Exhibit 10.2


 


SECURITIES
PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of November 2, 2016, between Applied DNA Sciences, Inc., a Delaware
corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively the “Purchasers”).


 


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


 


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


 


ARTICLE I.

DEFINITIONS


 


1.1           Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.5.


 


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


 


“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.


 


“Anti-Bribery
Laws” shall have the meaning ascribed to such term in Section 3.1(hh).


 


“Applicable
Regulatory Laws” shall have the meaning ascribed to such term in Section 3.1(o).


 


“Audit
Committee” shall have the meaning ascribed to such term in Section 3.1(v).


 


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


 


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


 


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


 


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


 




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“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.


 


“Closing
Date” means, subject to all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount
and (ii) the Company’s obligations to deliver the Securities, in each case, having been satisfied or waived, November 7,
2016 or such other date as the parties hereto shall mutually agree.


 


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


 


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


 


“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.


 


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


 


“Company
Counsel” means Pepper Hamilton LLP, with offices located at 620 Eighth Avenue, 37th Floor, New York, New York
10018.


 


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


 


“HSE”
means Harter Secrest & Emery LLP, counsel to the Placement Agents, with offices located at 1600 Bausch and Lomb Place, Rochester,
New York 14604.


 


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


 




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“Environmental
Laws” shall have the meaning ascribed to such term in Section 3.1(n).


 


“Escrow
Agent” means U.S. Bank National Association, a national banking association.


 


“Escrow
Agreement” means the escrow agreement entered into prior to the Closing, by and among the Company, the Escrow Agent and
Maxim Group LLC, pursuant to which the Purchaser shall deposit the Subscription Amount with the Escrow Agent to be applied to the
transactions contemplated hereunder.


 


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


 


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


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, consultants (provided that issuances
to consultants will not exceed 50,000 shares in the aggregate during the Restricted Period), officers or directors of the Company
pursuant to the Company’s 2005 Incentive Stock Plan as in effect on the date hereof, in the ordinary course of business consistent
with past practice, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such
securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with
stock splits or combinations) or to extend the term of such securities, and (c) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be
to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner
of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is investing in securities.


 


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


 


“Federal
Reserve” shall have the meaning ascribed to such term in Section 3.1(ss).


 


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


 


“Hazardous
Materials” shall have the meaning ascribed to such term in Section 3.1(n).


 


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


 




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


 


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


 


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


 


“Lock-Up
Agreements” means the various Lock-Up Agreements, dated as of or prior to the date hereof, by and among the Company and
the directors, officers, and 5% stockholders of the Company, in the form of Exhibit B attached hereto.


 


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


 


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


 


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


 


“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.11(a).


 


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


 


“Per
Share Purchase Price” equals $2.20, 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.


 


“Placement
Agents” means Maxim Group LLC, as Lead Placement Agent, and Imperial Capital, LLC, as Co-Placement Agent.


 


“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.11(b).


 


“Pro
Rata Portion” shall have the meaning ascribed to such term in Section 4.11(e).


 


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


 


“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.2(b).


 




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“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.2(b).


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8.


 


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


 


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchasers of the Shares, the Warrants and the Warrant Shares.


 


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


 


“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.


 


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


 


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


 


“Securities”
means the Shares, the Warrants and the Warrant Shares.


 


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


 


“Shares”
means, collectively, the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.


 


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


 


“Standard
Settlement Period” shall have the meaning ascribed to such term in Section 4.1(c).


 




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


 


“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.11(a).


 


“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.11(b).


 


“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) 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 the OTCQB (or any successors to any of the foregoing).


 


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


 


“Transfer
Agent” means American Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address
of 6201 15th Avenue, Brooklyn, New York 11219, and any successor transfer agent of the Company.


 


“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.12(b).


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.


 




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“Warrant
Agreement” means the Warrant Agreement dated as of November 20, 2014, between the Company and American Stock Transfer
& Trust Company as Warrant Agent, as amended or supplemented.


 


“Warrants”
means, collectively, the Common Stock purchase warrants delivered under the Warrant Agreement to each Purchaser at the Closing
in accordance with Section 2.2(a) hereof.


 


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


 


ARTICLE II.

PURCHASE AND SALE


 


2.1           Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, $5,000,000 of Shares and Warrants. Each Purchaser shall deliver to the Escrow Agent, via wire transfer or a
certified check, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature
page hereto executed by such Purchaser, and the Company shall deliver to each Purchaser its respective Shares and a Warrant, as
determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of HSE or such other location as the parties shall mutually agree.


 


2.2           Deliveries.


 


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


 


(i)          this
Agreement duly executed by the Company;


 


(ii)         legal
opinions of (A) Company Counsel, (B) intellectual property counsel to the Company, and (C) British Virgin Islands counsel to the
Company, each in a form reasonably satisfactory to the Purchaser;


 


(iii)        a
copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, a
certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase
Price, registered in the name of such Purchaser;


 


(iv)        a
Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of such Purchaser’s
Shares, with an exercise price equal to $3.50, subject to adjustment therein;


 




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


 


(vi)        
the Lock-Up Agreements; and


 


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


 


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


 


(i)          this
Agreement duly executed by such Purchaser;


 


(ii)         to
Escrow Agent, such Purchaser’s Subscription Amount by wire transfer to the account specified in the Escrow Agreement; and


 


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


 


2.3           Closing
Conditions. 


 


(a)           The
obligations of the Company hereunder in connection with the 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 Purchasers 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 each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and


 


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


 


(b)          The
respective obligations of the Purchasers hereunder in connection with the 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;


 




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


 


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


 


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


 


ARTICLE III.

REPRESENTATIONS AND WARRANTIES


 


3.1           Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules delivered by the Company to the Purchasers on
the date of this Agreement (the “Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section
of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:


 


(a)           Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.


 


(b)           Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 




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(c)            Dividends.
No Subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which
it is a party or is subject, from paying any dividends to its shareholders, from making any other distribution on such subsidiary’s
issued share capital, from repaying to the Company or any other Subsidiary of the Company any loans or advances to such subsidiary
from the Company or such other Subsidiary or from transferring any of such Subsidiary’s properties or assets to any of the
Company or other Subsidiary.


 


(d)           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 each of this Agreement and 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.


 


(e)           No
Conflicts. Except as set forth on Schedule 3.1(e), the execution, delivery and performance by the Company of this Agreement
and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it
of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict
with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.


 




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(f)            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 4.4 of this Agreement, (ii) the filing with the Commission pursuant to the Registration
Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities
and the listing of the Shares, Warrants and Warrant Shares for trading thereon in the time and manner required thereby, and (iv)
the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively,
the “Required Approvals”).


 


(g)           Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The Warrant Shares, when issued in accordance with the
terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by
the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants.


 


(h)           Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(h), which Schedule 3.1(h) shall also include the
number of shares of Common Stock owned, to the Company’s knowledge, beneficially, and of record, by Affiliates of the Company
as of the date hereof. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange
Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of
shares of Common Stock to employees or consultants pursuant to the Company’s employee stock purchase plans and pursuant to
the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report
under the Exchange Act. Except as set forth on Schedule 3.1(h), no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except
as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock or the capital stock
of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary, except as listed
on Schedule 3.1(h). The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue shares of
Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under any of such securities. 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 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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(i)             SEC
Reports; Financial Statements. Except as set forth on Schedule 3.1(j), the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis
or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The Company is not an issuer described in Rule 144(i)(1)(i)
under the Securities Act, and satisfies the requirements of Rule 144(i)(2). The financial statements of the Company included in
the SEC Reports as amended, 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 or at the time of any amendment thereto. 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.


 




    	 	12	 



     


    

 


(j)             Material
Changes; Undisclosed Events, Liabilities or Developments. None of the Company or its Subsidiaries has sustained, since the
date of the latest audited financial statements included within the SEC Reports, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree. 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, 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 1 Trading Day prior to the date that this representation
is made.


 


(k)            Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities
or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.


 




    	 	13	 



     


    

 


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


 


(m)           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.


 


(n)            Environmental
Laws. The Company and each Subsidiary and their respective
properties, assets and operations are in compliance in all material respects with and hold all material permits,
authorizations and approvals required under Environmental Laws (as defined below). There are no past, present or reasonably
anticipated future events, conditions, circumstances, activities, practices, actions, omissions or plans that could
reasonably be expected to give rise to any material costs or liabilities to the Company or any Subsidiary under, or to
interfere with or prevent compliance by any of the Company or a Subsidiary with, Environmental Laws. To the Company’s
knowledge, none of the Company or any Subsidiary (i) is the subject of any investigation, (ii) has received any written
notice or claim, (iii) is a party to or affected by any pending or threatened Proceeding, (iv) is bound by any judgment,
decree or order or (v) has entered into any agreement, in each case relating to any alleged violation of any Environmental
Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Materials (as defined
below), except where (i), (ii), (iii) and (iv) would not, individually or in the aggregate, have a Material Adverse Effect.
As used herein, “Environmental Law” means any national, provincial, municipal or other local or foreign
law, statute, ordinance, rule, regulation, order, notice, directive, decree, judgment, injunction, permit, license,
authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or
restoration of the environment or natural resources, including those relating to the distribution, processing, generation,
treatment, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials, and
“Hazardous Materials” means any material (including, without limitation, pollutants, contaminants,
hazardous or toxic substances or wastes) that is regulated by or may give rise to liability under any Environmental Law.


 




    	 	14	 



     


    

 


(o)            Regulatory
Permits. Except as described in the SEC Reports, the Company and each of its Subsidiaries: (A) are and at all times have been
in material compliance with all applicable statutes, rules and regulations governing the ownership, testing, development, manufacture,
packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal
of any product sold, under development, manufactured or distributed by the Company or any Subsidiary (“Applicable Regulatory
Laws”); (B) have not received any correspondence or written notice from any other federal, state, local, national or
foreign governmental or regulatory authority alleging or asserting material noncompliance with any Applicable Regulatory Laws or
any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any
such Applicable Regulatory Laws (“Authorizations”); (C) possess all material Authorizations and such Authorizations
are valid and in full force and effect and neither the Company nor any Subsidiary is in material violation of any term of any such
Authorizations; (D) have not received written notice of any Proceeding, hearing, enforcement, investigation, arbitration or other
action from any federal, state, local, national or foreign governmental or regulatory authority or third party alleging that any
product, operation or activity is in material violation of any Applicable Regulatory Laws or Authorizations and has no knowledge
that any federal, state, local, national or foreign governmental or regulatory authority or third party is considering any such
Proceeding; (E) have not received written notice that any federal, state, local, national or foreign governmental or regulatory
authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any material Authorizations and has
no knowledge that any other federal, state, local, national or foreign governmental or regulatory authority has threatened such
action; and (F) have filed, obtained, maintained or submitted all reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any Applicable Regulatory Laws or Authorizations except where the failure
to file such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments would
not result in a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, and that all such reports, documents,
forms, notices, applications, records, claims, submissions and supplements or amendments were materially complete and correct on
the date filed (or were corrected or supplemented by a subsequent submission).


 


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


 




    	 	15	 



     


    

 


(q)            Intellectual
Property. The Company and each Subsidiary owns, possesses, licenses or has other rights to use the patents and patent applications,
copyrights, trademarks, service marks, trade names, Internet domain names, technology, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary rights) and other intellectual property necessary or used in any material respect to
conduct its business in the manner in which it is being conducted and in the manner in which it is contemplated as set forth in
the SEC Reports (collectively, the “Intellectual Property”). To the knowledge of the Company, none of the Intellectual
Property is unenforceable or invalid; none of the Company or any Subsidiary has received any notice of violation or conflict with
(and none of the Company or a Subsidiary knows of any basis for violation or conflict with) rights of others with respect to the
Intellectual Property; there are no pending or, to the Company’s knowledge, threatened Proceedings or claims by others that
allege any of the Company or a Subsidiary is infringing any patent, trade secret, trademark, service mark, copyright or other intellectual
property or proprietary right. To the knowledge of the Company, the discoveries, inventions, products or processes of the Company
or a Subsidiary referenced in the SEC Reports do not violate or conflict with any intellectual property or proprietary right of
any third Person, or any discovery, invention, product or process that is the subject of a patent application filed by any third
Person; no officer, director or employee of any of the Company or a Subsidiary is in or has ever been in violation of any term
of any patent non-disclosure agreement, invention assignment agreement, or similar agreement relating to the protection, ownership,
development use or transfer of the Intellectual Property or, to the Company’s knowledge, any other intellectual property,
except where any violation would not, individually or in the aggregate, have a Material Adverse Effect. None of the Company or
any Subsidiary are in breach of, and have complied in all material respects with all terms of, any license or other agreement relating
to the Intellectual Property. There are no contracts or other documents related to the Intellectual Property required to be described
in or filed as an exhibit to the SEC Reports other than those described in or filed as an exhibit to the SEC Reports. Except as
disclosed in the SEC Reports, none of the Company or a Subsidiary is subject to any non-competition or other similar restrictions
or arrangements relating to any business or service anywhere in the world. The Company and each Subsidiary has taken all necessary
and appropriate steps to protect and preserve the confidentiality of applicable Intellectual Property. All use or disclosure of
Intellectual Property owned by the Company or a Subsidiary by or to a third party has been pursuant to a written agreement between
the Company and/or Subsidiary and such third party. All use or disclosure of Intellectual Property not owned by the Company or
a Subsidiary has been pursuant to the terms of a written agreement between the Company and/or Subsidiary and the owner of such
Intellectual Property, or is otherwise lawful.


 


(r)            Patents.
The pending patent applications set forth in the SEC Reports (the “Pending Patents”) are being diligently prosecuted
by the Company and/or Subsidiaries. To the Company’s knowledge, there is no existing patent or published patent application
that would interfere, conflict with or otherwise adversely affect the validity, enforcement or scope of the Pending Patents if
claims of such Pending Patents were issued in substantially the same form as currently written. No security interests or other
Liens have been created with respect to the Pending Patents; and the Pending Patents have not been exclusively licensed to another
entity or Person.


 




    	 	16	 



     


    

 


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


 


(t)            Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company. There are no relationships or transactions between the Company and/or a Subsidiary on the one hand and the Company’s
affiliates, officers and directors or their shareholders, customers or suppliers on the other hand, which are not disclosed as
required in the SEC Reports.


 


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


 




    	 	17	 



     


    

 


(v)           Audit
Committee. A member of the Audit Committee of the Company (the “Audit Committee”) has confirmed to the Chief
Executive Officer or Chief Financial Officer of the Company that the Audit Committee is not reviewing or investigating, and neither
the Company’s independent auditors nor its internal auditors have recommended that the Audit Committee review or investigate,
(i) any matter which could result in a restatement of the Company’s financial statements for any annual or interim period
during the current or prior three fiscal years; or (ii) any significant deficiency, material weakness, change in internal controls
or fraud involving management or other employees who have a significant role in internal controls other than as set forth in the
SEC Reports.


 


(w)           Certain
Fees. Except as set forth on Schedule 3.1(w), no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank
or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 


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


 


(y)            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.


 


(z)            Registration
Rights. Other than each of the Purchasers and as set forth in Schedule 3.1(z), no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.


 


(aa)          Listing
and Maintenance Requirements. Each of the Common Stock and the Warrants 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 or the Warrants 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 and/or the Warrants are or have 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.


 




    	 	18	 



     


    

 


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


 


(cc)          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 (other than the Placement Agents) has provided any of the Purchasers
or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information.
The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in
securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company
and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules
to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do
not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.
The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2 hereof.


 


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


 




    	 	19	 



     


    

 


(ee)          Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry
on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. As of the date hereof, there
is no outstanding secured or unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money
or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected
in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments
in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary
is in default with respect to any Indebtedness.


 


(ff)          Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.


 


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


 




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(hh)         Foreign
Corrupt Practices. The Company and each Subsidiary and, to their knowledge, their affiliates and each of their respective officers,
directors, supervisors, managers, agents and employees has not violated, its participation in the offering will not violate, and
it has instituted and maintains policies and procedures designed to (i) ensure continued compliance with anti-bribery laws, including
but not limited to, any applicable law, rule, or regulation of any locality, including but not limited to any law, rule, or regulation
promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions,
signed December 17, 1997, the FCPA or any other applicable law, rule or regulation of similar purpose and scope or (ii) prohibit
(A) the use of corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political
activity, (B) the making of any direct or indirect unlawful payment to any government official or employee from corporate funds
or (C) the making of any bribe, rebate, payoff, influence payment, kickback or other unlawful payment (collectively, the “Anti-Bribery
Laws”). 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 the
Anti-Bribery Laws.


 


(ii)           Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(ii) of the Disclosure Schedules. To the knowledge and belief
of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall
express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal
year ending September 30, 2016.


 


(jj)            No
Disagreements with Accountants. There are no disagreements of any kind
presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants formerly or presently
employed by the Company and the Company is current with respect to any fees owed to its accountants which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents. 


 


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


 




    	 	21	 



     


    

 


(ll)           Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(g) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently
have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities
are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect
to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents. 



 


(mm)       Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) since January 1, 2013, except as disclosed in the Company’s SEC Reports, paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case
of clauses (ii) and (iii), compensation paid to the Company’s placement agents in connection with the placement of the Securities.


 


(nn)         Form
S-3 Eligibility. To the knowledge and belief of the Company, as of December 1, 2016, the Company will be eligible to register
the resale of the Securities for resale by the Purchaser on Form S-3 promulgated under the Securities Act.


 


(oo)         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.


 




    	 	22	 



     


    

 


(pp)         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”). None of the Company or any Subsidiary, nor,
to the knowledge of any of the Company or a Subsidiary, any director, officer, agent, employee, affiliate or Person acting on behalf
of any of the Company or a Subsidiary (i) has been or is, or is controlled or owned by an individual or entity that has been or
is or is, subject to (A) any trade, economic or military sanctions administered by or issued against any nation by the United Nations
or any governmental or regulatory authority of the United States, United Kingdom, Australia, Germany, Hong Kong, Canada, France,
Switzerland and Italy, including the Office of Foreign Assets Control of the United States Treasury Department (including but not
limited to the designation as a “specially designated national or blocked person” thereunder), the United Nations Security
Council, Her Majesty’s Treasury of the United Kingdom or any other relevant sanctions authority, or any orders or licenses
publicly issued under the authority of any of the foregoing, or (B) any sanctions or requirements imposed by, or based upon the
obligations or authorizations set forth in, the United States Trading With the Enemy Act, the United States International Emergency
Economic Powers Act, the United States United Nations Participation Act, the United States Syria Accountability and Lebanese Sovereignty
Act, or the United States Iran Sanctions Act of 2006, all as amended, or any foreign assets control regulations of the United States
Treasury Department (including but not limited to 31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto (collectively, “Sanctions”), (ii) has been or is located, organized or resident in a country
or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, Libya, North Korea, Sudan
and Syria) or (iii) has violated, will though its participation in the offering violate or failed to institute and maintain policies
and procedures designed to ensure continued compliance with Sanctions. To the knowledge of the Company, there have been no transactions
or connections between the Company or any Subsidiary, on the one hand, and any country, Person, or entity in countries subject
to Sanctions or who perform contracts in support of projects in or for the benefit of those countries, on the other hand other
than de minimis sales to customers in Iran in 2010.


 


(qq)         Mergers
or Consolidations. None of the Company nor any Subsidiary has entered into any memorandum of understanding, letter of intent,
definitive agreement or any similar agreements with respect to a merger or consolidation or a material acquisition or disposition
of assets, technologies, business units or businesses.


 


(rr)           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.


 


(ss)           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.


 




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(tt)           Money
Laundering. The Company and each Subsidiary, and, to their knowledge, their affiliates and each of their respective officers,
directors, supervisors, managers, agents, and employees, has not violated, its participation in the offering will not violate,
and it has instituted and at all times has maintained policies and procedures designed to ensure continued compliance with the
anti-money laundering laws, regulations or government guidance regarding anti-money laundering, and international anti-money laundering
principals or procedures of the United States and any related or similar statutes, rules, regulations or guidelines, issued, administered
or enforced by any governmental agency (collectively, the “Money Laundering Laws”), and no Proceeding by or
before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with
respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.


 


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


 


(vv)         Other
Covered Persons. Other than the Placement Agents, the Company is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale
of any Securities.


 


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


 


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


 




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


 


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


 


(c)            Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act.


 


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


 


(e)            General
Solicitation. Such Purchaser is not, 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.


 




    	 	25	 



     


    

 


(f)            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 Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and its financial
condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with respect to the investment.  Such Purchaser
acknowledges and agrees that neither the Placement Agents nor any Affiliate of the Placement Agents has provided such Purchaser
with any information or advice with respect to the Securities nor is such information or advice necessary or desired.  Neither
the Placement Agents nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities
and the Placement Agents and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser
agrees need not be provided to it.  In connection with the issuance of the Securities to such Purchaser, neither the Placement
Agents nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.


 


(g)           Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly
or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases
or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered
by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including,
without limitation, its officers, directors, partners, legal and other advisors, agents and Affiliates, such Purchaser has maintained
the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for the avoidance of doubt, 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.


 


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


 




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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1           Transfer
Restrictions.


 


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


 


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


 


THIS SECURITY HAS NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED
BY SUCH SECURITIES.


 


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


 




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


 




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(d)            In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, (i) as partial liquidated
damages and not as a penalty, for each $1,000 of Securities (based on the VWAP of the Common Stock or Warrants, as the case may
be, on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject
to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to
accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend and (ii) if the
Company fails to (a) issue and deliver (or cause to be delivered) to a Purchaser by the Legend Removal Date a certificate representing
the Securities so delivered to the Company by such Purchaser that is free from all restrictive and other legends and (b) if after
the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock or Warrants,
as the case may be, to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of shares of Common
Stock or Warrants, respectively or a sale of a number of shares of Common Stock or Warrants, as the case may be, equal to all or
any portion of the number of shares of Common Stock or Warrants, respectively, that such Purchaser anticipated receiving from the
Company without any restrictive legend, then, an amount equal to the excess of such Purchaser’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock or Warrants, as the case may be,
so purchased (including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”)
over the product of (A) such number of shares of Common Stock or Warrants, as the case may be, that the Company was required to
deliver to such Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale price of the Common Stock or Warrants,
as the case may be, on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company
of the applicable Common Stock or Warrants, as the case may be, and ending on the date of such delivery and payment under this
clause (ii).


 


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


 


4.2           Furnishing
of Information; Public Information.


 


(a)            If
the Common Stock and Warrants are not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof, the Company
agrees to cause the Common Stock and Warrants to be registered under Section 12(g) of the Exchange Act on or before the 60th
calendar day following the date hereof. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants
have expired, the Company covenants to maintain the registration of the Common Stock and the Warrants under Section 12(b) or 12(g)
of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange Act.


 


(b)           At
any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of
the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the future,
and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”)
then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial
liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an
amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s Securities on the day
of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days)
thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information
is no longer required  for the Purchasers to transfer the Securities pursuant to Rule 144.  The payments to which a Purchaser
shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure Payments.” 
Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which
such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or
failure giving rise to the Public Information Failure Payments is cured.  In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at
the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s
right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.


 




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



 


4.4           Securities
Laws Disclosure; Publicity. The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following
the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current
Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the
Exchange Act. From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly
disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or
any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries
or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any
of their Affiliates on the other hand, shall terminate. The Company and each Purchaser shall consult with each other in issuing
any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall
issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect
to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding
the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing
with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a)
as required by federal securities law in connection with (i) any registration statement contemplated by the Registration Rights
Agreement and (ii) the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (b).


 




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


 


4.6            Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably
believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented to the receipt
of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that
each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent
that the Company delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company
hereby covenants and agrees that such purchaser shall not have any duty of confidentiality to Company, any of its Subsidiaries,
or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, and of its Subsidiaries
or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public
information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant
to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.


 


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


 




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4.8            Indemnification
of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against 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 Parties, 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 Parties may have with any such stockholder or any violations by such
Purchaser Parties of state or federal securities laws or any conduct by such Purchaser Parties which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may
be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party, but
the failure to notify the Company shall not relieve it from liability that it may have under this Section 4.8 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure. 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 4.8 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.


 


4.9            Reservation
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 Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants. 


 




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4.10          Listing
of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of each of the Common Stock
and the Warrants 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 Shares, Warrants and Warrant Shares on such Trading Market and promptly secure the listing of all of
the Shares, Warrants and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the
Common Stock or Warrants traded on any other Trading Market, it will then include in such application all of the Shares, Warrants
and Warrant Shares, and will take such other action as is necessary to cause all of the Shares, Warrants and Warrant Shares 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 or quotation and trading of its Common Stock and the Warrants 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 and the Warrants 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.


 


4.11          Participation
in Future Financing.


 


(a)          From
the date hereof until the date that is the nine (9) month anniversary of the Effective Date, upon any issuance by the Company or
any of its Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration, Indebtedness or a combination of units
hereof (a “Subsequent Financing”), each Purchaser shall have the right to participate in up to an amount of
the Subsequent Financing equal to 25% of the Subsequent Financing (the “Participation Maximum”) on the same
terms, conditions and price provided for in the Subsequent Financing; provided that no Purchaser shall have the right to participate
pursuant to this Section 4.11 to the extent that after giving effect to such participation, such Purchaser (together with such
Purchaser’s affiliates, and any persons acting as a group together with such Purchaser or its affiliates) would beneficially
own in excess of 9.99% of the Common Stock outstanding immediately after giving effect to the Subsequent Financing. For purposes
of the foregoing proviso, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act.


 


(b)          At
least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). 
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. 
The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount
of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed
to be effected and shall include a term sheet or similar document relating thereto as an attachment.


 




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


 


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


 


(e)          If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum.  “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities
purchased on the Closing Date by a Purchaser participating under this Section 4.11 and (y) the sum of the aggregate Subscription
Amounts of Securities purchased on the Closing Date by all Purchasers participating under this Section 4.11.


 


(f)          The
Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 4.11, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.


 


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


 


(h)          Notwithstanding
anything to the contrary in this Section 4.11 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery
of the Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction
with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received
by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession
of any material, non-public information with respect to the Company or any of its Subsidiaries.


 




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(i)          Notwithstanding
the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance.


 


4.12         Subsequent
Equity Sales. 


 


(a)           From
the date hereof until one hundred twenty (120) days after the Effective Date (the “Restricted Period”), neither
the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of
any shares of Common Stock or Common Stock Equivalents.


 


(b)           From
the date hereof until such time as no Purchaser holds any of the Warrants, the Company shall be prohibited from effecting or entering
into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents
(or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means
a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares
of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market
for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity
line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect
damages.


 


(c)            Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall
be an Exempt Issuance.


 


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


 




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4.14         Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release
as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and
the information included in the Transaction Documents and the Disclosure Schedules.  Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes
any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser
shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries
after the issuance of the initial press release as described in Section 4.4.  Notwithstanding the foregoing, in the case of
a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing
other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.


 


4.15         Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.


 


4.16          Capital
Changes. Until the one (1) year anniversary of the Effective Date, the Company shall not undertake a reverse or forward stock
split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in interest
of the Shares.


 


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


 




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ARTICLE V.

MISCELLANEOUS


 


5.1           Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before November 8, 2016; provided, however, that such termination will not affect
the right of any party to sue for any breach by any other party (or parties).


 


5.2            Fees
and Expenses. At the Closing, the Company has agreed to reimburse the Placement Agents for out-of-pocket expenses actually
incurred, including without limitation the reasonable fees and disbursements of legal counsel and all reasonable travel and other
out-of-pocket expenses in an amount not to exceed $50,000 $25,000 of which has been paid prior to the Closing, and $15,000 of which
shall be paid to reimburse the Purchasers for legal and due diligence fees and expenses. In the event that this Agreement shall
terminate prior to the Closing, the Placement Agents shall be entitled to reimbursement for their actual expenses subject to a
cap of $50,000. All expenses in excess of $5,000 shall be subject to prior approval by the Company. The Company will reimburse
the Placement Agents and the Purchasers, in an amount not to exceed the $50,000 cap in the aggregate, directly out of the Closing.
The Company shall deliver to each Purchaser, prior to the Closing, a completed and executed copy of the Closing Statement, attached
hereto as Annex A. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the
Company and any exercise notice delivered by a Purchaser) and other taxes and duties levied in connection with the delivery of
any Securities to the Purchasers.


 


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


 


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


 




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5.5           Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and Purchasers holding at least 50.1% in interest of the Shares then outstanding or,
in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any amendment,
modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately
impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default
or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately,
materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations
of the other Purchasers shall require the prior written consent of such adversely affected Purchaser, Any amendment effected in
accordance with accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.


 


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


 


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


 


5.8            No
Third-Party Beneficiaries. The Placement Agents shall be the third party beneficiary of the representations and warranties
of the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. 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 4.8 and this Section 5.8.


 




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5.9            Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action
or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding
is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party hereto 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 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action
or Proceeding.


 


5.10          Compliance
with Anti-Bribery Laws, Money Laundering Laws and Sanctions. The Company will not, and the Company will procure that each of
its Subsidiaries , any of their respective affiliates and any Person acting on its or their behalf will not, (i) violate any of
the Anti-Bribery Laws, Money Laundering Laws or Sanctions or (ii) directly or indirectly use the proceeds from the offering of
the Securities, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other
Person or entity, for the purpose of financing or facilitating the business or the activities of any Person, or in any country
or territory that, at the time of such financing or facilitation, is subject to any Sanctions, or in any other manner that will
result in a violation of Sanctions by any Person.


 


5.11          Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities for a period of
three (3) years.


 


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


 


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


 




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5.14          Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the
case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid
to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).


 


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


 


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


 


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


 




    	 	40	 



     


    

 


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


 


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


 


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


 


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


 


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


 




    	 	41	 



     


    

 


 


(Signature Pages Follow)


 




    	 	42	 



     


    

 


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.


 


 


	
        APPLIED DNA SCIENCES,
        INC.

         
	
        Address for Notice: 50 Health

        Sciences Drive

        Stony Brook, NY 11790

	By:	/s/ James Hayward	Fax: 631-240-8900
	 	Name: James Hayward	 
	 	Title: Chief Executive Officer	 
	With a copy to (which shall not constitute notice):	 
	 	 
	Pepper Hamilton LLP	 
	620 Eighth Avenue, 37th Floor	 
	New York, New York 10018-1405	 
	Attention: Merrill Kraines, Esq.	 
	Fax: (212) 286-9806	 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASERS FOLLOWS]


 




    	 	43	 



     


    

 


[PURCHASER SIGNATURE PAGES TO APPLIED
DNA SCIENCES, INC.


SECURITIES PURCHASE AGREEMENT]


 


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


 


Name of Purchaser: Sabby Healthcare Master
Fund, Ltd.


 


Signature of Authorized Signatory of Purchaser:
/s/ Robert Grundstein


 


Name of Authorized Signatory: Robert Grundstein


 


Title of Authorized Signatory: COO of Purchaser’s
Investment Manager


 


Email Address of Authorized Signatory: rgrundstein@sabbycapital.com


 


Facsimile Number of Authorized Signatory: 201-661-8654


 


Address for Notice to Purchaser: c/o Sabby Management, LLC, 10 Mountainview
Road, Suite 205, Upper Saddle River, NJ 07458


 


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


Bank America Merrill Lynch, 222 Broadway, 11th Floor,
New York, NY 10038, Attn: Miguelina Seda


 


Subscription Amount: $3,000,001.40


 


Shares: 1,363,637 at $2.20 per share


 


Warrant Shares: 1,363,637 APDNW $3.50 strike expiration date of
11/20/19


 


EIN Number: 98-1012742


 


[SIGNATURE PAGES CONTINUE]


 




    	 	44	 



     


    

 


Name of Purchaser: Sabby Volatility Warrant Fund, Ltd.


Signature of Authorized Signatory of Purchaser:
/s/ Robert Grundstein


 


Name of Authorized Signatory: Robert Grundstein


 


Title of Authorized Signatory: COO of Purchaser’s
Investment Manager


 


Email Address of Authorized Signatory: rgrundstein@sabbycapital.com


 


Facsimile Number of Authorized Signatory: 201-661-8654


 


Address for Notice to Purchaser: c/o Sabby Management, LLC, 10 Mountainview
Road, Suite 205, Upper Saddle River, NJ 07458


 


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


Bank America Merrill Lynch, 222 Broadway, 11th Floor,
New York, NY 10038, Attn: Miguelina Seda


 


Subscription Amount: $1,999,998


 


Shares: 909,090 at $2.20 per share


 


Warrant Shares: 909,090 APDNW $3.50 strike expiration date of 11/20/19


 


EIN Number: 98-1017380


 




    	 	45	 



     


    

 


Annex A 


 


CLOSING STATEMENT


 


Pursuant to the attached Securities Purchase
Agreement, dated as of the date hereto, the purchasers shall purchase up to $5,000,000 of Common Stock and Warrants from Applied
DNA Sciences, Inc., a Delaware corporation (the “Company”). All funds will be wired into an account maintained
by the Company. All funds will be disbursed in accordance with this Closing Statement.


 


Disbursement
Date:     [________ ___, _____


 





 



 


		I.	PURCHASE PRICE


 


	Gross Proceeds to be Received	$


 


		II.	DISBURSEMENTS


 


	 	$
	 	$
	 	$
	 	$
	 	$
	 	 
	Total Amount Disbursed:	$


 


WIRE INSTRUCTIONS:


 


	To:	 	 


 


	To:	 	 


 




    	 	46	 



     


    

  


 



 


COMPANY
DISCLOSURE SCHEDULE


 


To


 


SECURITIES
PURCHASE AGREEMENT


 


By and Between


 


APPLIED
DNA SCIENCES, INC.


 


and


 


PURCHASERS


 


Dated as of November 2, 2016


 


 



 




    	 	 	 



     


    

 


For the purposes of
the Company Disclosure Schedule, any information, item or other disclosure set forth in any section or subsection of the Company
Disclosure Schedule shall be deemed disclosed with respect to any other section or subsection to the extent that the relevance
of any such disclosure to any other section or subsection is reasonably apparent.


 




    	 	-2-	 



     


    

 


Schedule 3.1(a)


 


	Subsidiary	 	State or Country of Incorporation
	 	 	 
	APDN (B.V.I.) Inc.	 	British Virgin Islands
	 	 	 
	Applied DNA Sciences Europe Limited	 	United Kingdom


 




    	 	-3-	 



     


    

 


Section 3(e)


 


Conflicts


 


The Company has received waivers from the
shareholders that are party to the subscription agreements listed below of their rights to participate in this offering:


 


		1.	Subscription agreements entered into by ABARTA, Inc. and Delabarta, Inc. in connection with the
Private Placement of Common Stock of the Company, dated July 15, 2011.



 


		2.	Subscription agreement entered into by ABARTA Partners I in connection with the Private Placement
of Common Stock of the Company, dated June 21, 2012.



 


The Company needs to obtain waivers from
the following holders of warrants of their piggyback registration rights:


 


		3.	Purchase Warrants issued by the Company to Pterodactyl Holdings LLC on July 15, 2010, January 7,
2011 and July 15, 2011.



 


		4.	Purchase Warrant issued by the Company to Global Asset Management, LLC on July 15, 2011.



 


		5.	Purchase Warrant issued by the Company to Etico Capital, L.P. on July 15, 2010.



 


		6.	Purchase Warrants issued by the Company to Maxim Group LLC on November 20, 2014, April 1, 2015
and November 27, 2015.



 




    	 	-4-	 



     


    

 


Section 3(h)


 


Capitalization


 


Capitalization


 


		1.	As of November 2, 2016, the Company has 24,078,756 shares of Common Stock issued and outstanding,
options to purchase 4,413,234 shares of Common Stock issued and outstanding, and Warrants to purchase 7,208,060 shares of Common
Stock issued and outstanding. There are no shares of Preferred Stock issued and outstanding.



 


Beneficial
Stock Ownership By Affiliates


 


James A. Hayward
Common Stock      3,736,349       14.43 %


 


Yacov A. Shamash Common
Stock       91,723       *


 


John Bitzer,
III Common Stock       1,304,842       5.39 %


 


Joseph D. Ceccoli
Common Stock       30,972       *


 


Beth M. Jantzen
Common Stock       55,834       *


 


Judith Murrah
Common Stock       97,289       *


 


Charles S.
Ryan Common Stock       72,016       *


 


Ming-Hwa Benjamin
Liang Common Stock       215,960       *


 


Sanford R.
Simon Common Stock       80,300       *


 


Robert Catell
      1,875       *


 


All directors
and officers as a group (10 persons) Common Stock       5,687,160       21.31 %


 


5% Stockholder:


 


Delabarta,
Inc. (11)(15) Common Stock       1,205,959       5.00 %


 


* indicates
less than one percent


 




    	 	-5-	 



     


    

 


Rights to Participate
in Transactions Contemplated by the Transaction Documents


 


		2.	Pursuant to the terms of the subscription agreement entered into in connection with the Private
Placement of Common Stock, dated July 15, 2011, Delabarta, Inc. and ABARTA, Inc. have the right to participate in the transactions
contemplated by the Transaction Documents1.



 


		3.	Pursuant to the terms of the subscription agreements entered into in connection with the Private
Placement of Common Stock, dated June 21, 2012, ABARTA Partners I has the right to participate in the transactions contemplated
by the Transaction Documents.1



 


Options and Warrants exercisable for any capital stock of
the Company


 


		4.	As of November 2, 2016 there are options to purchase 4,413,234 shares of Common Stock outstanding
and Warrants to purchase 7,208,060 shares of Common Stock outstanding.



 


		5.	Delabarta, Inc., ABARTA, Inc. and ABARTA Partners I have the right to participate in subsequent
offerings. (See Items 2 and 3 above)



 


Stockholder Agreement


 


		6.	In connection with the investment by Delabarta, Inc. in the Company on July 11, 2011, the Company
agreed to use best efforts to nominate Delabarta, Inc.’s designee, Mr. John Bitzer, III to the Company Board of Directors
and include Mr. Bitzer on the slate of nominees for the Board of Directors for election by stockholders at the Annual Meetings
of Stockholders for so long as Delabarta, Inc. owns at least 2% of the outstanding shares of Common Stock of the Company.



 


 



1
The relevant holders of warrants have waived these rights with respect to the transactions contemplated by the Transaction
Documents.


 




    	 	-6-	 



     


    

 


Section 3.1(i)


 


SEC Reports; Financial Statements


 


On July 22, 2016, the
Company filed Form 8K/A (Amendment No. 1) providing certain audited financial statements and certain unaudited pro forma information
relating to its purchase of substantially all of the assets of Vandalia Research, Inc. as of September 11, 2015. The Form 8-K/A
was filed past the date it was required to be filed.


 




    	 	-7-	 



     


    

 


Section 3.1(w)


 


In connection with the
transactions contemplated by the Transaction Documents, the Company shall pay Maxim Group LLC and Imperial Capital, LLC, as placement
agents (“Placement Agents”) an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company and grant
the Placement Agents warrants to purchase 3% of the aggregate number of shares of Common Stock sold in the placement. In addition,
the Company agrees to reimburse the Placement Agents for out-of-pocket expenses actually incurred, including the reasonable fees
and disbursements of legal counsel and all reasonable travel and other out-of-pocket expenses in an amount not to exceed $50,000.


 




    	 	-8-	 



     


    

 


Section 3.1(x)


 


NASDAQ has orally informed
the Company that it did not give NASDAQ the required 15 days prior notice of its issuance of securities.


 




    	 	-9-	 



     


    

 


Section 3(z)


 


Registration Rights


 


The holders of the following warrants have
piggyback registration rights to include the securities underlying the warrants in a registration statement filed by the Company:


 


		1.	Purchase Warrants issued by the Company to Pterodactyl Holdings LLC on July 15, 2010, January 7,
2011 and July 15, 2011.



 


		2.	Purchase Warrant issued by the Company to Global Asset Management, LLC on July 15, 2011.



 


		3.	Purchase Warrant issued by the Company to Etico Capital, L.P. on July 15, 2010.



 


		4.	Purchase Warrants issued by the Company to Maxim Group LLC on November 20, 2014, April 1, 2015 and
November 27, 2015.



 




    	 	-10-	 



     


    

 


Schedule 3.1(ii)


 


Accountants


 


Marcum LLP


 




    	 	-11-