SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as of October __, 2016, between Royal Energy Resources,
Inc., a Delaware corporation (the “Company”), and East Hill Investments, Ltd., a British Virgin Islands business
company (the “Purchaser”).


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the “Securities Act”) as to the Securities, the Company desires to issue
and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described
in this Agreement.


 


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


 


ARTICLE
I.


DEFINITIONS


 


Section
1.01Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement,
the following terms have the meanings set forth in this Section 1.01:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.04.


 


“Action”
shall have the meaning ascribed to such term in Section 3.01(i).


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.


 


“Bankruptcy
Code” means the United States Bankruptcy Code, Title 11 of the United States Code, as amended from time to time, and
any successor statute.


 


“Board
of Directors” means the board of directors of the Company.


 


“Breaching
Party” means a party who is in breach of any representation, warranty, obligation, covenant or agreement hereunder.


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.


 


“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.01 at either the Initial Closing, a Subsequent
Closing or the Final Closing.


 


“Closing
Date” means the Initial Closing Date, any Subsequent Closing Date or the Final Closing Date.


 


“Closing
Delay” shall have the meaning the failure of a Subsequent Closing or the Final Closing to occur as a result of the failure
to be true of any representation or warranty of either party, or the failure of either party to comply with any obligation, covenant
or agreement hereunder, provided a Closing Delay shall not occur as a result of the failure of the Company to deliver Subsequent
Closing Securities at a Subsequent Closing or Final Closing Securities at the Final Closing, or the failure of the Purchaser to
deliver the Subsequent Subscription Amount at a Subsequent Closing or Final Subscription Amount at the Final Closing,


 


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


 


“Common
Stock” means the common stock of the Company, par value $0.00001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.


 


“Company
Counsel” means Davis Gillett Mottern & Sims, LLC, with offices located at 1230 Peachtree Street, N.E., Suite 2445,
Atlanta, GA 30309.


 




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“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


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


 


“Final
Closing” means the closing of the purchase and sale of the Final Closing Securities pursuant to Section 2.02(c).


 


“Final
Closing Date” shall have the meaning assigned to such term in Section 2.01(c).


 


“Final
Closing Securities” shall have the meaning assigned to such term in Section 2.02(c).


 


“Final
Subscription Amount” shall have the meaning assigned to such term in Section 2.02(c).


 


“GAAP”
shall have the meaning ascribed to such term in Section 3.01(g).


 


“Initial
Closing” means the closing of the purchase and sale of the Initial Closing Securities pursuant to Section 2.2(a).


 


“Initial
Closing Date” means the Trading Day on which the Initial Closing takes place.


 


“Initial
Closing Securities” shall have the meaning assigned to such term in Section 2.01(a).


 


“Initial
Subscription Amount” shall have the meaning assigned to such term in Section 2.02(a).


 


“Insolvency
Event” with respect to a specified Person, shall mean either of the following events: (a) a case or proceeding shall
have been commenced against such Person seeking a decree or order in respect of such Person (i) under the Bankruptcy Code, as
now constituted or hereafter amended or any other applicable federal, state or foreign bankruptcy, insolvency or other similar
law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Person
or of any substantial part of such Person’s assets, or (iii) ordering the winding-up or liquidation of the affairs of such
Person, and such case or proceeding shall remain undismissed or unstayed for ninety (90) days or more or such court shall enter
a decree or order granting the relief sought in such case or proceeding; or (b) the commencement by such Person of a voluntary
case under the Bankruptcy Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy,
insolvency or other similar law, or the consent by such Person to the entry of an order for relief in an involuntary case under
any such law, or the consent by such Person to the appointment or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of such Person for any substantial part of such Person’s assets, or the making
by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.


 


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


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.01(a).


 


“Non-Breaching
Party” means a party other than the Non-Breaching Party.


 


“Per
Share Purchase Price” equals $4.25, subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.


 


“Prospectus”
means the final prospectus filed for the Registration Statement.


 


“Prospectus
Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with
the Commission and delivered by the Company to the Purchaser at the Closing.


 




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“Purchase
Note” means a promissory note payable by the Purchaser for Securities purchased at a Closing in the form attached hereto
as Exhibit A.


 


“Purchase
Notice” shall have the meaning ascribed to such term in Section 2.01(b).


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.07.


 


“Registration
Statement” means the effective registration statement with Commission File No. 333-213031 which registers the sale of
the Securities to the Purchaser.


 


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.01(d).


 


“Rhino”
means Rhino Resource Partners, LP, a majority controlled subsidiary of the Company.


 


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


 


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


 


“SEC
Reports” shall have the meaning ascribed to such term in Section 3.01(g).


 


“Securities”
means 1,000,000 shares of Common Stock issued or issuable to the Purchaser pursuant to this Agreement.


 


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


 


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


 


“Subsequent
Closing” means the closing of the purchase and sale of the Subsequent Closing Securities pursuant to Section 2.2(b).


 


“Subsequent
Closing Date” means the Trading Day on which each Subsequent Closing takes place.


 


“Subsequent
Closing Securities” means the Securities purchased by the Purchaser at a Subsequent Closing.


 


“Subsequent
Subscription Amount” shall have the meaning assigned to such term in Section 2.02(b).


 


“Subscription
Amount” means the aggregate amount to be paid for Securities purchased hereunder at a Closing, which shall be the number
of shares of Common Stock purchased by the Purchaser at the Closing times the Purchase Price Per Share.


 


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


 


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


 


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


 


“Transaction
Documents” means this Agreement, and any other documents or agreements executed in connection with the transactions
contemplated hereunder.


 


“Transfer
Agent” means Securities Transfer Corp., the current transfer agent of the Company, with a mailing address of 2591 Dallas
Pkwy, #102, Frisco, TX 75034 and any successor transfer agent of the Company.


 




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ARTICLE
II.

PURCHASE AND SALE


 


Section
2.01Purchase and Sale of Shares. Upon the terms and subject to the conditions set forth herein, the Company agrees
to sell, and the Purchaser agrees to purchase, 1,000,000 shares of Common Stock for the Purchase Price Per Share, for an aggregate
purchase price of $4,250,000. The purchase and sale of the Securities shall take place at the Initial Closing, one or more Subsequent
Closings and a Final Closing on the following schedule:


 


	(a)	50,000
    shares of Common Stock (the “Initial Closing Securities”) at the Initial Closing Date;
	 	 
	(b)	Such
    shares of Common Stock that the Purchaser requests to purchase by a notice to the Company (a “Purchase Notice”),
    provided that each Purchase Notice shall be for no less than 25,000 shares of Common Stock and no more than 50,000
    shares of Common Stock; and further provided, that the Company shall not be obligated to sell the Purchaser any Securities
    pursuant to a Purchase Notice if the Purchaser has an outstanding Purchase Note at the time;
	 	 
	(c)	Any
    Securities which have not been purchased by the Purchaser at the Initial Closing or a Subsequent Closing shall be purchased
    60 days after the Initial Closing Date (the “Final Closing Date”).


 


Section
2.02Initial and Subsequent Closings.


 


	(a)	On
    the Initial Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the
    execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase,
    the Initial Closing Securities for the Subscription Amount, which equals $212,500 (the “Initial Subscription Amount”).
    At the Initial Closing, the Purchaser shall deliver the Initial Subscription Amount to the Company in the form of a Purchase
    Note, and the Company shall deliver to the Purchaser the Initial Closing Securities due in respect of the Initial Subscription
    Amount, and each party shall otherwise satisfy all of the covenants and conditions set forth in Sections 2.03 and 2.04.
	 	 
	(b)	On
    each Subsequent Closing Date prior to the Final Closing Date, upon the terms and subject to the conditions set forth herein,
    the Company agrees to sell, and the Purchaser agrees to purchase, the number of shares of Common Stock specified in the Purchase
    Notice for which the Subsequent Closing relates for the Subscription Amount due for such shares (the “Subsequent
    Subscription Amount”). At each Subsequent Closing, the Purchaser shall deliver the Subsequent Subscription Amount
    due the Company in the form of a Purchase Note, and the Company shall deliver to the Purchaser the Subsequent Closing Securities
    due in respect of the Subsequent Closing, and each party shall otherwise satisfy all of the covenants and conditions set forth
    in Sections 2.03 and 2.04.
	 	 
	(c)	On
    the Final Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the
    Purchaser agrees to purchase, the number of shares of Common Stock equal to 1,000,000 less the number of shares of Common
    Stock purchased at the Initial Closing and all prior Subsequent Closings (the “Final Closing Securities”),
    for the Subscription Amount due for such number of shares (the “Final Subscription Amount”). At the Final
    Closing, the Company shall deliver to the Purchaser the Final Closing Securities due in respect of the Final Closing, and
    the Company shall pay cash equal to the Final Subscription Amount, and each party shall otherwise satisfy all of the covenants
    and conditions set forth in Sections 2.03 and 2.04.
	 	 
	(d)	All
    Closings shall occur at the offices of Company Counsel or such other location as the parties shall mutually agree.
	 	 
	(e)	Notwithstanding
    anything to the contrary in this Agreement, in no event shall the Purchaser be required to purchase any Securities, which
    when added to the number of shares of Common Stock of the Company then beneficially owned by the Purchaser as determined in
    accordance with Section 13(d) of the Exchange Act, would exceed 4.9% of the number of shares of Common Stock outstanding as
    determined under Section 13(d) of the Exchange Act.



 






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	(f)	In
    the event a Subsequent Closing or the Final Closing does not take place on the date scheduled therefor pursuant to Section
    2.01 because of a Closing Delay, then the Subsequent Closing or the Final Closing shall occur at date mutually acceptable
    by the parties within five (5) Business Days after the elimination of the conditions that resulted in the Closing Delay, unless
    this Agreement has been terminated pursuant to Section 5.01(a) herein.


 





Section
2.03Deliveries.





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


 


	 	(i)	this
    Agreement duly executed by the Company;
	 	 	 
	 	(ii)	shares
    of Common Stock equal to such Initial Subscription Amount divided by the Per Share Purchase Price, registered in the name
    of such Purchaser;
	 	 	 
	 	(iii)	the
    Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).



 


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



 


	 	(i)	this
    Agreement duly executed by the Company;
	 	 	 
	 	(ii)	a
    Purchase Note for the Initial Subscription Amount.



 


	(c)	On
    or prior to each Subsequent Closing Date and the Final Closing Date, the Company shall deliver or cause to be delivered to
    the Purchaser shares of Common Stock equal to such Subsequent Subscription Amount or Final Subscription Amount divided by
    the Per Share Purchase Price, registered in the name of such Purchaser, as applicable;



 


	(d)	On
    or prior to each Subsequent Closing Date, the Purchaser shall deliver or cause to be delivered to the Company a Purchase Note
    for the Subsequent Subscription Amount. On or prior to the Final Closing Date, the Purchaser pay the Final Subscription Amount
    in cash by wire transfer to the account of the Company.


 


Section
2.04Closing Conditions.


 


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



 


	 	(i)	the
    accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material
    Adverse Effect, in all respects) on the Closing Date of the representations and warranties of the Purchaser contained herein
    (unless as of a specific date therein in which case they shall be accurate as of such date);
	 	 	 
	 	(ii)	all
    obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have
    been performed; and
	 	 	 
	 	(iii)	the
    delivery by the Purchaser of the items set forth in Section 2.03(b) or (d) of this Agreement, as applicable.



 






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



 


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


 


	 	(ii)	all
    obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
    performed;
	 	 	 
	 	(iii)	the
    delivery by the Company of the items set forth in Section 2.03(a) or (c) of this Agreement, as applicable.


 


ARTICLE
III.


REPRESENTATIONS
AND WARRANTIES


 


Section
3.01Representations and Warranties of the Company. Except as set forth in the SEC Reports, which SEC Reports shall
be deemed a part hereof and shall qualify any representation or otherwise made herein, the Company hereby makes the following
representations and warranties to the Purchaser:


 


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



 






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	(c)	No
    Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents
    to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated
    hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s
    certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute
    a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of
    any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination,
    amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility,
    debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) to which the Company or any Subsidiary is
    a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required
    Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other
    restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and
    state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected;
    except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material
    Adverse Effect.
	 	 
	(d)	Filings,
    Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
    notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority
    or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other
    than: (i) the filings required pursuant to Section 4.03 of this Agreement, (ii) the filing with the Commission of the Prospectus
    Supplement, and (iii) such filings as are required to be made under applicable state securities laws (collectively, the “Required
    Approvals”).
	 	 
	(e)	Issuance
    of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance with the
    applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens
    imposed by the Company. The Company has prepared and filed the Registration Statement in conformity with the requirements
    of the Securities Act, which became effective on September 16, 2016, including the Prospectus, and such amendments and supplements
    thereto as may have been required to the date of this Agreement. The Registration Statement is effective under the Securities
    Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing
    the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to
    the knowledge of the Company, are threatened by the Commission. The Company, if required by the rules and regulations of the
    Commission, shall file the Prospectus with the Commission pursuant to Rule 424(b). At the time the Registration Statement
    and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement
    and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and
    did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated
    therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto,
    at time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform
    in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of
    a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances
    under which they were made, not misleading.
	 	 
	(f)	Capitalization.
    The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than
    pursuant to the exercise of employee stock options under the Company’s stock option plans and the issuance of shares
    of Common Stock to employees pursuant to employment agreements. The issuance and sale of the Securities will not obligate
    the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Purchaser)
    and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price
    under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary that contain
    any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the
    Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does
    not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
    All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable,
    have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued
    in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization
    of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no
    stockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capital
    stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.



 






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	(g)	SEC
    Reports; Financial Statements. The Company and Rhino have filed all reports, schedules, forms, statements and other documents
    required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or
    15(d) thereof, for the two years preceding the date hereof (the foregoing materials of the Company and Rhino, including the
    exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement,
    being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension
    of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective
    dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act,
    as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state
    a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
    under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in
    all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect
    thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States
    generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
    except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial
    statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position
    of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows
    for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
	 	 
	(h)	Material
    Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
    within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there
    has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
    Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
    expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be
    reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii)
    the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution
    of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares
    of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except
    pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential
    treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact,
    circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to
    the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition
    that would be required to be disclosed by the Company under applicable securities laws at the time this representation is
    made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation
    is made.
	 	 
	(i)	Litigation.
    Except as disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation
    pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective
    properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state,
    county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality,
    validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable
    decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor
    any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under
    federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company,
    there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director
    or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any
    registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.



 






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	(j)	Labor
    Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
    of the Company, which could reasonably be expected to result in a Material Adverse Effect. Except as disclosed in the SEC
    Reports, none of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s
    relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective
    bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.
    To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation
    of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition
    agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment
    of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any
    of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign
    laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours,
    except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a
    Material Adverse Effect.
	 	 
	(k)	Compliance.
    Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not
    been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under),
    nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of,
    any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any
    of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment,
    decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute,
    rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and
    local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment
    and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
	 	 
	(l)	Investment
    Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
    will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of
    1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company”
    subject to registration under the Investment Company Act of 1940, as amended.
	 	 
	(m)	Listing
    and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and
    the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
    of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
    terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading
    Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with
    the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will
    not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common
    Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation
    and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation)
    in connection with such electronic transfer.
	 	 
	(n)	Application
    of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
    inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
    or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
    or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser
    and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without
    limitation as a result of the Company’s issuance of the Securities and the Purchaser’s ownership of the Securities.



 






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	(o)	Disclosure.
    Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the
    Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchaser or its agents
    or counsel with any information that it believes constitutes or might constitute material, non-public information which is
    not otherwise disclosed in the Prospectus Supplement. The Company understands and confirms that the Purchaser will rely on
    the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or
    on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective businesses and the
    transactions contemplated hereby is true and correct in all material respects and does not contain any untrue statement of
    a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the
    circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve
    months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit
    to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the
    circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Purchaser
    makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those
    specifically set forth in Section 3.02 hereof.
	 	 
	(p)	No
    Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section
    3.02, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
    made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause
    this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act
    which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval
    provisions of any Trading Market on which any of the securities of the Company are listed or designated.
	 	 
	(q)	Tax
    Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
    in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state
    and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to
    which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown
    or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provisions reasonably
    adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations
    apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and
    the officers of the Company or of any Subsidiary know of no basis for any such claim.
	 	 
	(r)	Foreign
    Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any
    agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for
    unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity,
    (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political
    parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary
    (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated
    in any material respect any provision of FCPA.
	 	 
	(s)	Accountants.
    The Company’s accounting firm is Paritz & Company, P.A. To the Company’s knowledge, such accounting firm (i)
    is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to
    the financial statements to be included in the Company’s Annual Report for the fiscal year ending August 31, 2015.



 






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	(t)	Acknowledgment
    Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solely
    in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
    thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company
    (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice
    given by the Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and
    the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company
    further represents to the Purchaser that the Company’s decision to enter into this Agreement and the other Transaction
    Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its
    representatives.
	 	 
	(u)	Acknowledgement
    Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
    (except for Sections 3.02(d) and 4.10 hereof), it is understood and acknowledged by the Company that: (i) the Purchaser has
    not been asked by the Company to agree, nor has the Purchaser agreed, to desist from purchasing or selling, long and/or short,
    securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the
    Securities for any specified term; (ii) past or future open market or other transactions by the Purchaser, specifically including,
    without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private
    placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) the
    Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or
    indirectly, presently may have a “short” position in the Common Stock, and (iv) the Purchaser shall not be deemed
    to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction.
    The Company further understands and acknowledges that (y) the Purchaser may engage in hedging activities at various times
    during the period that the Securities are outstanding, and (z) such hedging activities (if any) could reduce the value of
    the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being
    conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction
    Documents.
	 	 
	(v)	Office
    of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
    officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
    by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
	 	 
	(w)	U.S.
    Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within
    the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
    request.
	 	 
	(x)	Bank
    Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
    Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
    System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,
    directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five
    percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
    Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies
    of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
	 	 
	(y)	Money
    Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
    with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act
    of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the
    “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority
    or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or,
    to the knowledge of the Company or any Subsidiary, threatened.



 






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	(z)	Stock
    Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in
    accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair
    market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law.
    No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted,
    and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly
    coordinate the grant of stock options with, the release or other public announcement of material information regarding the
    Company or its Subsidiaries or their financial results or prospects.
	 	 
	(aa)	No
    Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
    by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company
    and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
    ability to perform any of its obligations under any of the Transaction Documents.


 


	(bb)	No
    Insolvency Event. No Insolvency Event exists with respect to the Company or a Subsidiary.


 


Section
3.02Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate
as of such date):


 


	(a)	Organization;
    Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good
    standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited
    liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction
    Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction
    Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized
    by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.
    Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser
    in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable
    against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy,
    insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights
    generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
    remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
	 	 
	(b)	Experience
    of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
    and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective
    investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear
    the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
	 	 
	(c)	Access
    to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
    all exhibits and schedules thereto) and the SEC Reports 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.



 






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	(d)	Certain
    Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has
    not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed
    any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time
    that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company
    setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution
    hereof. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without
    limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, the Purchaser has
    maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
    and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall
    constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of,
    or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.
	 	 
	(e)	General
    Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, purchasing the Securities as a result of any
    advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar
    media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.


 


The
Company acknowledges and agrees that the representations contained in this Section 3.02 shall not modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations
and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection
with this Agreement or the consummation of the transactions contemplated hereby.


 


ARTICLE
IV.


OTHER
AGREEMENTS OF THE PARTIES


 


Section
4.01Transfer Restrictions.


 


	 	(a)	The
    Securities shall be issued free of all legends. The Securities may only be disposed of in compliance with state and federal
    securities laws.
	 	 	 
	 	(b)	The
    Purchaser agrees with the Company that the Purchaser will sell any Securities pursuant to either the registration requirements
    of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities
    are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein,
    and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this
    Section 4.01 is predicated upon the Company’s reliance upon this understanding.


 


Section
4.02Furnishing of Information. Until the earliest of the time that the Purchaser owns no Securities, the Company covenants
to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.


 


Section
4.03Securities Laws Disclosure; Publicity. The Company shall by 9:00 a.m. (New York City time) on the Trading Day immediately
following the date hereof, (a) issue a press release disclosing the material terms of the transactions contemplated hereby and
(b) file the Prospectus Supplement and a Current Report on Form 8-K, including the Transaction Documents as exhibits to such Form
8-K, with the Commission. From and after the issuance of such press release, the Company represents to the Purchaser that it shall
have publicly disclosed all material, non-public information delivered to any of the Purchaser by the Company or any of its Subsidiaries,
or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. In addition, effective upon the issuance of such press release and filing of the Form 8-K and Prospectus Supplement,
the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written
or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates
on the one hand, and any of the Purchaser or any of their Affiliates on the other hand, shall terminate. The Company and the Purchaser
shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither
the Company nor the Purchaser shall issue any such press release nor otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of the Purchaser, with
respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public
statement or communication.


 






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Section
4.04Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company,
any other Person, that the Purchaser is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in
effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company
and the Purchaser.


 


Section
4.05Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents, which shall be disclosed pursuant to Section 4.03, the Company covenants and agrees that neither
it, nor any other Person acting on its behalf will provide the Purchaser or its agents or counsel with any information that constitutes,
or the Company reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have
consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands
and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
To the extent that the Company delivers any material, non-public information to the Purchaser without such Purchaser’s consent,
the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of
its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any
of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis
of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that
any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding
the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.


 


Section
4.06Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for acquisitions,
working capital purposes and other corporate purposes including redemption of Common Stock and shall not use such proceeds: in
violation of FCPA or OFAC regulations.


 


Section
4.07Indemnification of Purchaser. Subject to the provisions of this Section 4.07, the Company will indemnify and hold
the Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person
who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each,
a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents
or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by
any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated
by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties
or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder
or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against a Purchaser Party in respect
of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after
a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion
of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party,
in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.
The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent,
but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of
the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification required by this Section 4.07 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities
the Company may be subject to pursuant to law.


 






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Section
4.08Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue Securities pursuant to this Agreement.


 


Section
4.09Listing of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of
the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply
to list or quote all of the Securities on such Trading Market and promptly secure the listing of all of the Securities on such
Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market,
it will then include in such application all of the Securities, and will take such other action as is necessary to cause all of
the Securities to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action
reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects
with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The Company
agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another
established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or
such other established clearing corporation in connection with such electronic transfer.


 


Section
4.10Certain Transactions and Confidentiality. The Purchaser covenants that neither it nor any Affiliate acting on its
behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s
securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.03. The Purchaser
covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant
to the initial press release as described in Section 4.03, such Purchaser will maintain the confidentiality of the existence and
terms of this transaction. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary,
the Company expressly acknowledges and agrees that (i) the Purchaser makes no representation, warranty or covenant hereby that
it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.03, (ii) the Purchaser
shall not be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable
securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant
to the initial press release as described in Section 4.03 and (iii) the Purchaser shall not have any duty of confidentiality or
duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press
release as described in Section 4.03.


 






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Section
4.11Furnishing of Information; Public Information. Until the earlier of the time that the Purchaser owns no Securities,
the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to
timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed
by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements
of the Exchange Act.


 


Section
4.12Blue Sky Filings. The Company shall take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser at the Closing under applicable securities
or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request
of the Purchaser.


 


ARTICLE
V.


MISCELLANEOUS


 


Section
5.01Termination.


 


	(a)	Termination
    Reasons. This Agreement may be terminated prior to the occurrence of the Final Closing under the following circumstances:



 


	 	(i)	at
    any time that a Closing Delay is in existence, the Non-Breaching Party may terminate this agreement in the event the circumstances
    that caused the Closing Delay are not cured by the Breaching Party within five (5) Business Days after written notice by the
    Non-Breaching Party to the Breaching Party;
	 	 	 
	 	(ii)	in
    the event a Closing does not take place as a result of the failure of the party to perform its obligations hereunder when
    a Closing Delay does not exist, then the Non-Breaching Party may terminate this Agreement on one (1) Business Days’
    notice to the Breaching Party;
	 	 	 
	 	(iii)	if
    both parties are Breaching Parties hereunder, then either party may exercise the right to terminate this Agreement pursuant
    to subsections (i) or (ii) above.



 


	(b)	Consequences
    of Termination. In the event of a termination of this Agreement pursuant to Section 5.01(a) herein, each party shall have
    all rights against the other party at law and in equity for breach of contract.


 


Section
5.02Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall
pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by
such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall
pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to
the Purchaser.


 


Section
5.03Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and
the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.


 


Section
5.04Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on the signature
pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date
of transmission, if such notice or communication is delivered via facsimile or email attachment at the facsimile number or email
address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York
City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any
notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the
Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K.


 






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Section
5.05Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in
a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right.


 


Section
5.06Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not
be deemed to limit or affect any of the provisions hereof.


 


Section
5.07Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their
successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Purchaser (other than by merger, in which case no consent shall be required). The Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided
that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchaser.”


 


Section
5.08No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person,
except as otherwise set forth in Section 4.07.


 


Section
5.09Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction
Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought
against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in New York City. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in New York City for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement
of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any
claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is
an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process
being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action or Proceeding
to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.07,
the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.


 


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


 


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


 






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Section
5.12Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions
set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.


 


Section
5.13Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any
similar provisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided,
then the Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future actions and rights.


 


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


 


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


 


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


 


Section
5.17Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised
on the next succeeding Business Day.


 


Section
5.18Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity
to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be
subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.


 


Section
5.19WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.


 


(Signature
Pages Follow)


 




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


 


	East Hill Investments, LTD.	 	 
	 	 	 	 
	By:		 	 
	Name:	 	 	 
	Title:		 	 
	 	 	 	 
	Address for Notice:	 	 
	 	 	 	 
	601 Lexington Avenue, 15th
    Floor	 	 
	New York, NY 10022	 	 
	 	 	 	 
	Royal Energy Resources, Inc.	 	 Address
    for Notice:
	 	 	 	 
	By:		 	 56
    Broad Street, Suite 2
	Name:	William
    Tuorto	 	 Charleston,
    SC 29401
	Title:	Chairman
    and CEO	 	 


 




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EXHIBIT
A


 


PROMISSORY
NOTE


 


	$[dollar
    amount]	[date]


 


FOR
VALUE RECEIVED, East Hill Investments, Ltd., a a British Virgin Islands business company (hereinafter referred to as the “Maker”),
promises to pay to the order of Royal Energy Resources, Inc., a Delaware corporation, or its successors or assigns (“Holder”),
at 56 Broad Street, Suite 2, Charleston, SC 29401, or at such place as the Holder may from time to time designate in writing to
the Maker, in lawful money of the United States of America, the principal sum of ____________________ Dollars and ____ Cents ($___________________)
or such lesser amount that may be outstanding as set forth below.


 


This
Note shall be payable fifteen (15) calendar days after issuance of this Note (the “Maturity Date”). Prior to the Maturity
Date, this Note shall not bear interest. Any payment of principal or interest on this Note that is not made when due, whether
by reason of maturity, acceleration or otherwise, as herein provided, shall be paid on all unpaid amounts hereunder (including,
to the extent permitted by law, accrued but unpaid interest) at a rate of fifteen percent (15%) per annum.


 


The
indebtedness evidenced by this Note may be prepaid in whole or in part at any time without penalty or premium.


 


If
from any circumstances whatsoever fulfillment of any provision of this Note at the time performance of such provision shall be
due shall involve transcending the limit prescribed by any applicable usury statute or any other applicable law, with regard to
obligations of like character and amount, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, so that in no event shall any exaction be possible under this Note or under any other instrument evidencing or securing
the indebtedness evidenced hereby, that is in excess of the current limit of such validity, but such obligation shall be fulfilled
to the limit of such validity.


 


Presentment
for payment, demand, protest and notice of demand, notice of dishonor and notice of nonpayment and all other notices are hereby
waived by Maker. No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a past due installment,
or indulgences granted from time to time shall be construed (1) as a novation of this Note or as a restatement of the indebtedness
evidenced hereby or as a waiver of such right of acceleration or of the right of the Holder thereafter to insist upon strict compliance
with the terms of this Note, or (2) to prevent the exercise of such right of acceleration or any other right granted hereunder
or by applicable law; and Maker hereby expressly waives the benefit of any statute or rule of law or equity now provided, or which
may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing. No extension of the time
for the payment of this Note or any installment due hereunder, made by agreement with any person now or hereafter liable for the
payment of this Note shall operate to release, discharge, modify, change or affect the original liability of the Maker under this
Note, either in whole or in part, unless the Holder agrees otherwise in writing. This Note may not be changed orally, but only
by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.


 


Maker
hereby waives and renounces for itself, its heirs, successors and assigns, all rights to the benefits of any statute of limitations,
any moratorium, reinstatement, marshaling, forbearance, valuation, stay, extension, redemption, appraisement and exemption now
provided, or which may hereafter by provided, by the Constitution and laws of the United States of America and of the State of
Georgia, against the enforcement and collection of the obligations evidenced by this Note except as described above.


 


Maker
shall be deemed in default of this Note and all amounts then outstanding hereunder (including all principal outstanding and any
accrued but unpaid interest) shall immediately become due and payable, if (i) any proceedings shall be instituted by or against
Maker under the provisions of any federal bankruptcy, reorganization, arrangement of debt, insolvency or receivership laws or
any similar state or federal laws providing for the relief of debtors; (ii) Maker shall make an assignment for the benefit of
its creditors; or (iii) any proceedings shall be instituted by or against Maker for its liquidation or dissolution or Maker’s
business as a going concern shall terminate for any reason. Upon such a default, Holder may thereupon exercise all rights of Holder
hereunder and under applicable law cumulatively and not exclusively.


 




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In
the event that this Note is collected by law or through an attorney at law, or under advice therefrom, the Maker agrees to pay
all costs of collection, including reasonable attorneys’ fees actually incurred. This Note shall be governed by the laws
of the State of New York.


 


Given
under the hand and seal of the undersigned, the date and year indicated above.


 


DATED
this _____day of ______________, 2016.


 


	 	East
    Hill Investments, Ltd., a British Virgin Islands business company 
	 	 
	 	 
	 	By:
    _________________, Chief Executive Officer


 




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