SECURITIES PURCHASE AGREEMENT


 


SECURITIES PURCHASE
AGREEMENT (the "Agreement"), dated as of February 12, 2014, by and among LabStyle Innovations Corp., a Delaware
corporation, with headquarters located at Halamish 9, Caesarea Industrial Park, 38900, Israel (the "Company"),
and the investors listed on the Schedule of Buyers attached hereto (individually, a "Buyer" and collectively,
the "Buyers").


 


WHEREAS:


 


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


 


B.           Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) that aggregate
number of shares of the Company's common stock, par value $0.0001 per share (the "Common Stock"), set forth opposite
such Buyer's name in column (3) on the Schedule of Buyers (which aggregate number for all Buyers together shall be 2,226,956
shares of Common Stock and shall collectively be referred to herein as the "Common Shares") and (ii) Warrants,
in substantially the form attached hereto as Exhibit A (the "Warrants"), representing the right to acquire
up to that number of additional shares of Common Stock set forth opposite such Buyer's name in column (4) on the Schedule of Buyers
(as exercised, collectively, the "Warrant Shares").


 


C.           Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit B (the "Registration Rights Agreement"), pursuant
to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement) under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state
securities laws.


 


D.           The
Common Shares, the Adjustment Shares (as defined in Section 1(b)), the Warrants and the Warrant Shares collectively are referred
to herein as the "Securities".


 


NOW, THEREFORE,
the Company and each Buyer hereby agree as follows:


 


1.          PURCHASE
AND SALE OF COMMON SHARES AND WARRANTS; ADJUSTMENT SHARES OBLIGATION.


 


(a)   Purchase
and Sale of Common Shares and Warrants.





 




    	 



    	 



    

 


(i)          Purchase
of Common Shares and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company
on the Closing Date (as defined below), (x) the number of Common Shares as is set forth opposite such Buyer's name in column (3)
on the Schedule of Buyers, along with (y) Warrants to acquire up to that number of Warrant Shares as is set forth opposite such
Buyer's name in column (4) on the Schedule of Buyers (the "Closing").


 


(ii)         Closing.
The date and time of the Closing (the "Closing Date") shall be 10:00 a.m., New York City time, on the date hereof
(or such other date and time as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or waiver)
of the conditions to the Closing set forth in Sections 6 and 7 below, at the offices of Schulte Roth & Zabel LLP, 919 Third
Avenue, New York, New York 10022. The Closing may also be undertaken remotely by electronic transfer of Closing documentation.


 


(iii)        Purchase
Price. The purchase price for the Common Shares and the related Warrants to be purchased by each Buyer at the Closing shall
be the amount set forth opposite such Buyer's name in column (5) of the Schedule of Buyers (the "Purchase Price")
which shall be equal to the amount of $1.88 per Common Share and the related Warrants.


 


(iv)        Form
of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price to the Company for the Common Shares
and the Warrants to be issued and sold to such Buyer at the Closing by wire transfer of immediately available funds in accordance
with the Company's written wire instructions and (ii) the Company shall deliver to each Buyer (x) one or more stock certificates,
evidencing the number of Common Shares such Buyer is purchasing as is set forth opposite such Buyer's name in column (3) of the
Schedule of Buyers and (y) Warrants (allocated in the amounts as such Buyer shall request) which such Buyer is purchasing hereunder
pursuant to which such Buyer shall have the right to acquire up to such number of Warrant Shares as is set forth opposite such
Buyer's name in column (4) of the Schedule of Buyers, in each case duly executed on behalf of the Company and registered in the
name of such Buyer or its designee.


 


(v)         Placement
Agent Fees. On the Closing Date, the Company shall pay to ROTH Capital Partners, LLC, as placement agent (the "Placement
Agent"), all fees and expenses due to the Placement Agent as of such Closing Date, pursuant to the terms of the engagement
letter, dated as of January 9, 2014, between the Company and the Placement Agent (the "Engagement Letter"), by
wire transfer of immediately available funds in accordance with the Placement Agent's written wire instructions.


 


(b)   Adjustment
Shares.


 


(i)          The
following terms used herein shall have the following meanings:


 




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(1)         "Adjustment
Date" means, as applicable, the First Adjustment Date together with the Second Adjustment Date and/or the Third Adjustment
Date.


 


(2)         "Adjustment
Price" means, as applicable, the First Adjustment Price together with the Second Adjustment Price and/or the Third Adjustment
Price.


 


(3)         "Affiliate"
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that "control" of a Person means the power
directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such
Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.


 


(4)         "Approved
Stock Plan" means any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant
to which the Company's securities may be issued to any employee, officer or director for services provided to the Company.


 


(5)         "Bloomberg"
means Bloomberg Financial Markets.


 


(6)         "Closing
Sale Price" means, for any security as of any date, the last closing trade price for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
trade price, then the last trade price of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if
the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such
security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average
of the ask prices of any market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets
Group Inc. (formerly Pink OTC Markets Inc.). If the Closing Sale Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually
determined by the Company and the Required Holders. If the Company and the Required Holders are unable to agree upon the fair market
value of such security, then such dispute shall be resolved pursuant to Section 1(c). All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable
calculation period.


 




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(7)         "Convertible
Securities" means any stock or securities (other than Options) directly or indirectly convertible into or exercisable
or exchangeable for shares of Common Stock.


 


(8)         "Common
Stock Equivalents" means, collectively, Options and Convertible Securities.


 


(9)         "Eligible
Market" means the Principal Market (as hereinafter defined), the OTCQX Market, the OTCQB Market, The NASDAQ Capital Market,
The NASDAQ Global Market, The NASDAQ Global Select Market, The New York Stock Exchange or the NYSE MKT LLC.


 


(10)        "First
Adjustment Date" means the date that is the earliest of (1) the date that is the twenty first (21st) Trading Day immediately
following the date that some or all of the Registrable Securities (as defined in the Registration Rights Agreement) have become
registered pursuant to an effective Registration Statement (as defined in the Registration Rights Agreement), (2) the date that
is the twenty first (21st) Trading Day immediately following the date that such Buyer can sell all of the Registrable Securities
without restriction or limitation pursuant to Rule 144 and (3) the date that is the twenty first (21st) Trading Day immediately
following the date that is six (6) months immediately following the Closing Date.


 


(11)        "First
Adjustment Price" means ninety percent (90%) of the ten (10) lowest Weighted Average Prices of the Common Stock during
the twenty (20) Trading Days immediately preceding the First Adjustment Date (as adjusted for stock splits, stock dividends, recapitalizations,
reorganizations, reclassification, combinations, reverse stock splits or other similar events during such period).


 


(12)        "Fundamental
Transaction" shall have the meaning ascribed to such term in the Warrants.


 


(13)        "Options"
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.


 


(14)        "Parent
Entity" shall have the meaning ascribed to such term in the Warrants.


 


(15)        "Person"
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
and a government or any department or agency thereof.


 


(16)        "Second
Adjustment Date" means a date after the First Adjustment Date that is the earliest of (1) the date that is the twenty
first (21st) Trading Day immediately following the date that some or all of the Registrable Securities have become registered
pursuant to an effective Registration Statement, (2) the date that is the twenty first (21st) Trading Day immediately
following the date that such Buyer can sell all of the Registrable Securities without restriction or limitation pursuant to Rule
144, (3) the date that is the twenty first (21st) Trading Day immediately following the date that is one (1) year immediately
following the Closing Date.


 




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(17)        "Second
Adjustment Price" means ninety percent (90%) of the ten (10) lowest Weighted Average Prices of the Common Stock during
the twenty (20) Trading Days immediately preceding the Second Adjustment Date (as adjusted for stock splits, stock dividends, recapitalizations,
reorganizations, reclassification, combinations, reverse stock splits or other similar events during such period).


 


(18)        "Successor
Entity" means the Person (or, if so elected by the Required Holders, the Parent Entity), which may be the Company, formed
by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Required Holders, the Parent
Entity) with which such Fundamental Transaction shall have been entered into, provided that if such Person is not a publicly traded
entity whose common stock or equivalent equity security is quoted or listed for trading on an Eligible Market, Successor Entity
shall mean such Person's Parent Entity.


 


(19)        "Third
Adjustment Date" means a date after the Second Adjustment Date that is the twenty first (21st) Trading Day
immediately following the earlier of (i) the date that such Buyer can sell all of the Registrable Securities without restriction
or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) and (ii) the date that is
one (1) year immediately following the Closing Date.


 


(20)        "Third
Adjustment Price" means ninety percent (90%) of the ten (10) lowest Weighted Average Prices of the Common Stock during
the twenty (20) Trading Days immediately preceding the Third Adjustment Date (as adjusted for stock splits, stock dividends, recapitalizations,
reorganizations, reclassification, combinations, reverse stock splits or other similar events during such period).


 


(21)        "Trading
Day" shall have the meaning ascribed to such term in the Warrants.


 




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(22)        "Weighted
Average Price" means, for any security as of any date, the dollar volume-weighted average price for such security on the
Principal Market during the period beginning at 9:30:01 a.m., New York Time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time as the Principal Market
publicly announces is the official close of trading), as reported by Bloomberg through its "Volume at Price" function
or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York Time (or such other time
as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time
as the Principal Market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets
Group Inc. (formerly Pink OTC Markets Inc.). If the Weighted Average Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Required Holders. If the Company and the Required Holders are unable to agree upon the
fair market value of such security, then such dispute shall be resolved pursuant to Section 1(c). All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction
during the applicable calculation period.


 


(ii)         Obligation
to Issue Adjustment Shares. The Company shall, without any additional consideration, issue to each Buyer a number of shares
of Common Stock on the First Adjustment Date equal to the number (if positive) obtained by subtracting (I) the number of Common
Shares purchased by such Buyer on the Closing Date (as adjusted for stock splits, stock dividends, recapitalizations, reorganizations,
reclassification, combinations, reverse stock splits or other similar events) (the "Initial Shares") from (II)
the quotient determined by dividing (x) the aggregate Purchase Price paid by such Buyer on the Closing Date, by (y) the First Adjustment
Price (such number, the "First Adjustment Share Amount"). If (A) the First Adjustment Date was triggered by clause
(1) of such definition and the Registration Statement is not available for the resale of all Registrable Securities thereunder
at all times from the First Adjustment Date until the sixtieth (60th) day following the First Adjustment Date, (B) the First Adjustment
Date was triggered by clause (2) of such definition and there shall occur a Public Information Failure (as hereinafter defined)
at any time on or prior to the sixtieth (60th) day following the First Adjustment Date or (C) the First Adjustment Date was triggered
by clause (3) of such definition and clause (2) of such definition is not satisfied, the Company shall, without any additional
consideration, issue to each Buyer a number of shares of Common Stock on the Second Adjustment Date equal to the number (if positive)
obtained by subtracting the sum of (i) the First Adjustment Share Amount and (ii) the number of Initial Shares, from the quotient
determined by dividing (x) the aggregate Purchase Price paid by such Buyer on the Closing Date, by (y) the Second Adjustment Price
(such number, the "Second Adjustment Share Amount"). If (A) the Second Adjustment Date was triggered by clause
(1) of such definition and the Registration Statement is not available for the resale of all Registrable Securities thereunder
at all times from the Second Adjustment Date until the sixtieth (60th) day following the Second Adjustment Date or (B) the Second
Adjustment Date was triggered by clause (2) of such definition and there shall occur a Public Information Failure at any time on
or prior to the sixtieth (60th) day following the Second Adjustment Date, the Company shall, without any additional consideration,
issue to each Buyer a number of shares of Common Stock on the Third Adjustment Date equal to the number (if positive) obtained
by subtracting the sum of (i) the Second Adjustment Share Amount, (ii) the First Adjustment Share Amount and (iii) the number of
Initial Shares, from the quotient determined by dividing (x) the aggregate Purchase Price paid by such Buyer on the Closing Date,
by (B) the Third Adjustment Price (such number, the "Third Adjustment Share Amount" and, together with the First
Adjustment Share Amount and the Second Adjustment Share Amount, the "Adjustment Shares").


 




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(iii)        Blocker.
Notwithstanding anything to the contrary contained herein, the Company shall not issue Adjustment Shares, and no Buyer shall have
the right to receive Adjustment Shares, and any such issuance shall be null and void and treated as if never made, to the extent
that after giving effect to such issuance, such Buyer (together with such Buyer's Affiliates) would beneficially own in excess
of 4.99% (the "Maximum Percentage") of the number of shares of Common Stock outstanding immediately after
giving effect to such issuance. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by such Buyer and its Affiliates shall include the number of shares of Common Stock issuable pursuant to Section 1(b) hereof
with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (i) exercise of the remaining, unexercised portion of the Warrants beneficially owned by such Buyer
or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the
Company beneficially owned by such Buyer or any of its Affiliates (including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except
as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"). For purposes of determining
the number of outstanding shares of Common Stock, the Buyers may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Company's most recent Form 10-K, Form 10-Q, Form 8-K or other public filing with the SEC, as the case may be, (2) a
more recent public announcement by the Company or (3) any other notice by the Company or the Company's transfer agent setting forth
the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of a Buyer, the
Company shall within one (1) Business Day confirm orally and in writing to such Buyer the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the issuance
of the Adjustment Shares and the conversion or exercise of securities of the Company, including the Warrants, held by each Buyer
and its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice
to the Company, each Buyer may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess
of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to such Buyer and not
to any of the other Buyers. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. If a Buyer's right to receive Adjustment Shares is limited, in whole or in part, by this
Section, all such Adjustment Shares that are so limited shall be held in abeyance for the benefit of such Buyer by the Company
until such time, if ever, as the Buyer notifies the Company that its right thereto would not result in such Buyer exceeding the
Maximum Percentage. As used herein, "Business Day" means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to remain closed.


 




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(iv)        Cash
Settlement. In the event that the Company does not deliver any Adjustment Shares to any Buyer for any reason (other than Section
1(b)(iii)), in lieu of delivering the Adjustment Shares otherwise required to be delivered pursuant to this Section 1(b), the Company
shall pay such Buyer in cash by wire transfer of immediately available funds in a dollar amount determined by multiplying the number
of Adjustment Shares which are not delivered to such Buyer pursuant to this Section 1(b) by the highest Closing Sale Price during
the period starting on the Trading Day immediately prior to the applicable Adjustment Date and ending on the date that the Company
makes the cash payment contemplated under this provision. In the event the Company fails to make any cash payments required under
this Agreement by a specified deadline, such payments shall bear interest at the rate of one and one-half percent (1.5%) per month
(prorated for partial months) (or such lesser maximum amount that is permitted to be paid by applicable law) until paid in full.


 


(v)         Mechanics
of Issuance.


 


(1)   Delivery
of Adjustment Shares. Adjustment Shares shall be transmitted by the Company's transfer agent to a Buyer by crediting the account
of such Buyer's prime broker with The Depository Trust Company ("DTC") through its Deposit/Withdrawal At Custodian
system if the Company is then a participant in such system and there is an effective registration statement permitting the issuance
of the Adjustment Shares to or resale of the Adjustment Shares by Buyer and otherwise by physical delivery to the address specified
by such Buyer in a written notice delivered prior to the delivery of such Adjustment Shares (such date, the "Adjustment
Shares Delivery Date").   Notwithstanding anything to the contrary contained herein, in no event will any
Adjustment Shares be issued with any restrictive legends or any restrictions or limitations on resale by the Buyers. If the Company
and/or its transfer agent requires any legal opinions with respect to the issuance of any Adjustment Shares without restrictive
legends or the removal of any such restrictive legends, the Company agrees to cause its legal counsel to issue any such legal opinions.
The Company hereby acknowledges and agrees that the holding period of any Adjustment Shares issued hereunder for purposes of Rule
144 shall be deemed to have commenced on the Closing Date.


 




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(2)   Company's
Failure to Timely Deliver Securities. If the Company shall fail for any reason or for no reason to issue to a Buyer on or prior
to the Adjustment Shares Delivery Date a certificate for the number of shares of Common Stock to which such Buyer is entitled and
register such shares of Common Stock on the Company's share register or to credit such Buyer's balance account with DTC for such
number of shares of Common Stock to which such Buyer is entitled under Section 1(b), then, in addition to all other remedies available
to such Buyer, the Company shall pay in cash to such Buyer on each day after such Adjustment Shares Delivery Date that the issuance
of such shares of Common Stock is not timely effected an amount equal to 1.5% of the product of (A) the sum of the number of shares
of Common Stock not issued to such Buyer on a timely basis and to which such Buyer is entitled and (B) the Closing Sale Price of
the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares
of Common Stock to the Buyer without violating Section 1(b). In addition to the foregoing, if on or prior to the Adjustment Shares
Delivery Date the Company shall fail to issue and deliver a certificate to the Buyer and register such shares of Common Stock on
the Company's share register or credit the Buyer's balance account with DTC for the number of shares of Common Stock to which the
Buyer is entitled pursuant to the Company's obligation pursuant to Section 1(b)(ii) or clause (ii) below, and if on or after such
Trading Day the Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Buyer of shares of Common Stock the Buyer anticipated receiving from the Company (a "Buy-In")
under Section 1(b), then the Company shall, within three (3) Trading Days after the Buyer's request and in the Buyer's discretion,
either (i) pay cash to the Buyer in an amount equal to the Buyer's total purchase price (including brokerage commissions and other
reasonable and customary out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"),
at which point the Company's obligation to deliver such certificate (and to issue such shares of Common Stock) or credit such Buyer's
balance account with DTC for such shares of Common Stock shall terminate, or (ii) promptly honor its obligation to deliver to the
Buyer a certificate or certificates representing such shares of Common Stock or credit such Buyer's balance account with DTC and
pay cash to the Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares
of Common Stock, times (B) the Closing Sale Price on the applicable Adjustment Shares Delivery Date. Nothing shall limit the Buyer's
right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of
Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof.


 


(3)   Charges,
Taxes and Expenses.  Issuance of certificates for Adjustment Shares shall be made without charge to the Buyers for
any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name of the respective Buyer or in such name or names
as may be directed by the respective Buyer.


 


(4)   Closing
of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of such Buyer's rights with respect to the Adjustment Shares.


 


(vi)        Certain
Adjustments. 


 


(1)   Adjustment
Upon Subdivision or Combination of Shares of Common Stock. If the Company at any time on or after the date of this Agreement
subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the number of Adjustment Shares will be proportionately increased. If the Company
at any time on or after the date of this Agreement combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the number of Adjustment Shares will be proportionately
decreased. Any adjustment under this Section 1(b)(vi) shall become effective at the close of business on the date the subdivision
or combination becomes effective.


 




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(2)    Purchase
Rights. While any Adjustment Shares may be issued hereunder, the Company shall not grant, issue or sell any Purchase Rights
(as defined in the Warrants).


 


(3)    Other
Events. If any event occurs of the type contemplated by the provisions of this Section 1(b)(vi) but not expressly provided
for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other
rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the number of Adjustment
Shares, as mutually determined by the Company's Board of Directors and the holders of at least a majority of the aggregate amount
of Securities issued and issuable hereunder and under the Warrants (the "Required Holders"), so as to protect
the rights of the Buyers; provided that no such adjustment pursuant to this Section 1(b)(vi) will decrease the number of Adjustment
Shares as otherwise determined pursuant to this Section 1(b)(vi).


 


(4)    Pro
Rata Distributions.  If the Company shall declare or make any dividend or other distributions of its assets (or rights
to acquire its assets) to any or all holders of Common Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the Closing
Date and prior to the later of the date of delivery of all Adjustment Shares which the Company is obligated to deliver under this
Agreement and the date that the right to receive Adjustment Shares shall expire then, in each such case, each Buyer shall be entitled
to participate in such Distribution, with respect to each unissued Adjustment Share, to the same extent that such Buyer would have
participated therein with respect to each such Adjustment Share if such Buyer had held such unissued Adjustment Shares (without
taking into account any limitations or restrictions on the issuance of Adjustment Shares, including without limitation, the Maximum
Percentage) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date
as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, to the extent that such Buyer's right to participate in any such Distribution would result in such Buyer exceeding
the Maximum Percentage, then such Buyer shall not be entitled to participate in such Distribution to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall
be held in abeyance for the benefit of such Buyer until such time, if ever, as its right thereto would not result in such Buyer
exceeding the Maximum Percentage).


 




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(5)    Fundamental
Transaction. If, at any time after the Closing Date and prior to an Adjustment Date, a Fundamental Transaction occurs, then
for each Adjustment Share otherwise issuable under Section 1(b) not issued prior to the date of such Fundamental Transaction, the
respective Buyer shall be entitled to receive the number of shares of capital stock of the successor or acquiring corporation or
of the Company, if it is the surviving corporation, and any additional consideration (the "Alternate Consideration")
receivable as a result of such Fundamental Transaction by a holder of shares of Common Stock immediately prior to such Fundamental
Transaction.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Buyer shall be given the same choice as to the Alternate Consideration it receives upon the
issuance of an Adjustment Share following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the "Successor Entity") to assume in writing all of the
obligations of the Company under this Section 1(b) in accordance with the provisions of this Section 1(b)(vi)(5) pursuant to written
agreements in form and substance reasonably satisfactory to the Required Holders (as defined in the Registration Rights Agreement).
If a Fundamental Transaction is publicly announced or occurs prior to occurrence of an Adjustment Event or the issuance of the
Adjustment Shares, for all purposes under this Subsection (5) an Adjustment Date will have deemed to have occurred twenty one (21)
Trading Days immediately preceding the consummation of such Fundamental Transaction and the applicable Adjustment Price shall be
deemed to equal ninety percent (90%) of the ten (10) lowest Weighted Average Prices of the Common Stock during the twenty (20)
Trading Days immediately following such deemed Adjustment Date (as adjusted for stock splits, stock dividends, recapitalizations,
reorganizations, reclassification, combinations, reverse stock splits or other similar events during such period). The Company
shall provide each Buyer with written notice, including a summary of material terms, of any Fundamental Transaction described in
the preceding sentence no less than twenty one (21) Trading Days prior to the consummation such Fundamental Transaction, provided
that if the Company does not have knowledge of such Fundamental Transaction or material terms thereof at least twenty one (21)
Trading Days prior to the consummation, the Company shall provide written notice, including a summary of material terms, within
two (2) Trading Days of having such knowledge.  


 


(6)    Calculations.
All calculations under this Section 1(b) shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 1(b), the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.


 


(7)    Notice
to Buyers.


 


(A) Adjustment
to Number of Adjustment Shares. Whenever there is an adjustment pursuant to any provision of Section 1(b)(vi), the Company
shall promptly notify each Buyer a notice setting forth the adjustment to the number of Adjustment Shares and setting forth a brief
statement of the facts requiring such adjustment.


 




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(B) Notice
of Certain Events. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company
shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock are converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, in each case prior to the later of an Adjustment Date or the issuance of the applicable
number of Adjustment Shares issuable in respect of such Adjustment Date, then, in each case, the Company shall notify each Buyer
at its last address, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided
that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  To the extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice
with the SEC pursuant to a Current Report on Form 8-K. On or prior to any Adjustment Date, the Company shall file with the SEC
on a Current Report on Form 8-K disclosing the number of Adjustment Shares issued or issuable on such date (each, an "Adjustment
8-K Filing"). From and after the filing of an Adjustment 8-K Filing with the SEC, no Buyer shall be in possession of any
material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors,
employees or agents, that is not disclosed in such Adjustment 8-K Filing.


 


(c)          Dispute
Resolution.  In the case of a dispute as to the determination of the number of Adjustment Shares deliverable hereunder
and/or the amount of cash payable hereunder, the Company shall submit the disputed determinations or arithmetic calculations via
facsimile within two (2) Business Days of event giving rise to such dispute, as the case may be, to the Buyers.  If a
Buyer and the Company are unable to agree upon such determination or calculation of the number of shares of Common Stock issuable
within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Buyers, then the
Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the number of Adjustment Shares
and/or the amount of cash to an independent, reputable investment bank selected by the Company and approved by the Required Holders
or (b) the disputed arithmetic calculation of the number of Adjustment Shares and/or the amount of cash to the Company's independent,
outside accountant.  The Company shall cause at its expense the investment bank or accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the applicable Buyer(s) of the results no later than ten
(10) Business Days from the time it receives the disputed determinations or calculations.  Such accountant's determination
or calculation shall be binding upon all parties absent demonstrable error.


 




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2.          BUYER'S
REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and not jointly, represents and warrants with respect to only itself
to the Company and the Placement Agent that:


 


(a)   No
Public Sale or Distribution. Such Buyer is (i) acquiring the Common Shares and the Warrants and (ii) upon exercise of the Warrants
(other than pursuant to a Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise
of the Warrants, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under
the 1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business. Such Buyer does not presently
have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.


 


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


 


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


 


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


 


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


 




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


 


(g)   Legends.
Such Buyer understands that the certificates or other instruments representing the Common Shares and the Warrants and, until such
time as the resale of the Common Shares and the Warrant Shares have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement, the stock certificates representing the Warrant Shares, except as set forth below, shall bear any
legend as required by the "blue sky" laws of any state and a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock certificates):


 


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


 




    	- 14 -



    	 



    

 


The legend set forth above shall
be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped
or issue to such holder by electronic delivery at the applicable balance account at the DTC, if, unless otherwise required by state
securities laws, (i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or
other transfer, such holder provides the Company with an opinion of counsel (which in the case of the Adjustment Shares, shall,
to the extent required by the Company or its transfer agent, be an opinion of counsel to the Company), in a generally acceptable
form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable
requirements of the 1933 Act, or (iii) the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A. The
Company shall be responsible for the fees of its transfer agent and all DTC fees associated with such issuance. If the Company
shall fail for any reason or for no reason to issue to the holder of the Securities within three (3) Trading Days after the occurrence
of any of (i) through (iii) above, a certificate without such legend to such Holder or to issue such Securities to such holder
by electronic delivery at the applicable balance account at DTC, and if on or after such Trading Day the holder effects a Buy-In,
then the Company shall, within three (3) Trading Days after the holder's request and in the holder's discretion, either (i) pay
the Buy-In Price in cash, at which point the Company's obligation to deliver such unlegended Securities shall terminate, or (ii)
promptly honor its obligation to deliver to the holder such unlegended Securities as provided above and pay cash to the holder
in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times
(B) the Closing Sale Price (as defined in the Warrants) on the date of the occurrence of any of clauses (i) through (iii), as applicable.


 


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


 


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


 




    	- 15 -



    	 



    

 


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


 


(k)   Independent
Evaluation. Such Buyer confirms and agrees that (i) it has independently evaluated the merits of its decision to purchase the
Securities, (ii) it has not relied on the advice of, or any representations by the Placement Agent or any affiliate thereof or
any representative of the Placement Agent or its affiliates in making such decision, and (iii) neither the Placement Agent nor
any of its representatives has any responsibility with respect to the completeness or accuracy of any information or materials
furnished to such Buyer in connection with the transactions contemplated hereby.


 


(l)    Acknowledgement
of Risk. Such Buyer acknowledges and understands that its investment in the Securities involves a significant degree of risk,
including, without limitation, (i) the Company remains an early stage business with limited operating history and requires
substantial funds in addition to the proceeds from the sale of the Securities; (ii) an investment in the Company is speculative,
and only purchasers who can afford the loss of their entire investment should consider investing in the Company and the Securities;
(iii) such Buyer may not be able to liquidate its investment; (iv) transferability of the Securities is limited; (v) in
the event of a disposition of the Securities, the Purchaser could sustain the loss of its entire investment; and (vi) the
Company has not paid any dividends on its Common Stock since inception and does not anticipate the payment of dividends in the
foreseeable future.


 


(m)  No
Short Sales. Between the time the Buyer learned about the transactions contemplated hereby and the date hereof, the
Buyer has not engaged in any short sales or similar transactions with respect to the Common Stock or any derivative thereof, nor
has the Buyer, directly or indirectly, caused any Person to engage in any short sales or similar transactions with respect to the
Common Stock or any derivative thereof, including, without limitation, and in each case, in any transaction aimed, directly or
indirectly, at affecting the price of the Common Stock for purposes of the transactions contemplated by this Agreement.


 


(n)  Acknowledgements
Regarding Placement Agent. The Buyer acknowledges that the Placement Agent are acting as the exclusive placement agents on
a “best efforts” basis for the Securities being offered hereby and will be compensated by the Company for acting in
such capacity. The Buyer represents that (i)  the Buyer was contacted regarding the sale of the Securities by the Placement
Agent (or an authorized agent or representative thereof) with whom the Buyer had a substantial pre-existing relationship and who
entered into a confidentiality agreement or otherwise agreed, orally or in writing, to keep information with respect to the transactions
contemplated hereby confidential and (ii) to such Buyer's knowledge, no Securities were offered or sold to such Buyer by means
of any form of general solicitation or general advertising.


 




    	- 16 -



    	 



    

 


3.          REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.


 


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


 


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


 


(b)   Authorization;
Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform its obligations
under this Agreement, the Warrants, the Registration Rights Agreement, the Lock-Up Agreements (as defined in Section 7(x)), the
Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement (collectively, the "Transaction Documents")
and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the
other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Common Shares and the Warrants, the reservation for issuance and the issuance
of the Warrant Shares issuable upon exercise of the Warrants and the reservation for issuance and issuance of the Adjustment Shares
pursuant to the terms of this Agreement have been duly authorized by the Company's Board of Directors and (other than the filing
with the SEC of one or more Registration Statements (as defined in the Registration Rights Agreement) in accordance with the requirements
of the Registration Rights Agreement, a Form D with the SEC and any other filings as may be required by any state securities agencies)
no further filing, consent or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement
and the other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.


 




    	- 17 -



    	 



    

 


(c)   Issuance
of Securities. The issuance of the Common Shares, the Adjustment and the Warrants are duly authorized and, upon issuance in
accordance with the terms of the Transaction Documents, the Common Shares and the Warrants shall be validly issued and free from
all preemptive or similar rights (except for those which have been validly waived prior to the date hereof), taxes, liens and charges
and other encumbrances with respect to the issue thereof and the Common Shares shall be fully paid and nonassessable with the holders
being entitled to all rights accorded to a holder of Common Stock. As of the Closing Date, a number of shares of Common Stock shall
have been duly authorized and reserved for issuance which equals or exceeds (i) the maximum number of Warrant Shares issuable upon
exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth therein) and (ii)
the maximum number of Adjustment Shares issuable pursuant to the terms of this Agreement (without taking into account the Maximum
Percentage and assuming an Adjustment Price of $0.50 (as adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction occurring after the date hereof)). Upon exercise of the Warrants in accordance with the Warrants, the Warrant
Shares when issued will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes,
liens, charges and other encumbrances with respect to the issue thereof, with the holders being entitled to all rights accorded
to a holder of Common Stock. The Adjustment Shares, when issued in accordance with the terms of Section 1(b), will be validly issued,
fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with
respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Assuming the
accuracy of each of the representations and warranties set forth in Section 2 of this Agreement, the offer and issuance by the
Company of the Securities is exempt from registration under the 1933 Act.


 


(d)   No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares and
the Warrants and reservation for issuance and issuance of the Warrant Shares and the Adjustment Shares) will not (i) result in
a violation of the Certificate of Incorporation (as defined below) or Bylaws (as defined below) or other organizational documents
of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the articles of association
or bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities
laws and regulations and the rules and regulations of the OTC Bulletin Board (the "Principal Market") and including
all applicable foreign, federal laws, rules and regulations) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected.


 




    	- 18 -



    	 



    

 


(e)   Consents.
The Company is not required to obtain any consent from, authorization or order of, or make any filing or registration with (other
than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights
Agreement, a Form D with the SEC and any other filings as may be required by any state securities agencies), any court, governmental
agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence
have been obtained or effected on or prior to the Closing Date (or in the case of filings detailed above, will be made timely after
the Closing Date), and the Company is unaware of any facts or circumstances which might prevent the Company from obtaining or effecting
any of the registration, application or filings contemplated by the Transaction Documents. The Company is not in violation of the
requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting
or suspension of the Common Stock in the foreseeable future. The issuance by the Company of the Securities shall not have the effect
of delisting or suspending the Common Stock from the Principal Market.


 


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


 


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


 




    	- 19 -



    	 



    

 


(h)   No
Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes
of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation.
None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that
would require registration of the issuance of any of the Securities under the 1933 Act or cause the offering of any of the Securities
to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.


 


(i)    Dilutive
Effect. The Company understands and acknowledges that the number of Warrant Shares issuable upon exercise of the Warrants and
Adjustment Shares issuable pursuant to the terms of this Agreement will increase in certain circumstances. The Company further
acknowledges that its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this Agreement and
the Warrants and to issue the Adjustment Shares in accordance with Section 1(b) is, in each case, is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.


 


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


 




    	- 20 -



    	 



    

 


(k)   SEC
Documents; Financial Statements. Since February 14, 2013, and except as in connection with the transactions contemplated hereby,
the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the
SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof or prior to the
Closing Date, and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated
by reference therein being hereinafter referred to as the "SEC Documents"). The Company has delivered to the Buyers
or their respective representatives true, correct and complete copies of the SEC Documents not available on the EDGAR system. As
of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act applicable
to the Company and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. As of their respective filing dates, the financial statements of the Company included
in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with U.S. generally
accepted accounting principles, consistently applied, during the periods involved ("GAAP") (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements,
to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects
the financial position of the Company and its Subsidiaries as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). No other information provided by or on behalf of the Company to any of the
Buyers which is not included in the SEC Documents (including, without limitation, information referred to in Section 2(d) of this
Agreement or in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which
they are or were made.


 


(l)    Absence
of Certain Changes. Since September 30, 2013, there has been no material adverse change and no material adverse development
in the business, assets, liabilities, properties, operations, condition (financial or otherwise), results of operations or prospects
of the Company or any of its Subsidiaries. Since September 30, 2013, neither the Company nor any of its Subsidiaries has (i) declared
or paid any dividends or (ii) sold any assets, individually or in the aggregate, in excess of $100,000 outside of the ordinary
course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law
or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or
any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated
hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), "Insolvent"
means, with respect to any Person, (i) the present fair saleable value of such Person's assets is less than the amount required
to pay such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to
incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed
to be conducted.


 




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(m)  No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred
or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities
laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common
Stock and which has not been publicly announced.


 


(n)   Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, any certificate of designations, preferences or rights of any other outstanding series
of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation
or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any
judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases
for possible violations which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements
of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension
of the Common Stock by the Principal Market in the foreseeable future. Since April 9, 2013, (i) the Common Stock has been listed
or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the
Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding
the suspension or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate foreign, federal or state regulatory authorities necessary to
conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not
have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.


 


(o)   Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official
or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.


 




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


 


(q)   Transactions With Affiliates. Except as set forth in Schedule 3(q), none of the officers, directors or employees
of the Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other
than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any such officer, director or employee or, to the knowledge of the Company or any of its Subsidiaries, any
corporation, partnership, trust or other Person in which any such officer, director, or employee has a substantial interest or
is an employee, officer, director, trustee or partner.


 


(r)    Equity
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 45,000,000 shares of Common
Stock, of which, 20,071,817 are issued and outstanding and 8,254,312 shares are reserved for issuance pursuant to securities
(other than the Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000,000 shares
of preferred stock, none of which are issued and outstanding. No shares of Common Stock are held in treasury. All of such outstanding
shares are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. 5,125,000
shares of the Company's issued and outstanding Common Stock are as of the date hereof owned by Persons who are "affiliates"
(as defined in Rule 405 of the 1933 Act) of the Company or any of its Subsidiaries. (i) Except as disclosed in Schedule 3(r)(i),
none of the Company's or any Subsidiary's capital stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company or any Subsidiary; (ii) except as disclosed in Schedule 3(r)(ii), there
are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may
become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) except as disclosed in Schedule 3(r)(iii),
there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound; (iv) there are no financing statements securing obligations in any amounts filed in connection with the Company or
any of its Subsidiaries; (v) except as disclosed in Schedule 3(r)(v) or pursuant to the Registration Rights Agreement, there
are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act; (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries;
(vii) except as disclosed in Schedule 3(r)(vii), there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor any Subsidiary has any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and (ix) neither the Company
nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not so
disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company's or its Subsidiaries' respective
businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. True, correct and complete
copies of the Company's certificate of incorporation, as amended and as in effect on the date hereof (the "Certificate
of Incorporation"), and the Company's bylaws, as amended and as in effect on the date hereof (the "Bylaws"),
and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights
of the holders thereof in respect thereto have heretofore been filed as part of the SEC Documents.


 




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(s)   Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed in Schedule 3(s), has
any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which,
or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result
in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or instrument
relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in
a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of the Company's officers, has or is expected to have a Material Adverse Effect. For purposes of this
Agreement: (x) "Indebtedness" of any Person means, without duplication (A) all indebtedness for borrowed money,
(B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation,
"capital leases" in accordance with GAAP consistently applied, during the periods involved) (other than trade payables
entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created
or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby,
is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, claim, lien, tax, right
of first refusal, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts
and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable
for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; (y) "Contingent Obligation" means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, capital lease, dividend
or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) "Person" means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any department
or agency thereof.


 




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(t)    Absence
of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company's Subsidiaries or any of the Company's
or its Subsidiaries' officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such.


 


(u)   Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.


 


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


 




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(w)   Title.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any real property
and facilities held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property
and buildings by the Company or any of its Subsidiaries.


 


(x)    Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent rights, copyrights, original works of authorship, inventions,
licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and
registrations therefor ("Intellectual Property Rights") necessary to conduct their respective businesses as now
conducted and as presently proposed to be conducted. None of the Company's or its Subsidiaries' Intellectual Property Rights have
expired, terminated or been abandoned, or are expected to expire, terminate or be abandoned, within three years from the date of
this Agreement. The Company has no knowledge of any infringement by the Company or any of its Subsidiaries of Intellectual Property
Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or any of its
Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding their Intellectual Property Rights. The
Company is not aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions
or proceedings. The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their Intellectual Property Rights.


 


(y)   Environmental
Laws. The Company and its Subsidiaries (A) are in compliance with all Environmental Laws (as defined below), (B) have received
all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses
and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing
clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term "Environmental Laws" means all federal, state, local or foreign laws relating to pollution
or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, "Hazardous Materials")
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.


 




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


 


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


 


(bb)   Internal
Accounting and Disclosure Controls. The Company and each of its 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 generally
accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities
is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets
and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under
the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files
or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and
forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company's management,
including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow
timely decisions regarding required disclosure. Except as set forth in Schedule 3(bb), during the twelve months prior to
the date hereof neither the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant relating
to any material weakness in any part of the system of internal accounting controls of the Company or any of its Subsidiaries.


 


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


 




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(dd)   Investment
Company Status. Neither the Company nor any of its Subsidiaries is, and upon consummation of the sale of the Securities will
not be, an "investment company," an affiliate of an "investment company," a company controlled by an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment
company" as such terms are defined in the Investment Company Act of 1940, as amended.


 


(ee)    Acknowledgement
Regarding Buyers' Trading Activity. Except as set forth in Sections 2(m) and 4(s), the Company acknowledges and agrees that
(i) none of the Buyers has been asked to agree, nor has any Buyer 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) any Buyer, and counter-parties in "derivative" transactions to which any such Buyer is
a party, directly or indirectly, presently may have a "short" position in the Common Stock, and (iii) each Buyer 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 one or more Buyers may engage in hedging and/or trading 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 and/or the Adjustment Shares are being determined and (b) such hedging and/or trading activities, if any,
can reduce the value of the existing stockholders' equity interest in the Company both at and after the time the hedging and/or
trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do
not constitute a breach of this Agreement, the Warrants or any of the documents executed in connection herewith.


 


(ff)    Manipulation
of Price. 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, or that could reasonably be expected to cause or 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) other than the Placement
Agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than
the Placement Agent, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities
of the Company.


 


(gg)  U.S.
Real Property Holding Corporation.  Neither the Company nor any of its Subsidiaries is, or has ever been, and so long
as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning
of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company and each Subsidiary shall so certify upon
any Buyer's request.


 


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


 




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


 


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


 


(kk)    Money
Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act
of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited to, the
laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including,
but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, "Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism" (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained
in 31 CFR, Subtitle B, Chapter V.


 


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


 


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


 




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(nn)    Stock
Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable Company
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 consistently applied, during the periods involved 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.


 


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


 


(pp)    No
Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933
Act ("Regulation D Securities"), none of the Company, any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in the offering 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 1933 Act) connected with the Company in any capacity at the time of sale (each, an "Issuer
Covered Person" and, together, "Issuer Covered Persons") is subject to any of the "Bad Actor"
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a "Disqualification Event"), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether
any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its
disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.


 


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


 




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4.          COVENANTS.


 


(a)    Reasonable
Best Efforts. Each party shall use its reasonable best efforts timely to satisfy each of the covenants and the conditions to
be satisfied by it as provided in Sections 6 and 7 of this Agreement.


 


(b)    Form
D and Blue Sky. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as
the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to
the Buyers at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of
the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to
the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or "Blue Sky" laws of the states of the United States following the Closing
Date.


 


(c)    Reporting
Status. Until the date on which the Investors (as defined in the Registration Rights Agreement) shall have sold all of the
Common Shares, Adjustment Shares and Warrant Shares, none of the Warrants are outstanding and no additional Adjustment Shares are
issuable hereunder (the "Reporting Period"), the Company shall timely file all reports required to be filed with
the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination,
and the Company shall take all actions necessary to maintain its eligibility to register the Common Shares and Warrant Shares for
resale by the Investors on Form S-3.


 


(d)    Use
of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes and for working
capital purposes but not for (i) the repayment of any outstanding Indebtedness of the Company or any of its Subsidiaries or (ii)
the redemption or repurchase of any of its or its Subsidiaries' equity securities.


 


(e)    Financial
Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement) during
the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the
EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, any
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K (or any analogous reports under the 1934 Act) and any registration
statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release thereof,
facsimile or e-mailed copies of all press releases issued by the Company or any of its Subsidiaries, and (iii) copies of any notices
and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available
or giving thereof to the stockholders.


 




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(f)    Listing.
The Company shall promptly secure the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed (subject
to official notice of issuance) and shall maintain such listing of all Registrable Securities from time to time issuable under
the terms of the Transaction Documents. The Company shall maintain the authorization for quotation of the Common Stock on the Principal
Market or any other Eligible Market (as defined in the Warrants). Neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market.
The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).


 


(g)   Fees.
The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or broker's commissions
(other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby, including, without
limitation, any fees or commissions payable to the Placement Agent. The Company shall pay, and hold each Buyer harmless against,
any liability, loss or expense (including, without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in
connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party
to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.


 


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


 




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(i)    Disclosure
of Transactions and Other Material Information. On or before 8:30 a.m., New York City time, on the first Business Day after
this Agreement has been executed, the Company shall issue a customary press release and file a Current Report on Form 8-K describing
the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching the
material Transaction Documents (including, without limitation, this Agreement (and all schedules and exhibits to this Agreement),
the form of the Warrant, the form of Lock-Up Agreement and the form of the Registration Rights Agreement as exhibits to such filing
(including all attachments), the "8-K Filing"). From and after the filing of the 8-K Filing with the SEC, no
Buyer shall be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any
of their respective officers, directors, employees or agents, that is not disclosed in the 8-K Filing. In addition, effective
upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers,
directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand,
shall terminate. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers,
directors, employees and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any
of its Subsidiaries from and after the filing of the 8-K Filing with the SEC without the express prior written consent of such
Buyer. If a Buyer has, or believes it has, received any such material, nonpublic information regarding the Company or any of its
Subsidiaries from the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates or agents, it
may provide the Company with written notice thereof. The Company shall, within two (2) Trading Days of receipt of such notice,
make public disclosure of such material, nonpublic information. In the event of a breach of the foregoing covenant by the Company,
any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other
remedy provided herein or in the Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form
of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the
Company, its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any
liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or
agents for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without
such Buyer's consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with
respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the
Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i)
each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its
release). Except for the Registration Statement required to be filed pursuant to the Registration Rights Agreement, without the
prior written consent of any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the
name of such Buyer in any filing, announcement, release or otherwise.


 


(j)    Restrictions
on Specific Offerings. For so long as any Warrants remain outstanding, the Company shall not, in any manner, enter into any
equity line of credit, "at-the-market" offering (as defined in Rule 415(a)(4) under the 1933 Act) or substantially similar
transaction.


 


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


 




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(l)    Reservation
of Shares. So long as any Buyer owns any Securities, the Company shall take all action necessary to at all times have authorized,
and reserved for the purpose of issuance, no less than the sum of (i) the number of shares of Common Stock issuable upon exercise
of the Warrants then outstanding (without taking into account any limitations on the exercise of the Warrants set forth in the
Warrants) and (ii) the maximum number of Adjustment Shares issuable pursuant to the terms of this Agreement (without taking into
account the Maximum Percentage and assuming an Adjustment Price of $0.50 (as adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction occurring after the date hereof)). If at any time the number of shares of
Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserved Amount, the Company will promptly
take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling
a special meeting of stockholders to authorize additional shares to meet the Company's obligations under Section 3(c), in the case
of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares,
and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that
the number of authorized shares is sufficient to meet the Required Reserved Amount.


 


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


 


(n)    Additional
Registration Statements. Except for required post-effective amendments to any registration statement of the Company previously
declared effective by the SEC, from the date hereof until the date the Registration Statement(s) covering the resale of all of
the Registrable Securities (as defined in the Registration Rights Agreement) has been declared effective by the SEC and each prospectus
contained therein is available for use on such date), the Company will not, directly or indirectly, file any registration statement
with the SEC other than the Registration Statements (as defined in the Registration Rights Agreement).


 


(o)    Additional
Issuances of Securities. From the date hereof until the date that is the earlier of (A) sixty-one (61) days immediately following
the last date that Adjustment Shares may be issued hereunder and (B) seven (7) months immediately following the Closing Date (the
"Trigger Date"), the Company will not (except, in each case, for any Excluded Issuances (as defined below), which
issuances shall be excluded from the provisions of this Section 4(o)): (i) directly or indirectly, offer, sell, grant any
option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition
of) any of its or its Subsidiaries' equity or equity equivalent securities, including without limitation any debt, preferred stock
or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable
or exercisable for Common Stock or Common Stock Equivalents to the extent at a per share purchase price or at an exercise price,
conversion price or exchange price, as applicable, (a "Future Purchase Price") that is less than $1.88 (as adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after the date hereof)
or (ii) be party to any solicitations, negotiations or discussions with regard to the foregoing. For purposes of determining the
Future Purchase Price under this Section 4(o), the following shall be applicable:


 




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(i)    Issuance
of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities
issuable upon exercise of any such Option is less than the Purchase Price (as adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction occurring after the date hereof), then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for
such price per share. For purposes of this Section 4(o), the "lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Options or upon conversion or exchange or exercise of any Convertible Securities issuable
upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and
upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option less any consideration
paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise
of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option.


 


(ii)   Issuance
of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per
share for which one share of Common Stock is issuable upon the conversion or exchange or exercise thereof is less than the Purchase
Price (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction occurring after
the date hereof, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company
at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 4(o),
the "lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange or exercise thereof"
shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise
of such Convertible Security less any consideration paid or payable by the Company with respect to such one share of Common Stock
upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security.


 


(iii)  Change
in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable or exercisable for shares of Common Stock decreases at any time to below the per
share Purchase Price (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction
occurring after the date hereof), the Company shall be deemed to have made a Restricted Issuance at such decreased purchase price
as of the date of such increase or decrease.


 




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(iv)   Calculation
of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction (a) the Options will be deemed to have been issued for the Option Value and (b)
the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference
of (1) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the
terms of such other securities of the Company, less (2) the Option Value. If any shares of Common Stock, Options or Convertible
Securities are issued or sold or deemed to have been issued or sold for cash, the consideration other than cash received therefor
will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities
are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair
value of such consideration, except where such consideration consists of securities, in which case the amount of consideration
received by the Company will be the Closing Sale Price of such securities on the date of receipt. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company
and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring
valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Business
Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected
by the Company and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent
manifest error and the fees and expenses of such appraiser shall be borne by the Company.


 




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(v)   Definitions.
As used herein, (I) "Restricted Issuance" means any such offer, sale, grant, option to purchase or other disposition
prior to the Trigger Date at a Future Purchase Price that is less than the per share Purchase Price (as adjusted for any stock
dividend, stock split, stock combination, reclassification or similar transaction occurring after the date hereof), (II) "Option
Value" means the value of an Option based on the Black and Scholes Option Pricing model obtained from the "OV"
function on Bloomberg determined as of (i) the Trading Day prior to the public announcement of the applicable Option if the issuance
of such Option is publicly announced or (ii) the Trading Day immediately following the issuance of the applicable Option if the
issuance of such Option is not publicly announced, for pricing purposes and reflecting (a) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the applicable date of determination,
(b) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg as of the day immediately
following the public announcement of (i) the Trading Day immediately following the public announcement of the applicable Option
if the issuance of such Option is publicly announced or (ii) the Trading Day immediately following the issuance of the applicable
Option if the issuance of such Option is not publicly announced, (c) the underlying price per share used in such calculation shall
be the highest Weighted Average Price during the period beginning on the day prior to the execution of definitive documentation
relating to the issuance of the applicable Option and the public announcement of such issuance, (d) a zero cost of borrow and (e)
a 360 day annualization factor, and (III) “Excluded Issuance” means any issuance or grant of Common Stock, Option
or Convertible Security issued or issuable: (A) to directors, officers, employees or bona fide consultants performing services
typically performed by employees of the Company in their capacity as such pursuant to the Company’s existing or any future
stock option, stock incentive or similar plan (as the same may be amended from time to time) approved by the Company’s Board
of Directors and majority stockholders, (B) upon the conversion or exercise of Options or Convertible Securities (other than securities
that are covered by clause (A) above) issued prior to the date hereof, provided that the exercise or conversion price of such Options
or Convertible Securities is not lowered and such Options or Convertible Securities are not amended to increase the number of shares
issuable thereunder, except in each case pursuant to the terms thereof in existence on the date hereof; (C) upon exercise of any
Warrant issued hereunder, provided that the exercise price of such Warrant is not lowered and such Warrant is not amended to increase
the number of shares issuable thereunder and (D) 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 equity holders 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 for the purpose of raising capital or to an entity whose
primary business is investing in securities.


 


(vi)   Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them to subscribe
for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the date of the granting of such right
of subscription or purchase.


 




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(p)    Public
Information. At any time during the period commencing from the six (6) month anniversary of the Closing Date and ending at
such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities, may
be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1),
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirements under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (each, a "Public Information Failure") then, as partial relief for the damages to any
holder of Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not
be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash
equal to one and one-half percent (1.5%) of the aggregate Purchase Price of such holder's Securities on the day of a Public Information
Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i)
the date such Public Information Failure is cured and (ii) such time that such Public Information Failure no longer prevents a
holder of Securities from selling such Securities pursuant to Rule 144 without any restrictions or limitations. The payments to
which a holder shall be entitled pursuant to this Section 4(o) 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 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.


 


(q)    Lock-Up.
The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements except to extend the term
of the lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms. If any officer or
director that is a party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its
reasonable best efforts to seek specific performance of the terms of such Lock-Up Agreement.


 


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


 


(s)    Short
Sales. During the period commencing on the date hereof and ending with the close of trading on the Principal Market on the
last Adjustment Date hereunder (such period, the "Restricted Period"), each Buyer, severally and not jointly with
the other Buyers, covenants that neither it nor any of its Buyer Trading Affiliates shall maintain a Net Short Position. For purposes
hereof, a "Net Short Position" by a person means a position whereby such person has executed one or more sales
of Common Stock that is marked as a "short sale" (as defined in Rule 200 of Regulation SHO under the 1934 Act) and that
is executed at a time when such Buyer has no equivalent offsetting long position in the Common Stock or contract for the foregoing.
For purposes of determining whether a Buyer has an equivalent offsetting long position in the Common Stock, all Common Stock (i)
that is owned by such Buyer, (ii) that may be issued as Adjustment Shares pursuant to Section 1(b) if reasonably determinable (without
regard to the provisions of Section 1(b)(iii)), and (iii) that would be issuable upon exercise in full of the Warrants then held
by such Buyer (assuming that such Warrants were then fully exercisable, notwithstanding any provisions to the contrary) shall be
deemed to be held long by such Buyer. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall
constitute a covenant, 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 not during the Restricted Period. As used herein, "Buyer
Trading Affiliates" means any Person acting on behalf of or pursuant to any understanding with such Buyer which had knowledge
of the transactions contemplated hereby, (x) has or shares discretion relating to such Buyer's investments and trading or information
concerning such Buyer's investments or (y) is subject to such Buyer's review or input concerning such Person's investments or trading.


 




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(t)    Additional
Issuances of Securities.


 


(i)          From
the date hereof until the second anniversary of the Closing Date, the Company will not, (i) directly or indirectly, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition
of) any of its or its Subsidiaries' debt, equity or equity equivalent securities, including without limitation any debt, preferred
shares or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable
or exercisable for Common Shares or Common Share Equivalents (any such offer, sale, grant, disposition or announcement being referred
to as a "Subsequent Placement") or (ii) enter into any definitive agreement with regard to the foregoing, in each
case unless the Company shall have first complied with this Section 4(t)(i).


 


(1)   The
Company shall deliver to each Buyer an irrevocable written notice (the "Offer Notice") of any proposed or intended
issuance or sale or exchange (the "Offer") of the securities being offered (the "Offered Securities")
in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price
and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued,
sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such Buyers, in the aggregate, at least
thirty-five percent (35%) of the Offered Securities, allocated among such Buyers (a) based on such Buyer's pro rata portion of
the aggregate principal amount of Notes purchased hereunder (the "Basic Amount"), and (b) with respect to each
Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts
of other Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than their
Basic Amounts (the "Undersubscription Amount"), which process shall be repeated until the Buyers shall have an
opportunity to subscribe for any remaining Undersubscription Amount.


 


(2)   To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the fifth (5th)
Business Day after such Buyer's receipt of the Offer Notice (the "Offer Period"), setting forth the portion of
such Buyer's Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the "Notice of Acceptance").
If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the
"Available Undersubscription Amount"), each Buyer who has subscribed for any Undersubscription Amount shall be
entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the
total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the
extent its deems reasonably necessary. Notwithstanding anything to the contrary contained herein, if the Company desires to modify
or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to the Buyers
a new Offer Notice and the Offer Period shall expire on the tenth (10th) Business Day after such Buyer's receipt of such new Offer
Notice.


 




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(3)   The
Company shall have ten (10) Business Days (other than with respect to a Public Offering Subsequent Placement, in which case the
Company shall have fifteen (15) Business Days) from the expiration of the Offer Period above to offer, issue, sell or exchange
all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Buyers (the "Refused
Securities") pursuant to a definitive agreement (the "Subsequent Placement Agreement") but only to the
offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation,
unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company
than those set forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement Agreement,
and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination
of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits thereto.


 


(4)   In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4(t)(i)(3) above), then each Buyer may, at its sole option and in its sole discretion, reduce the number
or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or
amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(t)(i)(2) above multiplied by a fraction,
(i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to Buyers pursuant to Section 4(t)(i)(3) above prior to such reduction)
and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer so elects
to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or
exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered
to the Buyers in accordance with Section 4(t)(i)(1) above.


 




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(5)   Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Buyers shall acquire from
the Company, and the Company shall issue to the Buyers, the number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 4(t)(i)(3) above if the Buyers have so elected, upon the terms and conditions specified
in the Offer. The purchase by the Buyers of any Offered Securities is subject in all cases (other than with respect to a Public
Offering Subsequent Placement) to the preparation, execution and delivery by the Company and the Buyers of a purchase agreement
relating to such Offered Securities reasonably satisfactory in form and substance to the Buyers and their respective counsel.


 


(6)   Any
Offered Securities not acquired by the Buyers or other persons in accordance with Section 4(t)(i)(3) above may not be issued, sold
or exchanged until they are again offered to the Buyers under the procedures specified in this Agreement.


 


(7)   The
Company and the Buyers agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement
with respect to such Offer nor any other transaction documents related thereto (collectively, the "Subsequent Placement
Documents") shall include any term or provisions whereby any Buyer shall be required to agree to any restrictions in trading
as to any securities of the Company owned by such Buyer prior to such Subsequent Placement, and (y) unless the securities being
issued pursuant to the applicable Subsequent Placement are freely tradable and issued without any restrictive securities law legends,
any registration rights set forth in such Subsequent Placement Documents shall be similar in all material respects to the registration
rights contained in the Registration Rights Agreement.


 


(8)   Notwithstanding
anything to the contrary in this Section 4(t) and unless otherwise agreed to by the Buyers, the Company shall either confirm in
writing to the Buyers that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case in such a manner such that the Buyers will not be in possession of
material non-public information, by the fifteenth (15th) Business Day following delivery of the Offer Notice. If by
the fifteenth (15th) Business Day following delivery of the Offer Notice no public disclosure regarding a transaction
with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received
by the Buyers, such transaction shall be deemed to have been abandoned and the Buyers shall not be deemed to be in possession of
any material, non-public information with respect to the Company. Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company shall provide each Buyer with another Offer Notice and each Buyer will again have the right
of participation set forth in this Section 4(t)(i). The Company shall not be permitted to deliver more than one such Offer Notice
to the Buyers in any 60 day period.


 


(ii)         The
restrictions contained in this Section 4(t) shall not apply in connection with the any actual or deemed Excluded Issuance or the
entry into any agreement regarding any Excluded Issuance.


 




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(iii)        As
used in this Section 4(t), a "Public Offering Subsequent Issuance" shall mean a firm commitment public offering
of shares of Common Stock.


 


(u)   Closing
Documents. On or prior to thirty (30) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered,
to the Placement Agent, each Buyer and Schulte Roth & Zabel LLP a complete closing set of the executed Transaction Documents,
Securities and any other documents required to be delivered to any party pursuant to Section 7 hereof or otherwise.


 


5.          REGISTER;
TRANSFER AGENT INSTRUCTIONS.


 


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


 


(b)   Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent,
in the form of Exhibit C attached hereto (the "Irrevocable Transfer Agent Instructions") to issue certificates
or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective nominee(s),
for the Common Shares and the Warrant Shares issued at the Closing or upon exercise of the Warrants in such amounts as specified
from time to time by each Buyer to the Company upon exercise of the Warrants. The Company warrants that no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to
Section 2(f) hereof, will be given by the Company to its transfer agent, and that the Securities shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this Agreement and the other Transaction Documents. If
a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(f), the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment.
In the event that such sale, assignment or transfer involves the Warrant Shares sold, assigned or transferred pursuant to an effective
registration statement or pursuant to Rule 144, the transfer agent shall issue such Securities to the Buyer, assignee or transferee,
as the case may be, without any restrictive legend. The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions
of this Section 5(b), that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without
any bond or other security being required.


 




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


 


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


 


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


 


(ii)         Such
Buyer shall have delivered to the Company the Purchase Price for the Common Shares and the related Warrants being purchased by
such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.


 


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


 


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


 


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


 


(i)          The
Company shall have duly executed and delivered to such Buyer (A) each of the Transaction Documents, (B) the Common Shares (allocated
in such amounts as such Buyer shall request), being purchased by such Buyer at the Closing pursuant to this Agreement and (C) the
related Warrants (allocated in such amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant
to this Agreement.


 


(ii)         Such
Buyer and the Placement Agent shall have received the opinion of Ellenoff Grossman & Schole LLP, the Company's outside counsel,
dated as of the Closing Date, in a customary form agreed to by counsel to the Placement Agent.


 


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


 


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


 




    	- 43 -



    	 



    

 


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


 


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


 


(vii)       The
Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing
Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company's Board of Directors in a form reasonably
acceptable to such Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the
form attached hereto as Exhibit D.


 


(viii)      The
representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct
as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to
the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form
attached hereto as Exhibit E.


 


(ix)         The
Company shall have delivered to such Buyer a letter from the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five (5) days of the Closing Date.


 


(x)          The
Company shall have delivered to each Buyer a lock-up agreement in the form attached hereto as Exhibit F executed and delivered
by each of the Persons listed on Schedule 7(x) (collectively, the "Lock Up Agreements").


 


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


 


(xii)        The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities.


 




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(xiii)       The
Company shall have delivered to such Buyer such other customary documents relating to the transactions contemplated by this Agreement
as such Buyer or its counsel may reasonably request.


 


8.          TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from the date
hereof due to the Company's or such Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement
with respect to such breaching party at the close of business on such date by delivering a written notice to that effect to each
other party to this Agreement and without liability of any party to any other party.


 


9.          MISCELLANEOUS.


 


(a)    Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. 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, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 


(b)   Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile
or .pdf signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect
as if the signature were an original, not a facsimile or .pdf signature. Delivery of a counterpart signature hereto by facsimile
or email/.pdf transmission shall be deemed validly delivery thereof.


 


(c)   Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement.


 




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(d)   Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).


 


(e)   Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein,
and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No
provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Required Holders,
and any amendment to this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers
and holders of Securities and the Company; provided that (i) any such amendment or waiver that complies with the foregoing but
that disproportionately, materially and adversely affects the rights and obligations of any Buyer relative to the comparable rights
and obligations of the other Buyers shall require the prior written consent of such adversely affected Buyer and (ii) any such
amendment or waiver that materially and adversely affects the rights of the Placement Agent shall require the prior written consent
of the Placement Agent. No provisions hereto may be waived other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the Buyers or holders
of the applicable Securities then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents unless the same consideration (other than the reimbursement
of legal fees) also is offered to all of the parties to the Transaction Documents, holders of Common Shares or holders of the Warrants,
as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions
of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting
the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or
has any other obligation to provide any financing to the Company or otherwise.


 




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(f)   Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or by electronic mail; or (iii) one Business Day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall
be:


 


If to the Company:


 


LabStyle Innovations Corp.


Halamish 9


Caesarea Industrial Park


38900, Israel


Telephone:     +(972)-(4)
770 4054


Facsimile:      +(972)-(4)
770 4059


Attention:      Chief Executive Officer


E-mail:          erez@mydario.com


 


With a copy (for informational purposes only) to:


 


Ellenoff Grossman & Schole LLP


1345 Avenue of the Americas


New York, New York 10105


Telephone:      (212)
370-1300


Facsimile:       (646)
895-7204


Attention:       Lawrence
A. Rosenbloom, Esq.


 


If to the Placement Agent:


 


ROTH Capital Partners, LLC

730 Fifth Avenue

New York, New York 10019

Telephone:      (646) 338-1905


Attention: Michael Chill


E-mail: mchill@roth.com


 


With a copy (for informational purposes only) to:


 


Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Telephone:      (212) 756-2000

Facsimile:       (212) 593-5955

Attention:       Eleazer N. Klein, Esq.

E-mail:           eleazer.klein@srz.com


 




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If to the Transfer Agent:


 


VStock Transfer, LLC


77 Spruce Street, Suite 201


Cedarhurst, NY 11516


Telephone:      (212)
828-8436


Facsimile:       (646)
536-3179


Attention:       Yoel
Goldfeder


E-mail:           yoel@vstocktransfer.com


 


If to a Buyer,
to its address, facsimile number and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer's representatives
as set forth on the Schedule of Buyers, or to such other address, facsimile number and/or e-mail address and/or to the attention
of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender's facsimile machine or e-mail containing the time, date,
recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service
shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.


 


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


 


(h)    No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that
(i) each Indemnitee shall have the right to enforce the obligations of the Company with respect to Section 9(m) and (ii) the Placement
Agent shall be a third-party beneficiary of this Section 9(h) and Sections 1(a)(v), 2(k), 3(g), 4(g), 9(i) and 9(j).


 


(i)     Reliance
by the Placement Agent. Each party agrees and acknowledges that the Placement Agent may rely on the representations, warranties,
agreements and covenants of the Company contained in this Agreement and may rely on the representations and warranties of the
respective Buyers contained in this Agreement as if such representations, warranties, agreements, and covenants, as applicable,
were made directly to the Placement Agent. The parties further agreement that the Placement Agent may rely on or, if the Placement
Agent so requests, be specifically named as an addressee of, the legal opinions to be delivered pursuant to Section 7(ii) of this
Agreement.


 




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(j)     Exculpation
of Placement Agent. Each party hereto agrees for the express benefit of each of the Placement Agent, their affiliates and representatives
that:


 


(i)          Neither
the Placement Agent nor any of its affiliates or any of its representatives (1) has any duties or obligations other than those
specifically set forth herein or in the Engagement Letter; (2) shall be liable for any improper payment made in accordance with
the information provided by the Company; (3) makes any representation or warranty, or has any responsibilities as to the validity,
accuracy, value or genuineness of any information, certificates or documentation delivered by or on behalf of the Company pursuant
to this Agreement or the Transaction Documents or in connection with any of the transactions contemplated hereby; or (4) shall
be liable (x) for any action taken, suffered or omitted by any of them in good faith and reasonably believed to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement or any Transaction Document or (y) for anything which
any of them may do or refrain from doing in connection with this Agreement or any Transaction Document, except for such party's
own gross negligence, willful misconduct or bad faith.


 


(ii)         The
Placement Agent, and its affiliates and representatives shall be entitled to (1) rely on, and shall be protected in acting upon,
any certificate, instrument, opinion, notice, letter or any other document or security delivered to any of them by or on behalf
of the Company, and (2) be indemnified by the Company for acting as Placement Agent hereunder pursuant the indemnification provisions
set forth in the Engagement Letter.


 


(k)    Survival.
Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall
be responsible only for its own representations, warranties, agreements and covenants hereunder.


 


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


 




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


 


(n)    No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.


 


(o)    Remedies.
Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary
and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or
other security.


 


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


 




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


 


(r)     Independent
Nature of Buyers' Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations
of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action
taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the
Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Buyers are in any way acting in concert or as a group, and the Company shall not assert any such claim with respect to
such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are
not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.
The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall
not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.


 


[Signature Page Follows]


 




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










 


	 	COMPANY:
	 	 
	 	LABSTYLE INNOVATIONS CORP.
	 	 
	 	By:	/s/ Erez Raphael
	 	 	Name: Erez Raphael
	 	 	Title:  President and CEO


 


[Signature Page to Securities Purchase
Agreement]


 




    	 



    	 



    

 


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


 


	 	BUYERS:
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 


[Signature Page to Securities Purchase
Agreement]


 




    	 



    	 



    

 








SCHEDULE OF BUYERS


 


	Capital Ventures International
	Hudson Bay Master Fund, Ltd.
	Empery Asset Master, Ltd.
	Empery Tax Efficient, LP
	Anson Investments Master Fund LP
	Brio Capital Master Fund Ltd.
	Cranshire Capital Master Fund, Ltd.
	Equitec Specialists, LLC
	Alpha Capital Anstalt
	Iroquois Master Fund Ltd.
	Sabby Healthcare Volatility Master Fund, Ltd.
	Mark A. Mays
	Kingsbrook Opportunities Master Fund LP
	FireRock Global Opportunities Fund L.P.
	Do – Tsach Ltd
	B.F.I Investments LP
	Amir Ohana
	Orocom Strategies Ltd.
	A to Z Finance Ltd.


 












    	 



    	 



    

  


EXHIBITS


 


	Exhibit A	Form of Warrants
	Exhibit B	Form of Registration Rights Agreement
	Exhibit C	Form of Irrevocable Transfer Agent Instructions
	Exhibit D	Form of Secretary's Certificate
	Exhibit E	Form of Officer's Certificate
	Exhibit F	Form of Lock-Up Agreement


 


SCHEDULES


 


	Schedule 3(a)	Subsidiaries
	Schedule 3(q)	Transactions with Affiliates
	Schedule 3(r)	Equity Capitalization
	Schedule 3(s)	Indebtedness and Other Contracts
	Schedule 3(bb)	Internal Accounting and Disclosure Controls