimburse the Placement Agent’s
reasonable and documented out-of-pocket accountable expenses actually incurred by the Placement Agent up to $5,000. In addition,
the Company has agreed to reimburse the Placement Agent’s reasonable and documented out-of-pocket legal expense up to $75,000,
$30,000 of which the Company has paid to the Placement Agent’s legal counsel already.





 


Section 3(l) Absence of Certain Changes


 





	 	 	Last 10-K	 	 	 	 	 	 	 
	 	 	12/31/16	 	 	02/28/18	 	 	 	 
	(000's omited)	 	filed 3/9/17	 	 	un-audited	 	 	Change	 
	 	 	 	 	 	 	 	 	 	 
	Cash	 	$	2,940	 	 	$	543	 	 	$	(2,397	)
	Other current assets	 	 	6,915	 	 	 	6,738	 	 	 	(177	)
	Total current assets	 	 	9,855	 	 	 	7,281	 	 	 	(2,574	)
	Long-term assets	 	 	4,518	 	 	 	5,688	 	 	 	1,170	 
	Total assets	 	$	14,373	 	 	$	12,968	 	 	$	(1,405	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Line of credit	 	$	663	 	 	$	-	 	 	$	(663	)
	Notes payable	 	 	124	 	 	 	1	 	 	 	(123	)
	Accounts payable and accrued liabilities	 	 	3,381	 	 	 	3,047	 	 	 	(334	)
	Other current liabilities	 	 	2,107	 	 	 	1,759	 	 	 	(348	)
	Total current liabilities	 	 	6,275	 	 	 	4,806	 	 	 	(1,469	)
	Long-term liabilities	 	 	3,120	 	 	 	3,164	 	 	 	44	 
	Total liabilities	 	 	9,395	 	 	 	7,970	 	 	 	(1,425	)
	Stockholders'equity	 	 	4,978	 	 	 	4,998	 	 	 	20	 
	 	 	$	14,373	 	 	$	12,968	 	 	$	(1,405	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Working Capital	 	 	3,580	 	 	 	2,474	 	 	 	 	 
	Debt to Equity	 	 	0.16	 	 	 	0.00	 	 	 	 	 








 


During the month of February, the Company enacted a strategic
realignment to scale back the Company’s residential solar homeowner business, estimated to be a 30% reduction in operating
costs below the gross profit line. The realignment reduced the number of outside sales personnel. The Company plans to maintain
the areas of core competencies that are meeting expectations, such as its e-sales call center and commercial sales organization.


 






     


     


    

 


As previously disclosed, the Company will be recording a non-cash
charge to operations for the quarter ended March 31, 2018 for the value of shares of Common Stock issued to resolve a proxy battle;
a corresponding increase in shareholders’ equity will be recorded and, accordingly, this transaction will not affect shareholders’
equity.


 


The Company has obtained a worldwide exclusive license for the
POWERHOUSETM 3.0 solar roof shingle. As previously disclosed, the Company’s current capital resources are insufficient
to fully commercialize the POWERHOUSETM business. Accordingly, the Company is seeking additional capital. Proceeds from this
transaction will be used for certain capital expenditures related to the POWERHOUSETM business, such as equipment molds.


 


The Company’s 2017 Annual Report on Form 10-K will report
that the Company has a history of operating losses and a net loss for 2017 that raise substantial doubt about the Company’s
ability to continue as a going concern. The report of the Company’s independent accounting firm will be qualified for this
circumstance.


 


Schedule 3(m) No Undisclosed Events,
Liabilities, Developments or Circumstances


 


The Company’s 2017 Annual Report on Form 10-K will report
that the Company has a history of operating losses and a net loss for 2017 that raise substantial doubt about the Company’s
ability to continue as a going concern. The report of the Company’s independent accounting firm will be qualified for this
circumstance.


 


Schedule 3(r) Equity Capitalization


 


Capitalization schedule – Authorized and outstanding
as of March 29, 2018 


 


	Class/Category	 	Authorized	 	 	Reserved	 	 	Outstanding	 
	Class A common stock	 	 	150,000,000	 	 	 	-	 	 	 	10,351,845	 
	Class B common stock	 	 	50,000,000	 	 	 	-	 	 	 	-	 
	Preferred Stock	 	 	50,000,000	 	 	 	-	 	 	 	-	 
	2016 convertible debt*	 	 	-	 	 	 	384,494	 	 	 	1,600	 
	Warrants (for Class A Common Stock)	 	 	-	 	 	 	7,582,286	 	 	 	7,582,286	 
	Stock Options (for Class A Common Stock)	 	 	-	 	 	 	1,352,536	 	 	 	102	 
	Total:	 	 	250,000,000	 	 	 	9,319,316	 	 	 	17,934,233	 






 


*estimated as if $1,175 of debt was issued


 


15,149 of the outstanding shares of Common Stock were owned
by affiliates as of March 29, 2018.


 






     


     


    

 


Outstanding options, warrants 


 





	Outstanding Options, Warrants	 	Current 

Exercise Price	 	Outstanding	 	 
	Stock options	 	$1,428 - $46,560	 	149	 	Options outstanding under the Company’s 2008 Long-Term Incentive Plan
	June 2013 Warrants	 	$274.50	 	42,465	 	Formula anti-dilution (shares and exercise price); purchase rights for pro-rata issuances; redemption for fundamental transactions and going private
	November 2013 warrants	 	$40,920.00	 	418	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances; redemption for fundamental transactions and going private
	June, 2014 Warrants	 	$38,280	 	76	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances; redemption for fundamental transactions and going private
	Feb 2015 A & C Warrants	 	$6,000	 	9	 	Full ratchet anti-dilution (exercise price); purchase rights for pro-rata issuances; adjustment of shares and exercise price for splits; redemption in certain circumstances in fundamental transactions
	Feb 2015 Westpark warrants	 	$6,000	 	47	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances; redemption in certain circumstances in fundamental transactions.
	SVB Warrants	 	 $9,720 - $28,320	 	42	 	Ratchet for 12 months (expired); adjustment of shares and exercise price for splits
	June 2015 Series F warrants	 	$744.00	 	868	 	One time adjustment of exercise price on July 9, 2015; adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	June 2015 Westpark warrants	 	$744.00	 	183	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances; adjustment of exercise price for splits; purchase rights for pro-rata issuances
	April 2016 Series G Warrants	 	$1.36	 	3,323	 	One time adjustment of exercise price on April 1, 2017; adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	April 2016 Roth Warrants	 	$496.80	 	1,411	 	One time adjustment of exercise price on April 1, 2017; adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	September 2016 Series H Warrants	 	$165.00	 	7,455	 	One time adjustment of exercise price on date all Convertible Notes (as defined below) are paid-off; adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	September 2016 Underwriter Warrants	 	$30,000	 	5	 	Includes 90,177 Class A Common shares, and 25,454 Series H Warrants (see Series H Warrants above)
	December 2016 Series I Warrants	 	$1.27	 	141,676	 	One time adjustment of exercise price on April 1, 2017; adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	December 2016 Roth Warrants	 	$10.50	 	30,834	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	February 6, 2017 Series K Warrants	 	$3.10	 	3,710,000	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	February 6, 2017 Roth Warrants	 	$3.88	 	185,500	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	February 9, 2017 Series M Warrants	 	$2.40	 	1,609,974	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	February 9, Roth Warrants	 	$3.13	 	120,000	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	January 2018 Series O Warrants	 	$1.47	 	1,600,000	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances
	January 2018 Underwriter Warrants	 	$1.47	 	128,000	 	Adjustment of shares and exercise price for splits; purchase rights for pro-rata issuances








 






     


     


    

 


In June 2013, the Company issued warrants originally exercisable
to purchase 1,683,488 shares (pre-reverse stock splits) of Common Stock (the “June 2013 Warrants), which contain a “formula”
anti-dilution provision as well as a provision adjusting the shares and conversion price for stock splits, reverse stock splits
and the like. There is currently a total of 17,300 shares of Common Stock issuable upon the exercise of the June 2013 Warrants
at an exercise price of $215.00 per share, after adjusting for the applicable reverse stock splits and subsequent issuances of
securities but prior to giving effect to the securities issuable under this Agreement.


 


In addition, there are warrants to purchase 9 shares of Common
Stock issued in February 2015 currently outstanding with the right to have their exercise price adjusted to the price of the securities
issued under this Agreement.


 


Convertible Notes


 





	Outstanding 
 Convertible Notes
	 	Current

                                                                                Conversion Price
	 	Convertible

                                                                                Notes Payable
	 	 	 
	April 2016 Senior Secured Convertible Notes	 	 see below	 	$	1,175	 	 	Redemption features



 


As previously disclosed, on April 1, 2016, the Company issued
an aggregate of $10,000,000 principal amount of Senior Secured Convertible Notes due April 1, 2019 (the “Convertible Notes”).
The Convertible Notes are convertible at any time, at the option of the holders, into shares of Common Stock at the lower of a
fixed and floating conversion price. The fixed conversion price is currently $482.10 per share, subject to adjustment for stock
splits and similar events. The floating conversion price is equal to the lowest of (i) 85% of the arithmetic average of the five
lowest volume-weighted average prices of the Common Stock during the 20 consecutive trading day period ending on the trading day
immediately preceding the delivery of the applicable conversion notice by such holder of Convertible Notes, (ii) 85% of the volume-weighted
average price of the Common Stock on the trading day immediately preceding the delivery of the applicable conversion notice by
such holder of Notes, and (iii) 85% of the volume-weighted average price of the Common Stock on the trading day of the delivery
of the applicable conversion notice by such holder of Convertible Notes. The terms of the Convertible Notes permit the Company’s
board of directors, with the prior consent of the “required holders” (as defined in the Convertible Notes), to reduce
the then current conversion price to any amount and for any period of time deemed appropriate by the Company’s board of directors.
In no event may the conversion price be less than $0.25 per share.


 


In accordance with the terms of the Convertible Notes, the Company
has reduced the conversion price under the Convertible Notes for certain time periods at different prices. Most recently, the Company
reduced the conversion price to $7.50 for November 22, 2016, November 25, 2016, and November 28 through November 30, 2016.


 


As of March 26, 2018, the holders of the Convertible Notes have
converted an aggregate of $10.5 million of principal and interest under the Convertible Notes, and the Company has issued 659,095
shares of Common Stock at conversion prices between $2.82 and $52.21 per share. As of March 26, 2018, there remains outstanding
Convertible Notes with an aggregate principal amount of $1,000.


 






     


     


    

 


The Convertible Notes contain certain redemption rights upon,
among other things, the occurrence of an event or default or a “fundamental transaction” (as defined in the Convertible
Notes).


 


Stock Appreciation Rights and Phantom Stock


 


Under the 2008 Long-Term Incentive Plan (amended and restated
February 8, 2018) the Company may grant Stock Appreciation Rights either alone, or in conjunction with other awards, either at
the time of grant or by amendment thereafter. The plan does not expressly provide for the issuance of “phantom stock.”
However, the plan permits the Company’s Compensation Committee to issue any type of award deemed by the Compensation Committee
to be consistent with the purposes of the plan. Therefore, it is possible that the Compensation Committee in the future may issue
“phantom stock” under the plan.


 


Shareholders Agreement


 


Shareholders Agreement, dated as of December 19, 2011, between
the Company and Riverside Renewable Energy Investments, LLC.





 


Stock Options


 


As disclosed on Form 8-K filed February 8, 2018 the company
obtained shareholder approval to issue 1,300,000 stock options bringing the total options available to issue 1,350,000.


 


Registration Rights


 


The Company has granted registration rights under the following:


 


The Amended and Restated Registration Rights Agreement, dated
as of December 19, 2011, by and among the Company, Gaiam, Inc., and Riverside Renewable Energy Investments, LLC. [Note: On November
5, 2013, Gaiam ceased to be a party to the Amended and Restated Registration Rights Agreement pursuant to the terms of an Agreement,
dated November 5, 2013, among the parties.]


 


The Registration Rights Agreement, dated as of June 3, 2013,
by and among the Company and the investors party thereto.


 


The Warrants to purchase the Company’s Common Stock, issued
November 20, 2013.


 


The Registration Rights Agreement, dated as of July 9, 2014,
by and among the Company and the investors party thereto.


 


The Conversion Agreement dated as of June 24, 2015 by and between
the Company and Riverside Fund III, L.P.


 


Registration right granted to Roth Capital Partners, LLC.


 






     


     


    

 


Pursuant to Section 4.1 of the Securities Purchase Agreement,
dated as of December 8, 2016, by and among the Company and the investors party thereto, the Company has agreed to use its best
efforts to keep a registration statement effective registering the issuance or resale of the shares of Common Stock issuable upon
exercise of the Company’s Series I Warrants, during the term of the Series I Warrants.


 


Pursuant to Section 4.1 of the Securities Purchase Agreement,
dated as of February 1, 2017, by and among the Company and the investors party thereto, the Company has agreed to use its best
efforts to keep a registration statement effective registering the issuance or resale of the shares of Common Stock issuable upon
exercise of the Company’s Series K Warrants, during the term of the Series K Warrants.


 


Pursuant to Section 4.1 of the Securities Purchase Agreement,
dated as of February 7, 2017, by and among the Company and the investors party thereto, the Company has agreed to use its best
efforts to keep a registration statement effective registering the issuance or resale of the shares of Common Stock issuable upon
exercise of the Company’s Series M Warrants, during the term of the Series M Warrants.


 


Pursuant to the Cooperation Agreement, dated as of January 2,
2018, by and among the Company and the other parties thereto, the Company is obligated to cooperate in good faith with the other
parties thereto and to enter into a registration rights agreement, with customary terms reasonably acceptable to the Company, granting
piggyback registration rights with respect to the shares of Common Stock delivered pursuant to the Cooperation Agreement.


 


In connection with a common stock and warrant offering on January
2, 2018, the Company issued Series O Warrants exercisable into 1,600,000 shares of Common Stock to the investor. The Company intends
to register these shares for resale.


 


Schedule 3(s) Indebtedness and Other
Contracts


 


The worldwide exclusive POWERHOUSETM license required the
Company to make a up front license payment of $3 million, of which $1 million was payable upon execution of the license agreement.
The remaining $2 million is payable 30 days following UL certification for POWERHOUSETM 3.0. The Company has recorded a long-term
asset for the initial up-front payment. In the event the Company does not secure financing to commercialize POWERHOUSETM,
this asset would be impaired, and the Company expects that it would result in a Material Adverse Effect. Further, the license agreement
requires that, to maintain exclusivity, the Company produce and sell at least 50 megawatts of POWERHOUSETM 3.0 solar roof
shingles during the first three years. The Company expects that the failure to obtain sufficient capital to commercialize POWERHOUSETM
and meet the minimum production requirement each would result in a Material Adverse Effect.


 


The following financing statements are currently open, and the
Company will be pursuing closing all vendors except the current vendors Fronius USA LLC and Cannon Financial Services, Inc.


 


	Secured Party's Name	 	Debtor	 	 
	Fronius USA LLC	 	Real Goods Solar, Inc.	 	Materials
	Argonaut Insurance Company	 	Real Goods Solar, Inc.	 	 
	Argonaut Insurance Company	 	Regrid Power, Inc.	 	 
	Cannon Financial Services, Inc.	 	Real Goods Energy Tech, Inc.	 	Copiers
	Silicon Valley Bank (1)	 	Real Goods Energy Tech, Inc.	 	 
	Certainteed Corporation	 	Real Goods Energy Tech, Inc.	 	Materials
	Suniva, Inc	 	Elemental Energy, LLC	 	Materials
	Mitsubishi Electric US, Inc.	 	Elemental Energy, LLC	 	Materials
	Central Pacific Bank (2)	 	Elemental Energy, LLC dba Sunetric	 	 



 


		(1)	The Company repaid the Silicon Valley Bank loan in
January 2015.



		(2)	The Company has no record of a business transaction
with Central Pacific Bank



 






     


     


    

 


Schedule 3(t) Litigation


 


On July 9, 2014, the Company completed a private offering of
approximately $7.0 million of its Common Stock and warrants (the “July 2014 PIPE Offering”). Five of the investors
that participated in the offering (out of approximately 20 total investors that participated in the offering) asserted claims against
the Company in three separate lawsuits alleging certain misrepresentations and omissions in the offering. The Company subsequently
reached settlements with all five investors. The Company recorded a charge to operations of $0.5 million as of June 30, 2015, in
recognition of the loss contingency for the July 2014 PIPE offering. That charge was equal to the retention under the Company’s
2014-15 Officers and Directors liability insurance policy as the Company expects the insurance policy will cover any future claims
in excess of the retention limit.


 


The Company received a subpoena from the U.S. Securities and
Exchange Commission (“SEC”) requesting certain information pertaining to the Company’s 2014 PIPE Offering. The
Company established a special committee of the board of directors to review the facts and circumstances surrounding the PIPE offering
and engaged outside counsel to assist it with its review. On May 11, 2016, the Company was advised by the staff of SEC (the “Staff”)
that the Staff did not intend to recommend any enforcement action against the Company with respect to the investigation commenced
by the Staff in June 2015.


 


On November 22, 2016, the Company provided the remaining cash
collateral to Argonaut Insurance Company to fully secure the full amount of the $624,000 Final Acceptance Payment and Performance
Bond for a large commercial photovoltaic project the Company’s subsidiary Regrid Power, Inc. completed in 2012. As previously
disclosed, the customer has raised warranty claims pertaining to the project and the Company currently maintains a specific warranty
liability for the project of approximately $200,000. On November 30, 2016, the Company received a letter from the customer in which
the customer alleged that the Company has not completed agreed-upon remedial work to remedy alleged deficiencies and notified the
Company that the customer intends to perform such remedial work at the Company’s expense using a third-party contractor.
The customer also requested that the owner of the project demand the full amount of the performance bond. In addition, the customer
demanded an aggregate of approximately $400,000 as liquidated damages under the terms of the project contract. The Company denies
these assertions and disputes that the customer is entitled to liquidate damages. The Company plans to avail itself of all defenses
and remedies available. The Company estimates that the range of loss related to this warranty claim is from approximately $200,000
to a maximum of approximately $1 million. The Company has recorded a liability for the minimum amount of the range of loss.


 






     


     


    

 


As previously disclosed in the Company’s Quarterly Report
on Form 10-Q for the first quarter of 2017, on February 16, 2017, Alpha Capital Anstalt (“Alpha”), an investor in the
Company’s February 7, 2017 public offering of common stock and warrants, filed a lawsuit against Roth Capital Partners, LLC,
the Company’s investment banking firm in the offering, and the Company in U.S. District Court for the Southern District of
New York. Alpha’s lawsuit initially alleged that the registration statement for the February 7, 2017 offering contained material
misstatements or omissions and that the Company had breached contractual obligations owed to Alpha. Alpha seeks unspecified monetary
damages, rescission and other unspecified relief in the lawsuit. The Company disputes Alpha’s allegations and is vigorously
defending the lawsuit. Under local court rules, the Company filed a letter motion seeking permission to file a motion to dismiss
the claims related to the alleged misstatements and omissions in the complaint. On May 12, 2017, Alpha filed an amended complaint
removing the securities and fraud-related claims and leaving only breach of contract claims against the Company. Because the Company
has been unwilling to entertain settlement discussions, Alpha has recently deposed members of the Company and the Company’s
legal team that represented the Company in the offering. The discovery period of the suit has ended, and the Company filed a motion
for summary judgment on February 23, 2018, based in part on Alpha’s lack of damages.


 


As reported on Form 8-K filed March 12, 2018, the Financial
Industry Regulatory Authority (“FINRA”) contacted the Company to inquire about trading activity in the Company’s
Class A common stock in the time period surrounding the Company’s announcement of the Company’s license agreement for
the POWERHOUSE solar shingle system on October 4, 2017. In February 2018, FINRA notified the Company that FINRA had concluded its
review and referred the matter to the US Securities and Exchange Commission (“SEC”) for whatever action, if any, the
SEC deems necessary. John Schaeffer, who retired from the Company’s board of directors on March 9, 2018, has informed the
Company that he is in contact with the SEC in connection with this matter. The Company has no information about the nature or scope
of the SEC’s involvement in this matter. Further, the Company has not received any communication, inquiry or subpoena from
the SEC in connection with this matter and has no reason to believe that the Company is implicated in any way in this matter.


 


Section 3(aa) Tax Status


 


The company has not filed it 2016 returns for which no tax is
due.


 


Section 3(oo) Stock Option Plans


 


The Company made a stand-alone grant of options outside of the
Company’s Long-Term Incentive Plan, with substantially identical terms as grants made under the Company’s Long-Term
Incentive Plan, to William Yearsley, a former Chief Executive Officer. Dr. Yearsley resigned from his position effective July 30,
2012 and all his stock options terminated 30 days after the date of his termination


 


Section 3(vv) Ranking of Notes


 


Senior Convertible Debt Outstanding: $1,175


  






     


     


    

 


EXHIBIT A-1


 


FORM OF SERIES A NOTE


 


[NOTE: This exhibit is filed as Exhibit 4.1 to this current report on Form 8-K]


  




     


     


    

 


EXHIBIT A-2


 


FORM OF SERIES B NOTE


 


[NOTE: This exhibit is filed as Exhibit
4.1 to this current report on Form 8-K]


  




     


     


    

 


EXHIBIT B


 


FORM OF SERIES Q WARRANT


 


[NOTE: This exhibit is filed as Exhibit 4.2 to this current report on Form 8-K]


  




     


     


    

 


EXHIBIT C


 


FORM OF REGISTRATION RIGHTS AGREEMENT


 


[NOTE: This exhibit is filed as Exhibit 10.2 to this current report on Form 8-K]


  




     


     


    

 


EXHIBIT D


 


FORM OF NOTE PURCHASE AGREEMENT


 


[NOTE: This exhibit is filed as Exhibit 10.3 to this current report on Form 8-K]


  




     


     


    

 


EXHIBIT E


 


FORM OF MASTER NETTING AGREEMENT


 


[NOTE: This exhibit is filed as Exhibit 10.4 to this current report on Form 8-K]


 




     


     


    

 


EXHIBIT F


 


FORM
OF INVESTOR COLLATERAL CERTIFICATE





 


The undersigned authorized person
of ____________ (the “Investor”), hereby represents, warrants and certifies to Real Goods Solar, Inc.,
a Colorado corporation (the “Company”), solely in his capacity as an authorized person of the Investor
and not in his individual capacity, pursuant to Section 1(c) of that certain Securities Purchase Agreement, dated as of March
30, 2018 (the “Agreement”), by and among the Company and the investors identified on the Schedule of
Buyers attached to the Agreement (the “Buyers”), that as of the Closing Date, the bank account described
on Schedule I to such Investor Note, which secures such Investor Note in accordance therewith, contains at least the
Series B Purchase Price (as defined in the Securities Purchase Agreement) of Eligible Assets (as defined in the Investor
Note).


 


Capitalized terms used
but not otherwise defined herein shall have the meaning set forth in the Agreement.


 


IN WITNESS WHEREOF, the undersigned has executed this
certificate this ____ day of __________, 2018.





 


[Investor]


  


	 	By:	 
	 	 	Name:
	 	 	Title: