SUBSCRIPTION AGREEMENT


 


SUBSCRIPTION AGREEMENT
(this “Agreement”) made as of the last date set forth on the signature page hereof between The SpendSmart Payments
Company, a Colorado corporation (the “Company”), and the undersigned (the “Subscriber”).


 


WITNESSETH:


 


WHEREAS, the Company
is conducting a private offering (the “Offering”) consisting of up to 3,333,334 shares of the Company’s series
C convertible preferred stock, par value $0.001 per share (the “Preferred Stock”), each share of Preferred Stock having
a stated value of $3.00 per share (the “Stated Value”) and convertible into shares of the Company’s common stock,
par value $0.001 per share (the “Common Stock”) at a conversion ratio of $0.75 per share, subject to adjustment, with
each share to be sold at a negotiated price of $3.00 per share (the “Offering Price”);


 


WHEREAS, in connection
with the purchase of the shares of Preferred Stock, each Subscriber will receive a three-year warrant (the “Warrant”,
and collectively with the Preferred Stock, the “Securities”) to purchase four (4) shares of Common Stock of the Company
for every one (1) share of Preferred Stock purchased by such Subscriber in this Offering, at an exercise price equal to $1.10 per
share, subject to adjustment thereunder (the “Exercise Price”); and


 


WHEREAS, the Offering
is on a “best efforts, all-or-none” basis to attain the minimum offering amount of $3,000,000 (the “Minimum Offering”),
and on a “best efforts” basis as to the remaining shares of Common Stock to be sold up to the maximum offering amount
of $10,000,000 (the “Maximum Offering”), provided however that the Placement Agent and the Company may agree to increase
the Maximum Offering amount up to $15,000,000 without prior notice to the Subscribers, to a limited number of “accredited
investors” (as that term is defined by Rule 501(a) of Regulation D (“Regulation D”) promulgated under the Securities
Act of 1933, as amended (the “Securities Act”);


 


WHEREAS, the Company
and each Subscriber is executing and delivering this agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the SEC under the Securities Act; and


 


WHEREAS the subscription
for the Securities will be made in accordance with and subject to the terms and conditions of this Subscription Agreement and the
Company’s Confidential Private Placement Memorandum dated January 8, 2014, together with all amendments thereof and supplements
and exhibits thereto and as such may be amended from time to time (the “Memorandum”); and


 


WHEREAS, the Subscriber
desires to purchase such number of shares of Preferred Stock (together with the associated Warrants) as set forth on the signature
page hereof on the terms and conditions hereinafter set forth.


 






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NOW, THEREFORE, in consideration
of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto do hereby agree as follows:


 


		I.	SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY SUBSCRIBER



 


1.1     
Subject to the terms and conditions hereinafter set forth (including Section 1.19 hereof) and as set forth in the Memorandum,
the Subscriber hereby subscribes for and agrees to purchase from the Company, and the Company agrees to sell to the Subscriber,
such number of shares of Preferred Stock as is set forth on the signature page hereof. The purchase price is payable by wire transfer,
to be held in escrow until the Minimum Offering is achieved, to the escrow agent (the “Escrow Agent”) as follows:


 


		Bank:	JP MORGAN CHASE BANK



		ABA Number:	021 000 021



		Account #:	323-890113



		Account Name:	AMERICAN STOCK TRANSFER AND TRUST



COMPANY AS AGENT FOR SPENDSMART PAYMENTS COMPANY. FBO
OF (CLIENT/INVESTOR’S NAME)





1.2     
The Subscriber understands acknowledges and agrees that, except as otherwise set forth in Section 3.2 herein or otherwise
required by law, that once irrevocable, the Subscriber is not entitled to cancel, terminate or revoke this Agreement or any agreements
of the Subscriber hereunder and that this Agreement and such other agreements shall survive the death or disability of the Subscriber
and shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal
representatives and permitted assigns. If the Subscriber is more than one person, the obligations of the Subscriber hereunder shall
be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be
made by and be binding upon each such person and his/her heirs, executors, administrators, successors, legal representatives and
permitted assigns


 


1.3     
The Subscriber recognizes that the purchase of the Securities involves a high degree of risk including, but not limited
to, the following: (a) the Company requires substantial funds in addition to the proceeds of the Offering; (b) an investment in
the Company is highly speculative, and only investors who can afford the loss of their entire investment should consider investing
in the Company and the Securities; (c) the Subscriber may not be able to liquidate his, her or its investment; (d) transferability
of the Securities (including any securities issuable upon conversion and/or exercise of the Securities) is extremely limited; (e)
in the event of a disposition, the Subscriber could sustain the loss of its entire investment; and (f) the Company has not paid
any dividends since its inception and does not anticipate paying any dividends.


 


1.4     
At the time such Subscriber was offered the Securities, it was, and as of the date hereof it is, and on each date on which
it converts the Preferred Stock and/or exercises any Warrants, it will be an “accredited investor” as defined in Rule
501(a) under the Securities Act, as indicated by the Subscriber’s responses to the investor questionnaire attached as Exhibit
A to this Agreement (the “Purchaser Questionnaire”), and that the Subscriber is able to bear the economic risk of an
investment in the Securities.


 






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1.5     
The Subscriber hereby acknowledges and represents that (a) the Subscriber has adequate means of providing for the Subscriber’s
current financial needs and contingencies, (b) the Subscriber has knowledge and experience in business and financial matters, prior
investment experience, including investment in securities that are non-listed, unregistered and/or not traded on a national securities
exchange or the Subscriber has employed the services of a “purchaser representative” (as defined in Rule 501 of Regulation
D), attorney and/or accountant to read all of the documents furnished or made available by the Company both to the Subscriber and
to all other prospective investors in the Securities to evaluate the merits and risks of such an investment on the Subscriber’s
behalf; (c) the Subscriber recognizes the highly speculative nature of this investment; (d) the Subscriber is able to bear the
economic risk that the Subscriber hereby assumes, (e) the Subscriber could afford a complete loss of such investment in the Securities.


 


1.6     
The Subscriber hereby acknowledges receipt and careful review of this Agreement, the Memorandum, the certificate of designation
to be filed with the Secretary of State of the State of Colorado for the Preferred Stock (the “Certificate of Designations”)
, the Warrant and all other exhibits, annexes and appendices thereto (collectively referred to as the “Offering Materials”),
and has had access to the Company’s Annual Report on Form 10-K/A and the exhibits thereto for the fiscal year ended September
30, 2012 as well as the Company’s Annual Report on Form 10-K and the exhibits thereto for the fiscal year ended September
30, 2013 (collectively, the “Form 10-K”), the Company’s Quarterly Report on Form 10-Q and the exhibits thereto
for the quarterly period ended June 30, 2013 and the Company’s Quarterly Report on Form 10-Q/A and the exhibits thereto for
the quarterly period ended March 31, 2013 and June 30, 2013, respectively, (collectively, the “Form 10-Q”) and all
subsequent periodic and current reports filed with the United States Securities and Exchange Commission (the “SEC”)
as publicly filed with and available at the website of the SEC which can be accessed at www.sec.gov, and hereby represents that
the Subscriber has been furnished by the Company during the course of the Offering with all information regarding the Company,
the terms and conditions of the Offering and any additional information that the Subscriber has requested or desired to know, and
has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives
of the Company concerning the Company and the terms and conditions of the Offering; provided, however that no investigation performed
by or on behalf of the Subscriber shall limit or otherwise affect its right to rely on the representations and warranties of the
Company contained herein.


 


1.7     
(a)In making the decision to invest in the Securities, the Subscriber has relied solely upon the information provided
by the Company in the Offering Materials. To the extent necessary, the Subscriber has retained, at its own expense, and relied
upon appropriate professional advice regarding the investment, tax and legal merits and consequences of this Agreement and the
purchase of the Securities hereunder. The Subscriber disclaims reliance on any statements made or information provided by any person
or entity in the course of Subscriber’s consideration of an investment in the Securities other than the Offering Materials
and the results of Subscriber’s own independent investigation.


 






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(b)The
Subscriber represents that (i) the Subscriber was contacted regarding the sale of the Securities by the Company or the Placement
Agent (or another person whom the Subscriber believed to be an authorized agent or representative thereof) with whom the Subscriber
had a prior substantial pre-existing relationship and (ii) it did not learn of the offering of the Securities by means of any form
of general solicitation or general advertising, and in connection therewith, the Subscriber did not (A) receive or review any advertisement,
article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio,
whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees
were invited by any general solicitation or general advertising.


 


1.8     
The Subscriber hereby acknowledges that the Offering has not been reviewed by the SEC nor any state regulatory authority
since the Offering is intended to be exempt from the registration requirements of Section 5 of the Securities Act, pursuant to
Section 4(2) of the Securities Act and Rule 506 of Regulation D. The Subscriber understands that the Securities have not been registered
under the Securities Act or under any state securities or “blue sky” laws and agrees not to sell, pledge, assign or
otherwise transfer or dispose of the Securities unless they are registered under the Securities Act and under any applicable state
securities or “blue sky” laws or unless an exemption from such registration is available.


 


1.9     
The Subscriber understands that the Securities (including any securities issuable upon the conversion and/or exercise of
the Securities) have not been registered under the Securities Act by reason of a claimed exemption under the provisions of the
Securities Act that depends, in part, upon the Subscriber’s investment intention. In this connection, the Subscriber hereby
represents that the Subscriber is purchasing the Securities for the Subscriber’s own account for investment and not with
a view toward the resale or distribution to others; provided, however, that nothing contained herein shall constitute an agreement
by the Subscriber to hold the Securities for any particular length of time and the Company acknowledges that the Subscriber shall
at all times retain the right to dispose of its property as it may determine in its sole discretion, subject to any restrictions
imposed by applicable law. The Subscriber, if an entity, further represents that it was not formed for the purpose of purchasing
the Securities.


 


1.10 
The Subscriber consents to the placement of a legend on any certificate or other document evidencing the Securities and,
when issued, the shares of Common Stock issuable upon conversion of the Preferred Stock (the “Conversion Shares”) and/or
exercise of the Warrants (the “Warrant Shares” and collectively with the Conversion Shares, the “Underlying Shares”),
that such securities have not been registered under the Securities Act or any state securities or “blue sky” laws and
setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement. The Subscriber
is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability
of such Securities. The legend to be placed on each certificate shall be in form substantially similar to the following:


 






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“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE
SECURITIES OR “BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”


 


1.11 
The Subscriber hereby represents that the address of the Subscriber furnished by Subscriber on the signature page hereof
is the Subscriber’s principal residence if Subscriber is an individual or its principal business address if it is a corporation
or other entity.


 


1.12 
The Subscriber represents that the Subscriber has full power and authority (corporate, statutory and otherwise) to execute
and deliver this Agreement and to purchase the Securities. This Agreement constitutes the legal, valid and binding obligation of
the Subscriber, enforceable against the Subscriber in accordance with its terms.


 


1.13 
If the Subscriber is a corporation, partnership, limited liability company, trust, employee benefit plan, individual retirement
account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to invest in the Company and the person signing
this Agreement on behalf of such entity has been duly authorized by such entity to do so.


 


1.14 
The Subscriber acknowledges that if he or she is a Registered Representative of a Financial Industry Regulatory Authority
(“FINRA”) member firm, he or she must give such firm the notice required by the FINRA’s Rules of Fair Practice,
receipt of which must be acknowledged by such firm in the Purchaser Questionnaire.


 


1.15 To
effectuate the terms and provisions hereof, the Subscriber hereby appoint the Placement Agent as its attorney-in-fact (and the
Placement Agent hereby accepts such appointment) for the purpose of carrying out the provisions of the Escrow Agreement by and
between the Company, the Placement Agent and American Stock Transfer & Trust Company (the “Escrow Agreement”) including,
without limitation, taking any action on behalf of, or at the instruction of, the Subscriber and executing any release notices
required under the Escrow Agreement and taking any action and executing any instrument that the Placement Agent may deem necessary
or advisable (and lawful) to accomplish the purposes hereof. All acts done under the foregoing authorization are hereby ratified
and approved and neither the Placement Agent nor any designee nor agent thereof shall be liable for any acts of commission or omission,
for any error of judgment, for any mistake of fact or law except for acts of gross negligence or willful misconduct. This power
of attorney, being coupled with an interest, is irrevocable while the Escrow Agreement remains in effect.


 


1.16The
Subscriber agrees not to issue any public statement with respect to the Offering,
Subscriber’s investment or proposed investment in the Company or the terms of any agreement or covenant between
them and the Company without the Company’s prior written consent, except such disclosures as may be required under applicable
law.


 






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1.17 The
Subscriber understands, acknowledges and agrees with the Company that this subscription may be rejected, in whole or in part, by
the Company, in the sole and absolute discretion of the Company, at any time before any Closing notwithstanding prior receipt by
the Subscriber of notice of acceptance of the Subscriber’s subscription.


 


1.18 The Subscriber
acknowledges that the information contained in the Offering Materials or otherwise made available to the Subscriber is confidential
and non-public and agrees that all such information shall be kept in confidence by the Subscriber and neither used by the Subscriber
for the Subscriber’s personal benefit (other than in connection with this subscription) nor disclosed to any third party
for any reason, notwithstanding that a Subscriber’s subscription may not be accepted by the Company; provided, however, that
(a) the Subscriber may disclose such information to its affiliates and advisors who may have a need for such information in connection
with providing advice to the Subscriber with respect to its investment in the Company so long as such affiliates and advisors have
an obligation of confidentiality, and (b) this obligation shall not apply to any such information that (i) is part of the public
knowledge or literature and readily accessible at the date hereof, (ii) becomes part of the public knowledge or literature and
readily accessible by publication (except as a result of a breach of this provision) or (iii) is received from third parties without
an obligation of confidentiality (except third parties who disclose such information in violation of any confidentiality agreements
or obligations, including, without limitation, any subscription or other similar agreement entered into with the Company).


 


1.19Subscriber
understands that the Securities 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 Subscriber’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such
Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of such Subscriber to
acquire the Securities. The Subscriber agrees to supply the Company, within five (5) days after the Subscriber receives
the request therefor from the Company, with such additional information concerning the Subscriber as the Company deems necessary
or advisable


 


1.20 The Subscriber
understands that Rule 144 promulgated under the Act (“Rule 144”) requires, among other conditions, a minimum holding
period of six-months prior to the resale of securities acquired in a non-public offering without having to satisfy the registration
requirements under the Act. The Subscriber understands and hereby acknowledges that the Company is under no obligation to register
the Securities under the Act or any state securities or “blue sky” laws or to assist the Subscriber in obtaining an
exemption from various registration requirements, other than as set forth herein.


 


1.21 The Subscriber
agrees to hold the Company and its directors, officers, employees, controlling persons and agents (including the Placement Agent
and its managers, members, officers, directors, employees, counsel, controlling persons and agents) and their respective heirs,
representatives, successors and assigns harmless from and to indemnify them against all liabilities, costs and expenses incurred
by them as a result of (i) any misrepresentation made by the Subscriber contained in this Agreement (including Article VII hereunder)
or breach of any warranty by the Subscriber in this Agreement or in any Exhibits or Schedules attached hereto; (ii) any untrue
statement of a material fact made by the Subscriber and contained herein; or (iii) after any applicable notice and/or cure periods,
any breach or default in performance by the Subscriber of any covenant or undertaking to be performed by the Subscriber hereunder,
or any other Offering Materials entered into by the Company and Subscriber relating hereto. Notwithstanding the foregoing, in no
event shall the liability of the Subscriber hereunder be greater than the aggregate subscription amount paid for the Securities
as set forth on the signature page hereto.


 






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1.22 If the
Subscriber is purchasing the Securities in a fiduciary capacity for another person or entity, including without limitation a corporation,
partnership, trust or any other entity, the Subscriber has been duly authorized and empowered to execute this Agreement and all
other subscription documents, and such other person fulfills all the requirements for purchase of the Securities as such requirements
are set forth herein, concurs in the purchase of the Securities and agrees to be bound by the obligations, representations, warranties
and covenants contained herein. Upon request of the Company, the Subscriber will provide true, complete and current copies of all
relevant documents creating the Subscriber, authorizing its investment in the Company and/or evidencing the satisfaction of the
foregoing.


 


		II.	REPRESENTATIONS BY AND COVENANTS OF THE COMPANY



 


The Company hereby represents
and warrants to the Subscriber that:


 


2.1     
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado and has full corporate power and authority to own and use its properties
and its assets and conduct its business as currently conducted. Each of the Company’s subsidiaries (the “Subsidiaries”)
is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation with
the requisite corporate power and authority to own and use its properties and assets and to conduct its business as currently conducted.
Neither the Company, nor any of its Subsidiaries is in violation of any of the provisions of their respective articles of incorporation,
by-laws or other organizational or charter documents, including, but not limited to the Charter Documents (as defined below). Each
of the Company and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where
the failure to be so qualified or in good standing, as the case may be, would not result in a direct and/or indirect (i) material
adverse effect on the legality, validity or enforceability of any of the Securities and/or this Agreement, (ii) material adverse
effect on the results of operations, assets, business, condition (financial and other) or prospects of the Company and its Subsidiaries,
taken as a whole, or (iii) material adverse effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under the Offering Materials (as defined below) (any of (i), (ii) or (iii), a “Material Adverse Effect”).


 






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2.2     
Capitalization and Voting Rights. As of January 2, 2014, the Company is authorized to issue 300,000,000 shares of
common stock, of which, 10,374,062 shares were issued and outstanding, and 10,000,000 shares of “blank check” preferred
stock authorized, of which 16,000 have been designated as Series A Convertible Preferred Stock of which none are issued and outstanding,
12,000 have been designated as Series B Convertible Preferred Stock of which none are issued and outstanding. All issued and outstanding
shares of capital stock of the Company are validly issued, fully paid and nonassessable. Except as set forth in the Memorandum
or in the SEC Reports (as defined below), (i) there are no outstanding securities of the Company or any of its Subsidiaries which
contain any preemptive, redemption or similar provisions, nor is any holder of securities of the Company or any Subsidiary entitled
to preemptive or similar rights arising out of any agreement or understanding with the Company or any Subsidiary by virtue of any
of the Offering Materials, 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; (ii) neither the Company
nor any Subsidiary has any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement;
and (iii) there are no outstanding options, warrants, agreements, convertible securities, preemptive rights or other rights to
subscribe for or to purchase or acquire, any shares of capital stock of the Company or any Subsidiary or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may become bound to issue any shares of capital stock
of the Company or any Subsidiary, or securities or rights convertible or exchangeable into shares of capital stock of the Company
or any Subsidiary. Except as set forth in SEC Reports and as otherwise required by law, there are no restrictions upon the voting
or transfer of any of the shares of capital stock of the Company pursuant to the Company’s Charter Documents (as defined
below) or other governing documents or any agreement or other instruments to which the Company is a party or by which the Company
is bound. All of the issued and outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable
and the shares of capital stock of the Subsidiaries are owned by the Company, free and clear of any mortgages, pledges, liens,
claims, charges, encumbrances or other restrictions (collectively, “Encumbrances”). All of such outstanding capital
stock has been issued in compliance with applicable federal and state securities laws. The issuance and sale of the Underlying
Shares, as contemplated hereby, will not obligate the Company to issue shares of Common Stock or other securities to any other
person (other than the Subscribers) and will not result in the adjustment of the exercise, conversion, exchange or reset price
of any outstanding security. The Company does not have outstanding stockholder purchase rights or “poison pill” or
any similar arrangement in effect giving any person the right to purchase any equity interest in the Company upon the occurrence
of certain events.


 


2.3     
Authorization; Enforceability. The Company has all corporate right, power and authority to enter into, execute and
deliver this Agreement and each other agreement, document, instrument and certificate to be executed by the Company in connection
with the consummation of the transactions contemplated hereby, including, but not limited to the Offering Materials, and to perform
fully its obligations hereunder and thereunder. All corporate action on the part of the Company, its directors and stockholders
necessary for the (a) authorization execution, delivery and performance of this Agreement and the Offering Materials by the Company;
and (b) authorization, sale, issuance and delivery of the Securities and upon issuance, the Underlying Shares contemplated hereby
and the performance of the Company’s obligations under this Agreement and the Offering Materials has been taken. This Agreement
and the Offering Materials have been duly executed and delivered by the Company and each constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with its respective terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies, and to limitations of public policy. The Securities are duly authorized and, when issued and
paid for in accordance with the applicable Offering Materials, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Encumbrances other than restrictions on transfer provided for in the Offering Materials. The Conversion Shares,
when issued in accordance with the terms of the Certificate of Designation, will be validly issued, fully paid and nonassessable,
free and clear of all Encumbrances imposed by the Company other than restrictions on transfer provided for in the Offering Materials.
The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable,
free and clear of all Encumbrances imposed by the Company other than restrictions on transfer provided for in the Offering Materials.
The Company has reserved a sufficient number of shares of Common Stock for issuance upon the exercise of the Warrants, free and
clear of all Encumbrances, except for restrictions on transfer set forth in the Offering Materials or imposed by applicable securities
laws. Except as set forth on Schedule 2.3 hereto, the issuance and sale of the Securities (including the Warrant Shares)
contemplated hereby will not give rise to any preemptive rights or rights of first refusal on behalf of any person.


 






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2.4     
No Conflict; Governmental Consents.


 


(a)               
The execution and delivery by the Company of this Agreement and the Offering Materials, the issuance and sale of the Securities
(including, when issued, the Warrant Shares) and the consummation of the other transactions contemplated hereby or thereby do not
and will not (i) result in the violation of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of
any court or governmental authority to or by which the Company is bound including without limitation all foreign, federal, state
and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have
or reasonably be expected to result in a Material Adverse Effect, (ii) conflict with or violate any provision of the Company’s
Articles of Incorporation (the “Articles”), as amended or the Bylaws, (and collectively with the Articles, the “Charter
Documents”) of the Company, and (iii) conflict with, or result in a material breach or violation of, any of the terms or
provisions of, or constitute (with or without due notice or lapse of time or both) a default or give to others any rights of termination,
amendment, acceleration or cancellation (with or without due notice, lapse of time or both) under any agreement, credit facility,
lease, loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of their respective properties or assets is subject, nor
result in the creation or imposition of any Encumbrances upon any of the properties or assets of the Company or any Subsidiary.


 


(b)              
No approval by the holders of Common Stock, or other equity securities of the Company is required to be obtained by the
Company in connection with the authorization, execution, delivery and performance of this Agreement and the other Offering Materials
or in connection with the authorization, issue and sale of the Securities and, upon issuance, the Underlying Shares, except as
has been previously obtained.


 






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(c)               
Except as set forth on Schedule 2.4 hereto, no consent, approval, authorization or other order of any governmental
authority or any other person is required to be obtained by the Company in connection with the authorization, execution, delivery
and performance of this Agreement and the other Offering Materials or in connection with the authorization, issue and sale of the
Securities and, upon issuance, the Underlying Shares, except such post-sale filings as may be required to be made with the SEC,
FINRA and with any state or foreign blue sky or securities regulatory authority, all of which shall be made when required.


 


2.5     
Consents of Third Parties. No vote, approval or consent of any holder of capital stock of the Company or any other
third parties is required or necessary to be obtained by the Company in connection with the authorization, execution, deliver and
performance of this Agreement and the other Offering Materials or in connection with the authorization, issue and sale of the Securities
and, upon issuance, the Warrant Shares, except as previously obtained, each of which is in full force and effect.


 


2.6     
SEC Reports; Financial Statements. Except for the Company’s Quarterly Report on Form 10-Q for the period ended
June 30, 2013, the Company has filed all reports required to be filed by it under the Securities Act and Securities Exchange Act
of 1934 (the “Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, for the twenty-four months preceding
the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing materials being
collectively referred to herein as the "SEC Reports" and, together with the Schedules to this Agreement (if any), the
"Disclosure Materials") on a timely basis or has timely filed a valid extension of such time of filing and has filed
any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the footnotes
thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.


 


2.7     
Licenses. Except as otherwise set forth in the SEC Reports, the Company and its Subsidiaries have sufficient licenses,
permits and other governmental authorizations currently required for the conduct of their respective businesses or ownership of
properties and is in all material respects in compliance therewith.


 






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2.8     
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as
described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit


 


2.9     
Litigation. Except as set forth in the SEC Reports, the Company knows of no pending or threatened legal or governmental
proceedings against the Company or any Subsidiary which could materially adversely affect the business, property, financial condition
or operations of the Company and its Subsidiaries, taken as a whole, or which materially and adversely questions the validity of
this Agreement or the other Offering Materials or the right of the Company to enter into this Agreement and the other Offering
Materials, or to perform its obligations hereunder and thereunder. Neither the Company nor any Subsidiary is a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality which
could materially adversely affect the business, property, financial condition or operations of the Company and its Subsidiaries
taken as a whole. Except as set forth in the SEC Reports, there is no action, suit, proceeding or investigation by the Company
or any Subsidiary currently pending in any court or before any arbitrator or that the Company or any Subsidiary intends to initiate.
Neither the Company nor any Subsidiary, nor any director or officer thereof, is or since the Form 10-K has been the subject of
any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary
duty. There has not been, and to the Company’s knowledge, there is not pending or contemplated, any investigation by the
SEC involving the Company or any current or former director or officer of the Company.


 


2.10 
Investment Company. The Company is not an “investment company” within the meaning of such term under
the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.


 


2.11 
Brokers. Except for the Placement Agent and as set forth on Schedule 2.11, neither the Company nor any of
the Company's officers, directors, employees or stockholders has employed or engaged any broker or finder in connection with the
transactions contemplated by this Agreement and no fee or other compensation is or will be due and owing to any broker, finder,
underwriter, placement agent or similar person in connection with the transactions contemplated by this Agreement. The Company
is not party to any agreement, arrangement or understanding whereby any person has an exclusive right to raise funds and/or place
or purchase any debt or equity securities for or on behalf of the Company.


 






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2.12 
Intellectual Property; Employees.


 


(a)               
The Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes necessary for its business as now conducted and
as presently proposed to be conducted, without any known infringement of the rights of others as described in the SEC Reports and
which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
Except as disclosed in the Memorandum and the SEC Reports, there are no material outstanding options, licenses or agreements of
any kind relating to the Intellectual Property Rights, nor is the Company bound by or a party to any material options, licenses
or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising
from the purchase of “off the shelf” or standard products. The Company has not received any written communications
alleging that the Company has violated or, by conducting its business as presently proposed to be conducted, would violate any
Intellectual Property Rights of any other person or entity. The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect


 


(b)              
Except as disclosed in the SEC Reports, the Company is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company’s
business as presently conducted.


 


(c)               
Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s business by the employees
of the Company, nor the conduct of the Company’s business as presently conducted, will, to the Company’s knowledge,
conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant
or instrument under which any employee is now obligated.


 


(d)              
To the Company’s knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is
in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right
of any such individual to be employed by, or to contract with, the Company because of the nature of the business conducted by the
Company; and to the Company’s knowledge the continued employment by the Company of its present employees, and the performance
of the Company’s contracts with its independent contractors, will not result in any such violation. The Company has not received
any written notice alleging that any such violation has occurred. Except as described in the Memorandum, no employee of the Company
has been granted the right to continued employment by the Company or to any compensation following termination of employment with
the Company except for any of the same which would not have a Material Adverse Effect on the business of the Company. The Company
is not aware that any officer, key employee or group of employees intends to terminate his, her or their employment with the Company,
nor does the Company have a present intention to terminate the employment of any officer, key employee or group of employees.


 


2.13 
Title to Properties and Assets; Liens, Etc. Except as described in the SEC Reports, the Company has good and marketable
title to its properties and assets, including the properties and assets reflected in the most recent balance sheet included in
the Company’s financial statements, and good title to its leasehold estates, in each case subject to no Encumbrances, other
than (a) those resulting from taxes which have not yet become delinquent; and (b) Encumbrances which do not materially detract
from the value of the property subject thereto or materially impair the operations of the Company; and (c) those that have otherwise
arisen in the ordinary course of business, none of which are material. The Company is in compliance with all material terms of
each lease to which it is a party or is otherwise bound.


 






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2.14 
Obligations to Related Parties. Except as described in the SEC Reports, there are no obligations of the Company to
officers, directors, stockholders, or employees of the Company other than (a) for payment of salary or other compensation for services
rendered, (b) reimbursement for reasonable expenses incurred on behalf of the Company and (c) for other standard employee benefits
made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by
the Board of Directors of the Company). Except as disclosed in the SEC Reports, none of the officers or directors of the Company
and, to the Company’s knowledge, none of the employees of the Company is presently a party to any transaction with the Company
or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or,
to the Company’s knowledge, any entity in which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.


 


2.15 
Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except
as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected in the Company's financial statements pursuant to generally
accepted accounting principles or required to be disclosed in filings made with the SEC, (iii) the Company has not altered its
method of accounting or the identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its
capital stock, and (v) the Company has not issued any equity securities to any officer, director or affiliate, except pursuant
to existing Company stock option plans. The Company does not have pending before the SEC any request for confidential treatment
of information.


 


2.16 
Compliance. The Company is in compliance with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations thereunder, that are applicable to it, except where such noncompliance could not have or reasonably
be expected to result in a Material Adverse Effect.


 






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2.17 
No General Solicitation. None of the Company, its Subsidiaries, any of their affiliates, and any person acting on
their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Securities.


 


2.18 
No Integrated Offering. Except as disclosed in the Memorandum and SEC Reports, and assuming the accuracy of
the Subscriber representations and warranties set forth in Article I hereunder, none of the Company, its Subsidiaries, any of their
affiliates, and 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 any of the Securities under the Securities
Act or cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities
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. Except as disclosed in the
Memorandum and SEC Reports, none of the Company, its Subsidiaries, their affiliates and any person acting on their behalf, have
taken any action or steps referred to in the preceding sentence that would require registration of any of the Securities under
the Securities Act or cause the offering of the Securities to be integrated with other offerings.


 


2.19 
Application of Takeover Protections. The Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company's Charter Documents or the laws of its state of incorporation that is or could
become applicable to the Subscriber as a result of the Subscriber and the Company fulfilling their obligations or exercising their
rights under this Agreement, including, without limitation, the Company's issuance of the Securities and the Subscriber' ownership
of the Securities.


 


2.20 
Taxes. Each of the Company and its subsidiaries has filed all U.S. federal, state, local and foreign tax returns
which are required to be filed by each of them and all such returns are true and correct in all material respects, except for such
failures to file which could not reasonably be expected to have a Material Adverse Effect. The Company and each subsidiary has
paid all taxes pursuant to such returns or pursuant to any assessments received by any of them or by which any of them are obligated
to withhold from amounts owing to any employee, creditor or third party. The Company and each subsidiary has properly accrued all
taxes required to be accrued and/or paid, except where the failure to accrue would not have a Material Adverse Effect. To the knowledge
of the Company, the tax returns of the Company and its subsidiaries are not currently being audited by any state, local or federal
authorities. Neither the Company nor any subsidiary has waived any statute of limitations with respect to taxes or agreed to any
extension of time with respect to any tax assessment or deficiency. The Company has set aside on its books adequate provision for
the payment of any unpaid taxes.


 


2.21 
Registration Rights. Other than the Subscribers to this Offering and except as set forth on Schedule 2.21,
no person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.


 






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2.22 
Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. Except for the Company’s Common Stock listing being moved from the OTCBB to the OTCQB on July
23, 2012, the Company has not, in the 12 months preceding the date hereof, received notice from any trading market on which the
Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance
requirements of such trading market. The Company is, and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements.


 


2.23 
Material Contracts. The SEC Reports contain all material contracts, agreements, commitments, arrangements, leases,
policies or other instruments to which either the Company or any of its subsidiaries is a party or by which it is bound, which
are required to be filed pursuant to the Securities Act or the Exchange Act (the “Material Contracts”). Except as otherwise
described in the SEC Reports, the Material Contracts are valid and in full force and effect as to the Company and any of the Subsidiaries,
and, to the Company’s knowledge, to the other parties thereto. Except as otherwise disclosed in the Memorandum or the SEC
Reports, neither the Company nor any Subsidiary is in violation of, or default under (and there does not exist any event or condition
which, after notice or lapse of time or both, would constitute such a default under), the Material Contracts, except to the extent
that such violations or defaults, individually or in the aggregate, could not reasonably be expected to (a) affect the validity
of this Agreement or the other Offering Materials, (b) have a Material Adverse Effect, or (c) impair the ability of the Company
or any Subsidiary to perform fully on a timely basis any material obligation which the Company or any Subsidiary has or will have
under this Agreement or any other Offering Materials. To the Company’s knowledge, none of the other parties to any Material
Contract are in violation of or default under any Material Contract in any material respect. Neither the Company nor any Subsidiary
has received any notice of cancellation or any written communication threatening cancellation of any Material Contract by any other
party thereto.


 


2.24 
Contributions. Neither the Company nor any Subsidiary has directly or indirectly, (i) made any unlawful contribution
to any candidate for public office, or failed to disclose fully where required by law any contribution in violation of law, or
(ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.


 


2.25 
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Offering
Materials, the Company confirms that neither it nor any other person acting on its behalf has provided the Subscriber or its agents
or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company
understands and confirms that the Subscriber will rely on the foregoing representation in effecting transactions in securities
of the Company. All disclosure furnished by or on behalf of the Company to the Subscriber regarding the Company, its business and
the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during
the twelve months preceding the date of this Agreement taken as a whole together the SEC Reports do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements,
in light of the circumstances under which they were made and when made, not misleading.


 






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2.26 
Private Placement. Assuming the accuracy of the Subscribers’ representations and warranties set forth in Section
1, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Subscriber
as contemplated hereby.


 


2.27 
DTC Status. The Company’s transfer agent (the “Transfer Agent”) is a partial member participant
of the Depository Trust Company Automated Securities Transfer Program. The Company's Common Stock is currently eligible for transfer
pursuant to the Depository Trust Company Automated Securities Transfer Program.


 


2.28 
OFAC. Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee, affiliate
or person acting on its behalf, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the sale
of the Units, or lend, contribute or otherwise make available such proceeds to any joint venture partner or other person or entity,
towards any sales or operations in Cuba, Iran, Syria, Sudan, Myranmar or any other country sanctioned by OFAC or for the purpose
of financing the activities of any person currently subject to any U.S. sanctions.


 


2.29 
Bad Actor Disqualification


 


(a)      
No Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506 under
the Securities 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, any beneficial owner of 20% or more
of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term
is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an "Issuer
Covered Person" and, together, "Issuer Covered Persons") is subject to any of the "Bad Actor" disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person
is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Placement Agent and the Subscriber a copy of any disclosures provided thereunder.


 






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(b)     
Other Covered Persons. The Company is not aware of any person that (i) has been or will be paid (directly or indirectly)
remuneration for solicitation of purchasers in connection with the sale of the Securities and (ii) who is subject to a Disqualification
Event.  


 


(c)      
Notice of Disqualification Events. The Company will notify the Placement Agent in writing 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, prior to any Closing of this Offering.


 


 


		III.	TERMS OF SUBSCRIPTION



 


3.1     
The Securities will be offered for sale until the earlier of (i) the date upon which subscriptions for the Maximum Offering
offered hereunder have been accepted, or (ii) February 14, 2014, unless extended by the Company and the Placement for an additional
thirty (30) day period without prior notice to the Investors, unless terminated at an earlier time by mutual agreement between
the Company and the Placement Agent (the “Termination Date”). The Offering is being conducted on a “best efforts
all-or-none” basis for the Minimum Offering and a “best efforts” basis for the Maximum Offering.


 


3.2     
The Company may hold an initial closing (“Initial Closing”) at any time after the receipt of accepted subscriptions
for the Minimum Offering. After the Initial Closing, subsequent closings with respect to additional Securities may take place at
any time prior to the Termination Date as determined by the Company, with respect to subscriptions accepted prior to the Termination
Date (each such closing, together with the Initial Closing, being referred to as a “Closing”). The last Closing of
the Offering, occurring on or prior to the Termination Date, shall be referred to as the “Final Closing”. Any subscription
documents or funds received after the Final Closing will be returned, without interest or deduction. In the event that the any
Closing does not occur prior to the Termination Date, all amounts paid by the Subscriber shall be returned to the Subscriber, without
interest or deduction. The Subscriber may revoke its subscription and obtain a return of the subscription amount paid to the Escrow
Account at any time before the date of the Initial Closing by providing written notice to the Placement Agent, the Company and
the Escrow Agent as provided in Section 6.1 below. Upon receipt of a revocation notice from the Subscriber prior to the date of
the Initial Closing, all amounts paid by the Subscriber shall be returned to the Subscriber, without interest or deduction. The
Subscriber may not revoke this subscription or obtain a return of the subscription amount paid to the Escrow Agent on or after
the date of the Initial Closing. Any subscription received after the Initial Closing but prior to the Termination Date shall be
irrevocable.


 


3.3     
The minimum purchase that may be made by any prospective investor shall be $50,000. Subscriptions for investment below the
minimum investment may be accepted at the discretion of the Placement Agent and the Company. The Company and the Placement Agent
reserve the right to reject any subscription made hereby, in whole or in part, in their sole discretion. The Company’s agreement
with each Subscriber is a separate agreement and the sale of the Securities to each Subscriber is a separate sale. The Placement
Agent and the Company may agree to increase the Maximum Offering amount up to $15,000,000 without prior notice to the Subscribers.


 






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3.4     
All funds shall be deposited in the account identified in Section 1.1 hereof.


 


3.5     
Certificates representing the Preferred Stock and the Warrants purchased by the Subscriber pursuant to this Agreement will
be prepared for delivery to the Subscriber as soon as practicable following the Closing (but in no event later than seven (7) days
after a Closing) at which such purchase takes place. The Subscriber hereby authorizes and directs the Company to deliver the certificates
representing the Securities purchased by the Subscriber pursuant to this Agreement directly to the Subscriber’s residential
or business or brokerage house address indicated on the signature page hereto.


 


3.6     
The Company’s agreement with each Subscriber is a separate agreement and the sale of Securities to each Subscriber
is a separate sale.


 


		IV.	CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBER



 


4.1     
The Subscriber’s obligation to purchase the Securities at the Closing at which such purchase is to be consummated
is subject to the fulfillment on or prior to such Closing of the following conditions, which conditions may be waived at the option
of each Subscriber to the extent permitted by law:


 


(a)       
Representations and Warranties; Covenants. The representations and warranties made by the Company in Section 2 hereof
qualified as to materiality shall be true and correct at all times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true
and correct as of such earlier date, and, the representations and warranties made by the Company in Section 2 hereof not qualified
as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the
extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty
shall be true and correct in all material respects as of such earlier date. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the date of such Closing shall have been performed or complied
with in all material respects.


 


(b)      
No Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions
contemplated by this Agreement.


 


(c)       
No Law Prohibiting or Restricting Such Sale. There shall not be in effect any law, rule or regulation prohibiting
or restricting such sale or requiring any consent or approval of any person, which shall not have been obtained, to issue the Securities
(except as otherwise provided in this Agreement).


 


(d)      
Required Consents. The Company shall have obtained any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale of the Securities and the consummation of the other transactions
contemplated by the Offering Materials, all of which shall be in full force and effect.


 






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(e)Adverse
Changes. As of the date of execution of this Agreement, no event or series of events shall have occurred that reasonably could
have or result in a Material Adverse Effect.


 


(f)No
Suspensions of Trading in Common Stock; Listing. Except as disclosed in Section 2.22 of this Agreement, trading in the Common
Stock shall not have been suspended by the SEC or any trading market (except for any suspensions of trading of not more than one
trading day solely to permit dissemination of material information regarding the Company) at any time since the date of execution
of this Agreement, and the Common Stock shall have been at all times since such date listed or quoted for trading on the Company’s
principal trading market.


 


(g)Blue
Sky. The Company shall have completed qualification for the Securities under applicable Blue Sky laws.


 


(h)Legal Opinion.
The Company’s corporate counsel shall have delivered a legal opinion addressed to Placement Agent in a form reasonably acceptable
to the Placement Agent.


 


(i)Disclosure
Schedules. The Company shall have delivered to the Subscriber a copy of its Disclosure Schedules qualifying any of the representations
and warranties contained in Section 2.


 


		V.	COVENANTS OF THE COMPANY



 


5.1     
Listing of Securities. The Company agrees, (i) if the Company applies to have the Common Stock traded on any other
trading market, it will include in such application the Underlying Shares, and will take such other action as is necessary or desirable
to cause the Underlying Shares to be listed on such other trading market as promptly as possible, and (ii) it will take all action
reasonably necessary to continue the listing and trading of its Common Stock on a trading market and will comply in all material
respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the trading market.


 


5.2     
Reservation of Shares. The Company shall at all times while the Preferred Stock and the Warrants are outstanding
maintain a reserve from its duly authorized shares of Common Stock of a number of shares of Common Stock sufficient to allow for
the issuance of the Underlying Shares.


 


5.3     
Replacement of Securities. If any certificate or instrument evidencing any Securities or the Underlying Shares is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants
for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the
issuance of such replacement securities. If a replacement certificate or instrument evidencing any securities is requested due
to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent
to any issuance of a replacement.


 






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5.4     
Furnishing of Information. Until the time that no Subscriber owns Securities, the Company covenants to maintain the
registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant
to the Exchange Act. As long as Subscriber owns Securities, if the Company is not required to file reports pursuant to the Exchange
Act, it will prepare and furnish to Subscriber and make publicly available in accordance with Rule 144(c) such information as is
required for the Subscribers to sell the Securities under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, to the extent required from time to time to enable such person to sell
such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144.


 


5.5     
Securities Laws; Publicity. The Company shall, by 8:30 a.m. (New York City time) on the fourth Trading Day immediately
following a Closing hereunder, issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated
hereby and including the Offering Materials as exhibits thereto. The Company shall not publicly disclose the name of Subscriber,
or include the name of any Subscriber in any filing with the Commission or any regulatory agency or trading market, without the
prior written consent of Subscriber, except: (a) as required by federal securities law in connection with (i) any registration
statement contemplated by the Registration Rights Agreement and (ii) the filing of final Offering Materials (including signature
pages thereto) with the SEC and (b) to the extent such disclosure is required by law, in which case the Company shall provide the
Subscriber with prior notice of such disclosure permitted under this clause (b).


 


5.6     
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof, promptly upon request of the Subscriber. The Company shall take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to
the Subscriber at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of any Subscriber.


 


5.7     
Equal Treatment of Subscribers. No consideration (including any modification of any Transaction Document) shall be
offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Offering Materials
unless the same consideration is also offered to all of the parties to the Offering Materials.


 






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5.8    
Indemnification. 


 


(a)       
The Company agrees to indemnify and hold harmless the Subscriber, its affiliates and their respective officers, directors,
employees, agents and controlling persons (collectively, the “Indemnified Parties”) from and against , any and all
loss, liability, damage or deficiency suffered or incurred by any Indemnified Party by reason of (i) any misrepresentation or breach
of warranty by the Company or, after any applicable notice and/or cure periods, nonfulfillment of any covenant or agreement to
be performed or complied with by the Company under this Agreement, the Offering Materials and/or (ii) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment
or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus (as defined
below) or supplement thereto, in light of the circumstances under which they were made) not misleading; and will promptly reimburse
the Indemnified Parties for all expenses (including reasonable fees and expenses of legal counsel) as incurred in connection with
the investigation of, preparation for or defense of any pending or threatened claim related to or arising in any manner out of
any of the foregoing, or any action or proceeding arising therefrom (collectively, “Proceedings”), whether or not such
Indemnified Party is a formal party to any such Proceeding.


 


(b)      
If for any reason (other than a final non-appealable judgment finding any Indemnified Party liable for losses, claims, damages,
liabilities or expenses for its gross negligence or willful misconduct) the foregoing indemnity is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless, then the Company shall contribute to the amount paid or payable by
an Indemnified Party as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect
not only the relative benefits received by the Company but also the relative fault by the Company and the Indemnified Party, as
well as any relevant equitable considerations.


 


5.9Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Offering Materials,
the Company covenants and agrees that neither it, nor any other person acting on its behalf, will provide Subscriber or its agents
or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto Subscriber
shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and
confirms that Subscriber shall be relying on the foregoing covenant in effecting transactions in securities of the Company.


 


5.10Use
of Proceeds. Except as set forth in the Memorandum, the Company shall use the net proceeds from the sale of the Securities
hereunder for the acquisition of Intellectual Capital Management, Inc., d/b/a SMS Masterminds
(“SMS Masterminds”), the expansion of SMS Masterminds licensee and merchant network, technology development
and integration between the Company & SMS Masterminds, new product development, launch and marketing, as well as for customer
account acquisition, brand marketing, other operating expenses, and working capital and shall not use such proceeds for: (a) the
satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s
business and prior practices) or (b) the redemption of any Common Stock or Common Stock equivalents.


 


VIREGISTRATION
RIGHTS


 


6.1Definitions.
As used in this Section, the following terms shall have the following meanings:


 






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“Effectiveness
Date” means, with respect to the Initial Registration Statement required to be filed hereunder, as soon as commercially
practicable following the filing of the Initial Registration Statement, and with respect to any additional Registration Statements
which may be required pursuant to Section 5.3(c), as soon as commercially practicable following the date on which an additional
Registration Statement is required to be filed hereunder.


 


“Effectiveness
Period” means the period from the Effectiveness Date of a Registration Statement through the date that all Registrable
Securities covered by such Registration Statement have been sold, or may be sold without volume restrictions pursuant to Rule 144,
as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the
Company’s transfer agent and the affected Holders.


 


“Initial Registration
Statement” means the initial Registration Statement filed pursuant to this Agreement.


 


“Legal Counsel”
means one (1) counsel as designated by a majority of the holders of the Underlying Shares.


 


“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.


 


“Registrable
Securities” means (a) all of the Conversion Shares (assuming on the date of determination the Preferred Stock is exercised
in full without regard to any exercise limitations therein), (b) all of the Warrant Shares (assuming on the date of determination
the Warrants are exercised in full without regard to any exercise limitations therein), (c) any shares of Common Stock issuable
upon exercise and/or conversion of any warrants issued to the Placement Agent (assuming on the date of determination the Warrants
are exercised in full without regard to any exercise limitations therein) (d) any additional shares of Common Stock issuable in
connection with any anti-dilution provisions in the Warrants (without giving effect to any limitations on exercise set forth in
the Warrants) and (e) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing; provided, however, that the Company shall not be required to maintain
the effectiveness, or file another Registration Statement hereunder with respect to any Registrable Securities that are (i) not
subject to the current public information requirement under Rule 144 and that are eligible for resale without volume or manner-of-sale
restrictions without current public information pursuant to Rule 144 promulgated by the Commission or (ii) not required to be registered
in reliance upon the exemption in Section 4(1) under the Securities Act, in either case pursuant to a written opinion letter to
such effect, addressed, delivered and acceptable to the affected Subscribers.


 






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“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 5.2(a) and any additional
registration statements contemplated by Section 5.3(c), including (in each case) the Prospectus, amendments and supplements to
any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in any such registration statement.


 


“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.


 


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


 


“SEC Guidance”
means (i) any publicly-available written or oral guidance, comments, requirements or requests of the Commission staff and (ii)
the Securities Act.


 


6.2 Piggy Back
Registration.


 


(a)               
At any time the Registrable Securities are owned by a Subscriber and there is not an effective registration statement covering
all of the Registrable Securities, and if the Company shall determine to prepare and file with the SEC a registration statement
relating to an offering for its own account or the account of others under the Act, of any of its equity securities, other than
on Form S-4 or Form S-8 (each as promulgated under the Act) or their then equivalents, relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s
stock option or other employee benefit plans, then the Company shall deliver to each Subscriber a written notice of such determination
and, if within fifteen (15) days after the date of the delivery of such notice, any such Subscriber shall so request in writing,
the Company shall include in such registration statement all or any part of such Registrable Securities such Subscriber requests
to be registered; provided, however, that Registrable Securities will not be included if the underwriter(s) associated with the
offering which is the subject of the registration statement believes, in good faith, that the inclusion of such Registrable Securities
will have an adverse effect on the sale of the securities for which such registration statement was filed, and further provided,
however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6.2
that are eligible for resale pursuant to Rule 144 promulgated by the SEC pursuant to the Act or that are the subject of a then
effective registration statement. If any SEC Guidance sets forth a limitation on the number of securities permitted to be registered
on a particular registration statement (and notwithstanding that the Company used diligent efforts to advocate with the SEC for
the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Subscriber as
to its Registrable Securities, the number of Registrable Securities to be registered on such registration statement will be reduced
on a pro rata basis with such other securities being registered on the applicable registration after as full an allocation as possible
has been afforded for the securities for which the registration statement has been filed.


 






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(b)              
Reserved.


 


(c)               
Subject to the terms and conditions of this Agreement, Subscribers shall have the right to select Legal Counsel to review
and oversee, solely on its behalf, any Registration Statement pursuant to this Agreement, if such Registration Statement is filed.
The Company shall also reimburse Legal Counsel for its documented fees and disbursements in connection with registration, filing
or qualification pursuant to this Agreement which amount shall be limited to $7,500.


 


6.3 Registration
Procedures. In connection with the Company’s registration obligations hereunder, the Company shall:


 


(a)               
Not less than five (5) Trading days prior to the filing of each Registration Statement and not less than one (1) Trading
day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to Legal Counsel copies of the Registration
Statement proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will
be subject to the review of Legal Counsel; and (ii) cause its officers and directors, counsel and independent registered public
accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of Legal Counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus
or any amendments or supplements thereto to which the Subscribers of a majority of the Registrable Securities or Legal Counsel
shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than three
(3) Trading days after Legal Counsel has been so furnished a copy of a Registration Statement or one (1) Trading day after Legal
Counsel has been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Subscriber agrees to
furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex B (a “Selling
Stockholder Questionnaire”) on a date that is not less than two (2) Trading days prior to the Filing Date or by the end
of the fourth (4th) Trading day following the date on which such Subscriber receives draft materials in accordance with
this Section.


 


(b)              
(i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as
to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement),
and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments
received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably
possible to the Subscriber’s true and complete copies of all correspondence from and to the Commission relating to a Registration
Statement (provided that, the Company may excise any information contained therein which would constitute material non-public information
as to any Subscriber which has not executed a confidentiality agreement with the Company), and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered
by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended
methods of disposition by the Subscribers thereof set forth in such Registration Statement as so amended or in such Prospectus
as so supplemented.


 






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(c)               
Notify the Subscribers of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi)
hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly
as reasonably possible (and, in the case of (i)(A) below, not less than one trading day prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one Trading day following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission
notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments
or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission
or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by
the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of
the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible
for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement,
Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made, not misleading and (vi) of the occurrence
or existence of any pending corporate development with respect to the Company that the Company believes may be material and that,
in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration
Statement or Prospectus, provided that, any and all of such information shall remain confidential to each Subscriber until such
information otherwise becomes public, unless disclosure by a Subscriber is required by law; provided, further, that
notwithstanding each Subscriber’s agreement to keep such information confidential, each such Subscriber makes no acknowledgement
that any such information is material, non-public information.


 






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(d)              
Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order
stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.


 


(e)               
Furnish to Legal Counsel, without charge, at least one conformed copy of each such Registration Statement and each amendment
thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference
to the extent requested by such person, and all exhibits to the extent requested by such Person (including those previously furnished
or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which
is available on the EDGAR system need not be furnished in physical form.


 


(f)               
Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Subscribers in connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(c).


 


(g)              
The Company, in conjunction with the Placement Agent, shall effect a filing with respect to the public offering contemplated
by the Registration Statement (an “Issuer Filing”) with the Financial Industry Regulatory Authority, Inc. (“FINRA”)
Corporate Financing Department pursuant to FINRA Rule 5110 within one Trading Day of the date that the Registration Statement is
first filed with the Commission and pay the filing fee required by such Issuer Filing. The Company, in conjunction with the Placement
Agent, shall use commercially reasonable efforts to pursue the Issuer Filing until the FINRA issues a letter confirming that it
does not object to the terms of the offering contemplated by the Registration Statement. A copy of the Issuer Filing and all related
correspondence with respect thereto shall be provided to the Placement Agent.


 


(h)              
Prior to any resale of Registrable Securities by a Subscriber, use its commercially reasonable efforts to register or qualify
or cooperate with the selling Subscribers in connection with the registration or qualification (or exemption from the Registration
or qualification) of such Registrable Securities for the resale by the Subscriber under the securities or Blue Sky laws of such
jurisdictions within the United States as any Subscriber reasonably requests in writing, to keep each registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary
to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided,
that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified,
subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service
of process in any such jurisdiction.


 






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(i)                
If requested by a Subscriber, cooperate with such Subscribers to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee pursuant to an effective Registration Statement, which certificates
shall be free, to the extent permitted by the Subscription Agreement, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such Subscriber may request.


 


(j)                
The Company will, as promptly as reasonably possible under the circumstances taking into account the Company’s good
faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare
a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus
or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as
thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Company notifies
the Subscribers in accordance with clauses (iii) through (vi) of Section 6.3(c) above to suspend the use of any Prospectus until
the requisite changes to such Prospectus have been made, then the Subscribers shall suspend use of such Prospectus. The Company
will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.


 


(k)              
Comply with all applicable rules and regulations of the Commission.


 


(l)                
The Company may require each selling Subscriber to furnish to the Company a certified statement as to the number of shares
of Common Stock beneficially owned by such Subscriber and, if required by the Commission, the natural persons thereof that have
voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder
with respect to the registration of the Registrable Securities solely because any Subscriber fails to furnish such information
within three Trading days of the Company’s request, any liquidated damages that are accruing at such time as to such Subscriber
only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Subscriber
only, until such information is delivered to the Company.


 


6.4. Registration
Expenses. All fees and expenses incident to the performance of or compliance with Section by the Company shall be borne by
the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. In no event shall the Company
be responsible for any broker or similar commissions of any Subscriber or, except to the extent provided for in the Offering Materials,
any legal fees or other costs of the Subscribers.


 






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		VII.	MISCELLANEOUS



  


7.1     
Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, or delivered by hand against written receipt therefor, addressed as follows:


 


if to the
Company, to it at:


 


The Spendsmart Payments Company


2680 Berkshire Pkwy, Suite 130


Des Moines, IA 50325


Attn: William Hernandez, President


 


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


 


Ruskin Moscou Faltischek, P.C.


East Tower, 15th Floor


1425 RXR Plaza


Uniondale, NY 11556-1425


Attn: Seth I. Rubin, Esq.


 


if to the Subscriber, to the Subscriber’s
address indicated on the signature page of this Agreement.


 


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


 


Sichenzia Ross Friedman Ference LLP


61 Broadway, 32nd Floor


New York, NY 10006

Attn: Marc J. Ross, Esq.


 


if to the Escrow Agent, to it at:


 


American Stock Transfer & Trust Company


6201 15th Avenue


Brooklyn, NY 11219


Attn: SSPC Escrow Agent


 


7.2     
Notices shall be deemed to have been given or delivered on the date of receipt. Except as otherwise provided herein, this
Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and this Agreement
may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged. No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.


 






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7.3     
This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. The Company may not assign this Agreement or any rights or obligations hereunder without
the prior written consent of Subscriber (other than by merger). Subscriber may assign any or all of its rights under this Agreement
to any person to whom Subscriber assigns or transfers any Securities, provided that such transferee agrees in writing to be bound,
with respect to the transferred Securities, by the provisions of the Offering Materials.


 


7.4     
The Offering Materials, together with the exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. The Placement Agent
shall be deemed a third party beneficiary of the representation and warrants and covenants made by the Company and the Subscribers
in the Offering Documents.


 


7.5     
Upon the execution and delivery of this Agreement by the Subscriber and the Company, this Agreement shall become a binding
obligation of the Subscriber with respect to the purchase of Securities as herein provided, subject, however, to the right hereby
reserved by the Company to enter into the same agreements with other Subscriber and to reject any subscription, in whole or in
part, provided the Company returns to Subscriber any funds paid by Subscriber with respect to such rejected subscription or portion
thereof, without interest or deduction.


 


7.6     
All questions concerning the construction, validity, enforcement and interpretation of the Offering Materials shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense
of the transactions contemplated by this Agreement and any other Offering Materials (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement
of any of the Offering Materials), 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 improper
or is an inconvenient venue for such proceeding.


 


7.7     
In order to discourage frivolous claims the parties agree that unless a claimant in any proceeding arising out of this Agreement
succeeds in establishing his claim and recovering a judgment against another party (regardless of whether such claimant succeeds
against one of the other parties to the action), then the other party shall be entitled to recover from such claimant all of its/their
reasonable legal costs and expenses relating to such proceeding and/or incurred in preparation therefor.


 






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7.8     
The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall
not affect any other provision of this Agreement, which shall remain in full force and effect. If any provision of this Agreement
shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part,
such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law
and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable
to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision
unless so expressed herein.


 


7.9     
The representations, warranties, covenants and agreements contained in this Agreement, shall survive the Closing of the
transactions contemplated by this Agreement and the delivery of the Securities for the applicable statute of limitations.


 


7.10 
It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.


 


7.11 
The Company agrees to execute and deliver all such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.


 


7.12 
This Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.


 


7.13 
Nothing in this Agreement shall create or be deemed to create any rights in any person or entity not a party to this Agreement.


 


7.14 
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the
Subscriber and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations described in this Agreement and hereby
agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.


 


[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]


 


 


 


 






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DOLLAR SUBSCRIPTION __________ / $3.00
= ______________ NUMBER OF SHARES OF PREFERRED STOCK


 


 





	 	 	 
	Signature	 	Signature (if purchasing jointly)
	 	 	 
	 	 	 
	Name Typed or Printed	 	Name Typed or
Printed
	 	 	 
	 	 	 
	Title (if Subscriber is an Entity)	 	Title
(if Subscriber is an Entity)
	 	 	 
	 	 	 
	Entity Name (if applicable)	 	Entity Name
(if applicable
	 	 	 
	 	 	 
	 	 	 
	Address	 	Address
	 	 	 
	 	 	 
	City, State and Zip Code	 	City, State
and Zip Code
	 	 	 
	 	 	 
	Telephone-Business	 	Telephone-Business
	 	 	 
	 	 	 
	Telephone-Residence	 	Telephone-Residence
	 	 	 
	 	 	 
	Facsimile-Business	 	Facsimile-Business
	 	 	 
	 	 	 
	Facsimile-Residence	 	Facsimile-Residence
	 	 	 
	 	 	 
	Tax ID # or Social Security # 	 	Tax ID
# or Social Security #
	 	 	 
	 	 	 
	E-Mail Address	 	E-Mail Address
	 	 	 
	 	 	 
	Name in which securities should be issued:	 	 



 


 


Dated:____________________ , 2014


 


This Subscription Agreement
is agreed to and accepted as of ________________, 2014.


 





	 	THE SPENDSMART PAYMENTS COMPANY
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 



 






    	31



    	 



    

  

CERTIFICATE OF SIGNATORY


 


(To be completed if Securities are


being subscribed for by an entity)


 


 


I, ____________________________, am the
____________________________ of __________________________________________ (the “Entity”).


 


I certify that I am empowered and duly
authorized by the Entity to execute and carry out the terms of the Subscription Agreement and to purchase and hold the Securities
(and, upon issuance, the Underlying Shares), and certify further that the Subscription Agreement has been duly and validly executed
on behalf of the Entity and constitutes a legal and binding obligation of the Entity.


 


IN WITNESS WHEREOF, I have set my hand
this ________ day of _________________, 20__


 





	 	 
	 	(Signature)



 






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