Exhibit 10.36


 





SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as of March 1, 2019, between Helix TCS, Inc., a Delaware
corporation (the “Company”) and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively the “Purchasers”).


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements
of Section 5 of the Securities Act contained in Section 4(a)(2) thereof and/or Rule 506(b) thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, Securities
of the Company as more fully described in this Agreement.


 


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


 


ARTICLE
I.

DEFINITIONS


 


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


 


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


 


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


 


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


 


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


 


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


 


“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii)
the Company’s obligations to deliver the Securities to be issued and sold, in each case, have been satisfied or waived,
but in no event later than the second Trading Day following the date hereof.


 


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


 






     


     


    




 


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


 


“Company
Counsel” means Nelson Mullins.


 


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


 


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


 


“Existing
Rose Note” means the Promissory Note dated January 3, 2019, issued by the Company to Rose Capital Fund I, L.P., with an
initial principal amount of $280,000.


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, consultants, officers or directors of
the Company, in an aggregate amount not to exceed 20% of shares of Common Stock outstanding at any given time, or pursuant to
any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or
a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company,
or (b) securities issued pursuant to any purchase money equipment loan or capital leasing arrangement approved by the Collateral
Agent under the Security Agreement, or debt financing from a commercial bank or similar financial institution.


 


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


 


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


 


“Guaranty
Agreement” means the guaranty agreement for the Notes executed by each Subsidiary in the form attached hereto as Exhibit
C.


 


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


 


“Intellectual
Property” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto, and all U.S. and foreign patents, patent applications,
and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, brand names, certification marks, trade dress, logos, trade names, domain names, assumed
names and corporate names, together with all colorable imitations thereof, and including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith, (c) all copyrights, and all applications, registrations,
and renewals in connection therewith, (d) all trade secrets under applicable state laws and the common law and know-how (including
formulas, techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (e) all computer software (including source code, object code, diagrams, data
and related documentation), and (f) all copies and tangible embodiments of the foregoing (in whatever form or medium).


 






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“Intellectual
Property Agreement” has the meaning set forth in Section 3.1(p).


 


“Lead
Investor” means Rose Capital Fund I, L.P.


 


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


 


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


 


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


 


“Notes”
mean the Secured Convertible Promissory Notes issued by the Company to the Purchasers, in the form of Exhibit A attached
hereto, which bear interest at the rate of 25% per annum, and are secured pursuant to a Security Agreement.


 


“Note
Conversion Price” means, subject to adjustment as provided in the Note, the per share price equal to the lesser of (a) $0.90
and (ii) a 30% discount to the Company’s 30-day VWAP as of the Trading Day immediately before the date of conversion.


 


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


 


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


 


“Pledge
Agreement” means the pledge agreement, in the form of Exhibit D, pledging the outstanding common stock and other
equity instruments of each Subsidiary.


 


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


 


“Principal
Market” means any of The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select
Market, the Nasdaq Global Market, the Canadian Securities Exchange, the OTCQB, the OTCQX, the OTC Pink or any other market operated
by the OTC Markets Group Inc. or any successors of any of these exchanges or markets.


 


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


 


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


 


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


 






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“RedDiamond
Note” means that certain a convertible promissory note issued by the Company to RedDiamond Partners, LLC in the aggregate
principal amount of $208,333.33, dated as of February 13, 2017.


 


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


 


“Required
Approvals” shall mean the consent, waiver, authorization or order of, or the giving of any notice to, or the making of any
filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the Transaction Documents, including: (i) the holders of the RedDiamond
Note; (ii)the filings required pursuant to Section 4.4 of this Agreement, (iii) application(s) to each applicable Principal Market
for the listing of the Shares and Warrant Shares for trading thereon in the time and manner required thereby, (iv) filings necessary
to perfect the Liens in favor of the Purchasers under the Security Agreement, and (v) such filings as are required to be made
under the Securities Act and applicable state securities laws.


 


“Rule
144” means Rule 144 promulgated by the SEC 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 SEC having substantially the same purpose and effect
as such Rule.


 


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


 


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


 


“Securities”
means the Notes and the Warrants.


 


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


 


“Security
Agreement” means the security agreement, in the form of Exhibit E, providing the Purchasers with a first lien on
all of the assets of the Company other than as provided in this Agreement.


 


“Shares”
means the Common Stock issuable upon conversion of the Notes.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act.


 


“Short
Selling Prohibition” shall have the meaning ascribed to such term in Section 4.14.


 


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


 






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“Subsidiary”
means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of which (A) more than 50% of (i) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or
other managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital
or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture
or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination,
owned or controlled directly or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control
of the Company.


 


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


 


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


 


“Transfer
Agent” means Corporate Stock Transfer and any successor transfer agent of the Company.


 


“Transfer
Agent Issuance Failure” shall have the meaning ascribed to such term in Section 4.14.


 


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


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Principal Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Principal Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)) (or a similar organization or agency succeeding
to its functions of reporting prices), (b) if no volume weighted average price of the Common Stock is reported for the Principal
Market, the average closing price of the Common Stock during the ten Trading Days preceding such date, or (c) in all other cases,
the fair market value of a share of Common Stock as determined by the Board of Directors of the Company.


 


“Warrants”
means, collectively, the Common Stock Purchase Warrants delivered to the Purchasers at the Closing in accordance with Section
2.2(a) hereof, which Warrants shall be immediately exercisable and have a term of exercise equal to five years from such initial
exercise date, in the form of Exhibit B attached hereto.


 






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“Warrant
Exercise Price” means $1.40 per share, subject to adjustments as set forth in the Warrants.


 


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


 


ARTICLE
II.

PURCHASE AND SALE


 


2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase an aggregate of (i) Notes for a total purchase price of $450,000, and (ii) 160,715 Warrants, which is equal
to 50% of the Shares issuable upon conversion of the Notes. Each Purchaser shall deliver via wire transfer immediately available
funds (and, with respect to the Lead Investor’s subscription on the Closing Date only, the Existing Note marked “cancelled”)
equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and
the Company shall deliver each Purchaser’s respective Note and a Warrant as determined pursuant to Section 2.2(a), and the
Company and each Purchaser shall deliver the other items set forth in Section 2.2(b) deliverable at the Closing. Upon satisfaction
of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or
such other location as the parties shall mutually agree.


 


2.2 Deliveries.


 


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


 


(i) this
Agreement duly executed by the Company;


 


(ii) an
original Note, convertible at the Note Conversion Price, registered in the name of such Purchaser;


 


(iii) an
original Warrant, exercisable at the Warrant Exercise Price, registered in the name of such Purchaser to purchase up to a number
of shares of Common Stock equal to 50% of the principal amount of the Notes divided by the Warrant Exercise Price, subject to
adjustment as described therein (such Warrant may be delivered within two Trading Days of the Closing Date);


 


(iv) a
Security Agreement providing the Purchasers with a lien on all of the assets of the Company;








 


(v) a
Guaranty Agreement executed by the Company’s Subsidiaries;


 


(vi) a
Pledge Agreement pledging the Company’s outstanding common stock and other equity instruments of each of the Company’s
Subsidiaries;


 


(vii) a
reservation letter executed by the Company’s Transfer Agent and the Company in the form attached as Exhibit G.


 






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


 


(i) this
Agreement duly executed by such Purchaser;


 


 


 


(ii) to
such Purchaser’s Subscription Amount by wire transfer .


 


2.3 Closing
Conditions.


 


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


 


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


 


(ii) all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed.


 


 


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


 


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


 


(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
performed;


 


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


 


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


 






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


 


ARTICLE
III.

REPRESENTATIONS AND WARRANTIES


 


3.1 Representations
and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser as
of the date hereof which representations are true and correct and will be true and correct as of the Closing Date:


 


(a) SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
documents) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”). For so long as any of the Warrants are outstanding, the Company shall not
file Form 15 with the SEC or otherwise suspend or terminate its obligation to file any SEC Reports under the Exchange Act. As
of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all 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.


 






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(b) Subsidiaries.
All of the direct and indirect Subsidiaries of the Company are set forth in the SEC Reports. The Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary (other than its Argentine subsidiary where it owns 99%)
free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.


 


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


 


(d) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals. Subject to obtaining the Required Approvals,
this Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed
by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.


 






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


 


(f) Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.
The Shares, when issued upon conversion of the Notes, and 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 Liens imposed by the Company. The Company
shall reserve from its duly authorized capital stock a number of shares of Common Stock issuable pursuant to the Notes and the
Warrants equal to the amount set forth in Section 4.9.


 






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(g) Capitalization.
The capitalization of the Company is as set forth in the SEC Reports. Except as set forth on Schedule 3(f), the Company has not
issued any capital stock since its most recently filed periodic report under the Exchange Act. Except for the holders of the Series
B Preferred Stock, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents. Except as set forth in the SEC Reports, as a result
of the purchase and sale of the Securities there are no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable
for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or the capital stock of any Subsidiary,
or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the
Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary
that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company
does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.





 


(h) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there
has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the SEC, (iii) the Company has
not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company
equity incentive plans.











 


(i) Litigation.
Except as set forth on Schedule 3(i), there is no action, suit, inquiry, notice of violation, proceeding or investigation, inquiry
or other similar proceeding of any federal or state government unit pending or, to the knowledge of the Company, threatened against
or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the
issuance of the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. The Company has no reason to believe that an Action will be filed against it in the future. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any
current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act, and the Company
has no reason to believe it will do so in the future.


 






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(j) Compliance.
Except for the RedDiamond Note, neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event
has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or
any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it
is in violation of, any Indebtedness, indenture, loan or credit agreement or any other agreement or instrument to which it is
a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in
violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in
violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.


 


(k)Environmental
Laws.The Company and its Subsidiaries (i) are in material compliance with all federal, state, local and foreign laws relating
to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface
or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental
Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license
or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect.


 


(l) Regulatory
Permits. To their knowledge, the Company and the Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate state or local regulatory authorities necessary to conduct their respective businesses as described in the
SEC Reports (“Material Permits”). Neither the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit. The Company and each Subsidiary is in compliance with each Material
Permit in all material respects.


 






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


 


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


 


(o) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.


 


(p) Registration
Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act
of any securities of the Company or any Subsidiary except as disclosed in Schedule 3(p) hereto.


 


(q) 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 SEC is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Principal 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 Principal Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible
for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current
in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such
electronic transfer.


 






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


 


(s) Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to
carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports set forth
as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company
or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for
borrowed money, or other liabilities for other amounts owed in excess of $10,000 (other than trade accounts payable incurred in
the ordinary course of business which have been past due for less than 90 days), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $10,000
due under leases required to be capitalized in accordance with GAAP. Except for the RedDiamond Note, neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.


 


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


 






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(u) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated any provision of FCPA.


 


(v) Accountants.
The Company’s accounting firm is set forth in the SEC Reports. To the knowledge and belief of the Company, such accounting
firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) has expressed its opinion with respect
to the financial statements included in the Company’s Annual Report for the fiscal year ending December 31, 2017.


 


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


 


(x) Reserved.


 


(y) Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company.


 






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(z) Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities to the Purchasers as contemplated hereby


 








 


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


 


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


 


(cc)Notice
of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, reasonably be expected to
become a Disqualification Event relating to any Issuer Covered Person, in each case of which it is aware.


 


(dd)Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


 


(ee)U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.


 


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


 






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(gg)Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company
or any Subsidiary, threatened.


 


3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein) which representations
are true and correct and will be true and correct as of the Closing Date:


 


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


 






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











 


(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, an accredited investor
within the meaning of Rule 501 under the Securities Act. Such Purchaser is not 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).


 


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


 


(e) Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. 
Such Purchaser acknowledges and agrees that neither the Company nor anyone else has provided such Purchaser with any information
or advice with respect to the Securities nor is such information or advice necessary or desired.


 


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


 






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ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1 Removal
of Legends.


 


(a) The
applicable Shares, the Warrants and Warrant Shares may only be disposed of in compliance with state and federal securities laws.
In connection with any transfer of Warrants or Warrant Shares other than pursuant to an effective registration statement or Rule
144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company
may require the transferor, provided that the Company shall pay the transferor’s cost thereof, to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Shares, Warrants or Warrant Shares under the Securities Act.


 


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


 


NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 


The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the Shares or Warrant Shares to a financial institution
that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by
the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or
secured Shares or Warrant Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party of Shares and Warrant Shares may reasonably request
in connection with a pledge or transfer of the Shares or Warrant Shares.


 






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(c) Certificates
evidencing the Shares and the Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof):
(i) while a registration statement covering the resale of such securities is effective under the Securities Act, (ii) following
any sale of such Shares or Warrant Shares pursuant to Rule 144, (iii) if such Shares or Warrant Shares are eligible for sale under
Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule
144 as to such Shares or Warrant Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required
under applicable requirements of the Securities Act (including Section 4(a)(1), judicial interpretations and pronouncements issued
by the staff of the SEC) (the “Effective Date”). The Company shall, at its expense, cause its counsel to issue a legal
opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the
legend hereunder. If all or any portion of a Note is converted or a Warrant is exercised at a time when there is an effective
registration statement covering the resale of the Shares or the Warrant Shares, or if such Shares or Warrant Shares may be sold
under Rule 144 and the Company is then in compliance with the current public information required under Rule 144, or if the Shares
or Warrant Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Shares or Warrant Shares and without volume or manner-of-sale restrictions or if
such legend is not otherwise required under applicable requirements of the Securities Act (including Section 4(a)(1)(1/2) and
4(a)(7) judicial interpretations and pronouncements issued by the staff of the SEC) then such Shares or Warrant Shares shall be
issued or reissued free of all legends. The Company agrees that following the effective date of any registration statement or
at such time as such legend is no longer required under this Section 4.1(c), it will, no later than two Trading Days following
the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing restricted Shares or Warrant Shares,
as applicable, issued with a restrictive legend (such first Trading Day, the “Legend Removal Date”), deliver or cause
to be delivered to such Purchaser a certificate representing such Shares or Warrant Shares that is free from all restrictive and
other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4.1. Certificates for Shares or Warrant Shares subject to legend removal hereunder
shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with
the Depository Trust Company system as directed by such Purchaser.


 


(d)
In addition to such Purchaser’s other available remedies, (i) the Company shall pay to a Purchaser, in cash, as partial
liquidated damages and not as a penalty, for each $1,000 of the principal amount of the Notes being converted or the value of
the Warrant Shares for which a Warrant is being exercised (based on the Warrant Exercise Price), $10 per Trading Day for each
Trading Day after the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities
as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law
or in equity including, without limitation, a decree of specific performance and/or injunctive relief, and (ii) if after the Legend
Removal Date such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by such Purchaser of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of
Common Stock equal to all or any portion of the number of shares of Common Stock that such Purchaser anticipated receiving from
the Company without any restrictive legend, then, the Company shall pay to such Purchaser, in cash, an amount equal to the excess
of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for
the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In
Price”) over the product of (A) such number of Shares or Warrant Shares that the Company was required to deliver to such
Purchaser by the Legend Removal Date multiplied by (B) the closing sale price of the Common Stock on the Legend Removal Date.


 






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(e)
In the event a Purchaser shall request delivery of unlegended shares as described in this Section 4.1 and the Company is required
to deliver such unlegended shares, (i) it shall pay all fees and expenses associated with or required by the legend removal and/or
transfer including but not limited to legal fees, transfer agent fees and overnight delivery charges and taxes, if any, imposed
by any applicable government upon the issuance of Common Stock; and (ii) the Company may not refuse to deliver unlegended shares
based on any claim that such Purchaser or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s
obligations under the Transaction Documents.


 


4.2 Furnishing
of Information.


 


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


 


(b) Promptly
after becoming aware that the Company has failed to obtain any Material Permit, the Company shall notify the Purchasers in writing
thereof and use commercially reasonable efforts obtain such Material Permit.


 


4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2(a)(1) of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Principal Market such that it would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such subsequent transaction.


 


4.4 Securities
Laws Disclosure; Publicity. The Company shall, by 5:30 p.m. (New York City time) on the second Trading Day following the date
of execution hereof, file a Current Report on Form 8-K with the SEC disclosing the material terms of this Agreement. From and
after the filing of the Form 8-K as provided in the preceding sentence, the Company represents to the Purchasers that it shall
have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries,
or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. The Company and each Purchaser shall consult with each other in issuing any press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such
public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the SEC or any regulatory agency or
Principal Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection
with the filing of final Transaction Documents with the SEC and (b) to the extent such disclosure is required by law or Principal
Market regulations. or (c) is required in a resale registration statement.


 






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


 


4.6 Reserved.


 


4.7 Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for the continuation of its
development of BioTrack v2.0, refreshing public relations and investor relations strategies, listing the Company’s Common
Stock on the Canadian Securities Exchange, payment of expenses incurred in connection with the sale of Securities hereunder, reimbursement
of expenses payable to Rose Capital Fund I, LP, including all documented expenses incurred in connection with the sale of Securities
hereunder, in an amount not to exceed $50,000, and working capital and/or general corporate purposes, and shall not use such proceeds:
(a) for the satisfaction of any other portion of the Company’s debt (other than payment of trade payables in the ordinary
course of the Company’s business and prior practices), (b) for the redemption of any Common Stock or other securities, (c)
for the settlement of any outstanding litigation other than the litigation matters listed on Schedule 3(i) (the “Existing
Litigation”), (d) in violation of FCPA or OFAC regulations, or to lend money, give credit, or make advances to any officers,
directors, employees or affiliates of the Company except for routine travel advances, or (e) for the purchase of real estate.


 


4.8 Indemnification
of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, managers, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
members, managers, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (including
local counsel, if retained) that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of
any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction
Documents, (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates,
by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated
by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties
or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder
or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes
fraud, gross negligence or willful misconduct) or (c) any untrue or alleged untrue statement of a material fact contained in any
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 or supplement thereto, in light of the circumstances
under which they were made) not misleading. If any action shall be brought against any Purchaser Party in respect of which indemnity
sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have
the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser
Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof
has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such Purchaser Party, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel (in addition to local
counsel, if retained). The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed;
or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in
the other Transaction Documents. The Purchaser Parties shall have the right to settle any action against any of them by the payment
of money by the Company provided that they cannot agree to any equitable relief and the Company, its officers, directors and Affiliates
receive unconditional releases in customary form. The indemnification required by this Section 4.8 shall be made by periodic payments
of the attorneys fees and costs in addition to a reasonable initial retainer during the course of the investigation or defense,
as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of
action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to
pursuant to law.


 






    22


     


    




 


4.9 Reservation
of Common Stock. The Company shall reserve and keep available at all times in favor of the Purchasers on a pro rata basis
based on each Purchaser’s Subscription Amount, free of preemptive rights, a number of shares of Common Stock equal to five
times the number of shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants.


 


The
Company shall not enter into any agreement or file any amendment to its Certificate of Incorporation (including the filing of
a Certificate of Designation) which conflicts with this Section 4.9 while the Notes and Warrants remain outstanding.


 


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


 


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


 






    23


     


    




 


4.12 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales (other
than open market purchases), including Short Sales of any of the Company’s securities (“Short Selling Prohibition”)
at any time during which any Notes or Warrants remain outstanding. Notwithstanding the foregoing, if the Transfer Agent shall
failure to issue any Shares or Warrant Shares upon the terms and conditions and during the periods (each, a “Transfer Agent
Issuance Failure”), the prohibitions set forth in the immediately preceding sentence shall no longer apply so long as such
failure is not cured. Each Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as provided in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms
of this transaction.  Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary,
the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that
it will not engage in effecting transactions in any securities of the Company from and after the occurrence of a Transfer Agent
Issuance Failure, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the
Company in accordance with applicable securities laws from and after the occurrence of a Transfer Agent Issuance Failure, and
(iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company
or its Subsidiaries from and after the occurrence of a Transfer Agent Issuance Failure, in each case prior to cure. 


 


4.13 Capital
Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split
or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in interest of
the outstanding principal balance of the Notes unless such stock split is necessary for purposes of having the Company’s
common stock listed on the NYSE American Exchange, the Nasdaq Capital Market or the Canadian Securities Exchange.


 


4.14 Conversion
and Exercise Procedures. The forms of Conversion Notice and Notice of Exercise included in the Notes and Warrants set forth
the totality of the procedures required of the Purchasers in order to convert the Notes or to exercise the Warrants. No additional
legal opinion, other information or instructions shall be required of the Purchasers to convert their Notes or exercise their
Warrants. Without limiting the preceding sentences, no ink-original Conversion Notice or Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Conversion Notice or Notice of Exercise
form be required in order to convert the Notes or exercise the Warrants. The Company shall honor conversions of the Notes and
exercises of the Warrants and shall deliver Shares and Warrant Shares in accordance with the terms, conditions and time periods
set forth in the Transaction Documents.


 


4.15 DTC
Program. For so long as any Warrants are outstanding, the Company will employ as the transfer agent for the Common Stock and
Warrant Shares a participant in the Depository Trust Company Automated Securities Transfer Program and cause the Common Stock
to be transferable pursuant to such program.


 


4.16 Maintenance
of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its business, in good
working order and condition, ordinary wear and tear excepted.


 






    24


     


    




 


4.17 Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises
in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might
reasonably have a Material Adverse Effect upon the Company taken as a whole.


 


4.18 Collateral
Agent. Each Purchaser hereby appoints Rose Capital Fund I, LP as Collateral Agent under the Security Agreement, and as Agent
under each of the Subsidiary Guaranty and the Pledge Agreement.


 


4.19 D&O
Insurance. Provided it is available on commercially reasonable terms, the Company has and will continue to have director and
officer insurance on behalf of the Company’s (including its subsidiaries) officers and directors.


 


ARTICLE
V.

MISCELLANEOUS


 


5.1 Fees
and Expenses. Except as expressly set forth below and in the Transaction Documents to the contrary, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the
Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers. Upon the Closing, the Company agrees to pay the Lead Investor’s documented
legal fees and expenses less any initial or other deposits provided by the Company to the Lead Investor’s counsel prior
to the Closing Date) together with documented reasonable costs including those necessary to provide the Purchasers with a lien
on all of the assets of the Company, in an amount not to exceed $50,000.


 


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


 


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





 



    25


     


    

 


5.4 Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers who purchased at least a majority in interest of the Amendment
based on the initial Subscription Amounts hereunder or, in the case of a waiver, by the party against whom enforcement of any
such waived provision is sought; provided, that if any amendment, modification or waiver disproportionately and adversely
impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers)
shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise
of any such right.


 


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


 


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


 


5.7 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.8 and this Section 5.7.


 


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


 






    26


     


    




 


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


 


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


 


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


 


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


 






    27


     


    




 


5.13 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction without requiring the posting of any bond.


 


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


 


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


 


5.16 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto including any action taken by the
Collateral Agent as defined by the Security Agreement (whether under this Agreement or the Security Agreement), shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated
by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without
limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented
by its own separate legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide
all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required
or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement
and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers
collectively and not between and among the Purchasers.


 






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


 


5.18Saturdays,
Sundays, Holidays, etc.If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding
Trading Day.


 


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


 


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


 


5.21 Non-Circumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, including any
Certificates of Designation, or Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Agreement, and will at all times in good faith carry out all of the provision of this Agreement and
take all action as may be required to protect the rights of all holders of the Securities. Without limiting the generality of
the foregoing or any other provision of this Agreement or the other Transaction Documents, the Company (a) shall not increase
the par value of any shares of Common Stock receivable upon conversion of the Note or exercise of the Warrants above the Note
Conversion Price, or Warrant Exercise Price, as applicable, then in effect and (b) shall take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Shares upon the conversion
of the Note and Warrant Shares upon exercise of the Warrants. Notwithstanding anything herein to the contrary, if after six months
from the original issuance date, a holder is not permitted to convert the Note or exercise the Warrants, in full, for any reason,
the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consent
or approvals as necessary to permit such conversion or exercise.





 


(Signature
Pages Follow)


 




    29


     


    

 


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


 





	 	COMPANY: 
	 	 
	 	Helix TCS, Inc.
	 	 
	 	By:	                    
	 	Name:	 
	 	Title:	 
	 	 
	 	Address for Notice:
	 	 
	 	With a copy to (which shall not constitute notice):







 


 


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]


 






    30


     


    




 


PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT


  


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


 





	 	DIAMOND ROCK, LLC
	 	 
	 	By:	 
	 	Name:	Neil Rock
	 	Its:	Managing Member



 


	 	 
	Email Address of Authorized Signatory:	neil@diamondrockcap.com
	 	 
	Address for Notice to Purchaser:	Diamond Rock, LLC
	 	Attn: Neil Rock
	 	 
	 	 













 


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





 


Subscription
Amount: $450,000, to be paid by wire transfer of $450,000





 


Warrant
Shares: 160,715





 


Additional
Subscription Amount: $_________________





 


Additional
Warrant Shares: __________________





 


EIN
Number: _______________________


 






    31


     


    




 


EXHIBIT
A


Form
of Note





 




    32


     


    

 


EXHIBIT
B


Form
of Warrant





 




    33


     


    

 


EXHIBIT
C


Form
of Guaranty Agreement





 




    34


     


    

 


EXHIBIT
D


Form
of Pledge Agreement





 




    35


     


    

 


EXHIBIT
E


Form
of Security Agreement





 




    36


     


    

 


EXHIBIT
F


Form
of Reserve Letter


  




    37


     


    

 


Schedule
1.1


Required
Approvals


 


Red
Diamond consent


Filing
of UCC financing statement


Filing
a Form D


Filing
an 8-k


 




     


     


    

 


Schedule
3(f)


Equity
Issuances since 10-Q





 


RSF4,
LLC 733,333 common shares


Conifer
Insurance Company 222,222 common shares and 111,111 warrants


Ron
Parlato 111,111 common shares


Uptick
Capital LLC 100,000 common shares


DMO
Holdings Corp. 25,000 common shares


Patrick
Halpin 10,000 common shares


Kameron
Wallace 10,000 common shares


Grant
Whitus 25,000 common shares


Phil
Baca 25,000 common shares


Joaquin
Baca 25,000 common shares


RC
Feeder II, LLC 899,722 common shares and 449,861 warrants (to be issued)


 




     


     


    

 


Schedule
3(i)


Litigation


 


Baker,
et al. v. Helix TCS, Inc.


 


On
March 8, 2017, two former employees filed a lawsuit in the United States District Court for the District of Colorado alleging
violations of the Fair Labor Standards Act and the Colorado Wage Act on behalf of themselves and other employees. The plaintiffs
seek damages for our alleged failure to compensate them appropriately for the overtime hours they worked as purported “non-exempt”
employees. In January 2019 Helix’s CEO and CFO engaged in a full day mediation with counsel and the lead plaintiff. While
no settlement was reached, the framework for one was outlined pending a request to have the Kenney case merged with this one,
as it is for the same claims.


 


Kenney,
et al. v. Helix TCS, Inc.


 


On
July 20, 2017 one former employee filed a lawsuit in the United States District Court for the District of Colorado alleging violations
of the Fair Labor Standards Act on behalf of themselves and other employees. The plaintiffs seek damages for our alleged failure
to compensate them appropriately for the overtime hours they worked as purported “non-exempt” employees.


  


At
this time, the Company is not able to predict the outcome of the lawsuit, any possible loss or possible range of loss associated
with the lawsuit or any potential effect on the Company’s business, results of operations or financial condition. However,
the Company believes the lawsuit is wholly without merit and will defend itself from these claims vigorously.


 




     


     


    

 


Schedule
3(p)


Registration
Rights





 


Diamond
Rock shares underlying Convertible Note


RSF4,
LLC Series B Preferred Shares and common shares


Conifer
Insurance Company common shares and warrants


Ron
Parlato common shares


Kuchrawy
Revocable Trust common shares