EXHIBIT 10.13


 


INVESTMENT AGREEMENT


 


This
INVESTMENT AGREEMENT (the “Agreement”), dated as of April 27, 2012 (the “Execution
Date”), is entered into by and between Lone Star Gold, Inc., a Nevada corporation with its principal
executive office at 6565 Americas Parkway NE, Suite 200, Albuquerque, NM 87110 (the
“Company”), and Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (the
“Investor”), with its principal executive officers at 245 Main Street, Suite 302, White Plains, NY 10601. 


 


RECITALS:


WHEREAS, the parties
desire that, upon the terms and subject to the conditions contained herein, the Investor shall invest up to Twenty-Four Million
Dollars ($24,000,000) to purchase the Company’s Common Stock with $0.001 par value (the “Common Stock”);


 


WHEREAS, such investments
will be made in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933,
as amended (the “1933 Act”), Rule 506 of Regulation D promulgated by the SEC under the 1933 Act, and/or upon
such other exemption from the registration requirements of the 1933 Act as may be available with respect to any or all of the investments
in Common Stock to be made hereunder; and


 


WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit A (the “Registration Rights Agreement”) pursuant
to which the Company has agreed to provide certain registration rights under the 1933 Act, and the rules and regulations promulgated
thereunder, and applicable state securities laws.


 


NOW THEREFORE, in consideration
of the foregoing recitals, which shall be considered an integral part of this Agreement, the covenants and agreements set forth
hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company
and the Investor hereby agree as follows:


 


SECTION I.


DEFINITIONS


 


For all purposes of
and under this Agreement, the following terms shall have the respective meanings below, and such meanings shall be equally applicable
to the singular and plural forms of such defined terms.


 


“1933 Act”
shall have the meaning set forth in the recitals.


 


“1934 Act”
shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same will then be in effect.


 


“Affiliate”
shall have the meaning set forth in Section 5.7.


 


“Agreement”
shall have the meaning set forth in the preamble.


 


“By-laws”
shall have the meaning set forth in Section 4.3.


 


“Certificate of Incorporation”
shall have the meaning set forth in Section 4.3.


 


“Closing”
shall have the meaning set forth in Section 2.4.


 


“Closing Date”
shall have the meaning set forth in Section 2.4.


 


“Common Stock”
shall have the meaning set forth in the recitals.


 


“Control”
or “Controls” shall have the meaning set forth in Section 5.7.


 


“Effective Date”
shall mean the date the SEC declares effective under the 1933 Act the Registration Statement covering the Securities.


 


“Environmental Laws”
shall have the meaning set forth in Section 4.13.


 


“At-the-Market Financing
Transaction Documents” shall mean this Agreement and the Registration Rights Agreement between the Company and the Investor
of even date herewith.


 


“Execution Date”
shall have the meaning set forth in the preamble.


 



    	 



    	 



    

 


“Indemnified Liabilities”
shall have the meaning set forth in Section 10.


 


“Indemnitees”
shall have the meaning set forth in Section 10.


 


“Indemnitor”
shall have the meaning set forth in Section 10.


 


“Ineffective Period”
shall mean any period of time that the Registration Statement or any Supplemental Registration Statement (as defined in the Registration
Rights Agreement between the parties) becomes ineffective or unavailable for use for the sale or resale, as applicable, of any
or all of the Registrable Securities (as defined in the Registration Rights Agreement) for any reason (or in the event the prospectus
under either of the above is not current and deliverable) during any time period required under the Registration Rights Agreement.


 


“Investor”
shall have the meaning set forth in the preamble.


 


“Material Adverse Effect”
shall have the meaning set forth in Section 4.1.


 


“Maximum Common Stock
Issuance” shall have the meaning set forth in Section 2.5.


 


“Open Market Adjustment
Amount” shall have the meaning set forth in Section 2.4.


 


“Open Market Share Purchase”
shall have the meaning set forth in Section 2.4.


 


“Open Period”
shall mean the period beginning on and including the Trading Day immediately following the Effective Date and ending on the earlier
to occur of (i) the date which is thirty-six (36) months from the Effective Date; or (ii) termination of the Agreement in accordance
with Section 8.


 


“Pricing Period”
shall mean the ten (10) consecutive Trading Days prior to receipt of the Put Notice by the Investor.


 


“Principal Market”
shall mean the New York Stock Exchange, the NYSE Amex, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, or the OTC Bulletin Board, whichever is the principal market on which the Common Stock is listed.


 


“Prospectus”
shall mean the prospectus, preliminary prospectus and supplemental prospectus used in connection with the Registration Statement.


 


“Purchase Amount”
shall mean the total amount being paid by the Investor on a particular Closing Date to purchase the Securities.


 


“Purchase Price”
shall mean Twenty-Four and a half (24.5%) percent discount to the lowest volume weighted average price of the common stock reported
by Bloomberg during the ten (10) consecutive trading days immediately prior to receipt by the Investor of the Put Notice.


 


“Put” shall
have the meaning set forth in Section 2.2.


 


“Put Amount”
shall have the meaning set forth in Section 2.2.


 


“Put Notice”
shall mean a written notice sent to the Investor by the Company stating the Put Amount in U.S. dollars the Company intends to sell
to the Investor pursuant to the terms of the Agreement and stating the current number of Shares issued and outstanding on such
date.


 


“Put Notice Date”
shall mean the Trading Day, as set forth below, on which the Investor receives a Put Notice, however a Put Notice shall be deemed
delivered on (a) the Trading Day it is received by facsimile or otherwise by the Investor if such notice is received prior to 9:30
am Eastern Time, or (b) the immediately succeeding Trading Day if it is received by facsimile or otherwise after 9:30 am Eastern
Time on a Trading Day. No Put Notice may be deemed delivered on a day that is not a Trading Day.


 


“Put Restriction”
shall mean the days between the beginning of the Pricing Period and Closing Date. During this time, the Company shall not be entitled
to deliver another Put Notice.


 


“Put Shares Due”
shall have the meaning set forth in Section 2.4.


 


“Registration Rights
Agreement” shall have the meaning set forth in the recitals.


 


“Registration Statement”
means the registration statement of the Company filed under the 1933 Act covering the Common Stock issuable hereunder.


 



    	 



    	 



    

 


“Related Party”
shall have the meaning set forth in Section 5.7.


 


“Resolution”
shall have the meaning set forth in Section 7.5.


 


“SEC” shall
mean the U.S. Securities and Exchange Commission.


 


“SEC Documents”
shall have the meaning set forth in Section 4.6.


 


“Securities”
shall mean the shares of Common Stock issued pursuant to the terms of the Agreement.


 


“Shares” shall
mean the shares of the Company’s Common Stock.


 


“Subsidiaries”
shall have the meaning set forth in Section 4.1.


 


“Trading Day”
shall mean any day on which the Principal Market for the Common Stock is open for trading, from the hours of 9:30 am until 4:00
pm.


 


“Waiting Period”
shall have the meaning set forth in Section 2.2.


 


SECTION II


PURCHASE AND SALE OF COMMON STOCK


 


2.1          PURCHASE
AND SALE OF COMMON STOCK. Subject to the terms and conditions set forth herein, the Company shall issue and sell to the Investor,
and the Investor shall purchase from the Company, up to that number of Shares having an aggregate Purchase Price of Twenty-Four
Million dollars ($24,000,000).


 


2.2          DELIVERY
OF PUT NOTICES. Subject to the terms and conditions of the At-the-Market Financing Transaction Documents, and from time to
time during the Open Period, the Company may, in its sole discretion, deliver a Put Notice to the Investor which states the dollar
amount (designated in U.S. Dollars), which the Company intends to sell to the Investor on a Closing Date (the “Put”).
The Put Notice shall be in the form attached hereto as Exhibit C and incorporated herein by reference. The amount that the
Company shall be entitled to Put to the Investor (the “Put Amount”) shall be equal to Two Hundred percent (200%)
of the average daily volume (U.S. market only) of the Common Stock for the Ten consecutive (10) Trading Days immediately prior
to the applicable Put Notice Date. During the Open Period, the Company shall not be entitled to submit a Put Notice until after
the previous Closing has been completed. Notwithstanding the foregoing, the Company may not deliver
a Put Notice on or earlier of the fourteenth (14th) day immediately following the preceding Put Notice Date (the “Waiting
Period”) unless a written waiver to deliver Put Notice during the Waiting Period is obtained by the Company from the
Investor in advance. 


 


2.3          CONDITIONS
TO INVESTOR’S OBLIGATION TO PURCHASE SHARES. Notwithstanding anything to the contrary in this Agreement, the Company
shall not be entitled to deliver a Put Notice and the Investor shall not be obligated to purchase any Shares at a Closing unless
each of the following conditions are satisfied:


 


		i.	a Registration Statement shall have been declared effective and shall remain effective and available
for the resale of all the Registrable Securities (as defined in the Registration Rights Agreement) at all times until the Closing
with respect to the subject Put Notice;



 


		ii.	at all times during the period beginning on the related Put Notice Date and ending on and including
the related Closing Date, the Common Stock shall have been listed on the Principal Market and shall not have been suspended from
trading thereon for a period of two (2) consecutive Trading Days during the Open Period and the Company shall not have been notified
of any pending or threatened proceeding or other action to suspend the trading of the Common Stock;



 


		iii.	the Company has complied with its obligations and is otherwise not in breach of or in default under,
this Agreement, the Registration Rights Agreement or any other agreement executed in connection herewith which has not been cured
prior to delivery of the Investor’s Put Notice Date;



 


		iv.	no injunction shall have been issued and remain in force, or action commenced by a governmental
authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the Securities; and



 


		v.	the issuance of the Securities will not violate any shareholder approval requirements of the Principal
Market.



 


If any of the events
described in clauses (i) through (v) above occurs during a Pricing Period, then the Investor shall have no obligation to purchase
the Put Amount of Common Stock set forth in the applicable Put Notice.


 



    	 



    	 



    

 


2.4          MECHANICS
OF PURCHASE OF SHARES BY INVESTOR. Subject to the satisfaction of the conditions set forth in Sections 2.5, 7 and 8 of this
Agreement, the closing of the purchase by the Investor of Shares (a “Closing”) shall occur on the date which
is no later than seven (7) Trading Days following the applicable Put Notice Date (each a “Closing Date”). Upon
each such Closing Date, the Company shall deliver to the Investor pursuant to this Agreement, certificates representing the Shares
to be issued to the Investor on such date and registered in the name of the Investor (the “Certificate”). Within
one Business Day after receipt of the Certificate, the Investor shall deliver to the Company the Purchase Price to be paid for
such Shares, determined as set forth in Section 2.2. In lieu of delivering physical certificates representing the Securities
and provided that the Company’s transfer agent then is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program, upon request of the Investor, the Company shall use all
commercially reasonable efforts to cause its transfer agent to electronically transmit the Securities by crediting the account
of the Investor’s prime broker (as specified by the Investor within a reasonably in advance of the Investor’s notice)
with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.


 


2.5          OVERALL
LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained herein to the contrary, if during the Open Period the Company
becomes listed on an exchange that limits the number of shares of Common Stock that may be issued without shareholder approval,
then the number of Shares issuable by the Company and purchasable by the Investor, shall not exceed that number of the shares of
Common Stock that may be issuable without shareholder approval (the “Maximum Common Stock Issuance”). If such
issuance of shares of Common Stock could cause a delisting on the Principal Market, then the Maximum Common Stock Issuance shall
first be approved by the Company’s shareholders in accordance with applicable law and the By-laws and the Certificate of
Incorporation of the Company, if such issuance of shares of Common Stock could cause a delisting on the Principal Market. The parties
understand and agree that the Company’s failure to seek or obtain such shareholder approval shall in no way adversely affect
the validity and due authorization of the issuance and sale of Securities or the Investor’s obligation in accordance with
the terms and conditions hereof to purchase a number of Shares in the aggregate up to the Maximum Common Stock Issuance limitation,
and that such approval pertains only to the applicability of the Maximum Common Stock Issuance limitation provided in this Section
2.5.


 


2.6          LIMITATION
ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be entitled
to purchase that number of Shares, which when added to the sum of the number of shares of Common Stock beneficially owned (as such
term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 4.99% of the number of shares
of Common Stock outstanding on the Closing Date, as determined in accordance with Rule 13d-1(j) of the 1934 Act.


 


SECTION III


INVESTOR’S REPRESENTATIONS, WARRANTIES
AND COVENANTS


 


The Investor represents
and warrants to the Company, and covenants, that:


 


3.1          SOPHISTICATED
INVESTOR. The Investor has, by reason of its business and financial experience, such knowledge, sophistication and experience
in financial and business matters and in making investment decisions of this type that it is capable of (I) evaluating the merits
and risks of an investment in the Securities and making an informed investment decision; (II) protecting its own interest; and
(III) bearing the economic risk of such investment for an indefinite period of time.


 


3.2          AUTHORIZATION;
ENFORCEMENT. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and is a
valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject as to enforceability
to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar
laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.


 


3.3          SECTION
9 OF THE 1934 ACT. During the term of this Agreement, the Investor will comply with the provisions of Section 9 of the 1934
Act, and the rules promulgated thereunder, with respect to transactions involving the Common Stock. The Investor agrees not to
sell the Company’s stock short, either directly or indirectly through its affiliates, principals or advisors, the Company’s
common stock during the term of this Agreement.


 


3.4          ACCREDITED
INVESTOR. Investor is an “Accredited Investor” as that term is defined in Rule 501(a) of Regulation D of the 1933
Act.


 


3.5          NO
CONFLICTS. The execution, delivery and performance of the Transaction Documents by the Investor and the consummation by the
Investor of the transactions contemplated hereby and thereby will not result in a violation of Partnership Agreement or other organizational
documents of the Investor.


 


3.6          OPPORTUNITY
TO DISCUSS. The Investor has received all materials relating to the Company’s business, finance and operations which
it has requested. The Investor has had an opportunity to discuss the business, management and financial affairs of the Company
with the Company’s management.


 



    	 



    	 



    

 


3.7          INVESTMENT
PURPOSES. The Investor is purchasing the Securities for its own account for investment purposes and not with a view towards
distribution and agrees to resell or otherwise dispose of the Securities solely in accordance with the registration provisions
of the 1933 Act (or pursuant to an exemption from such registration provisions).


 


3.8          NO
REGISTRATION AS A DEALER. The Investor is not and will not be required to be registered as a “dealer” under the
1934 Act, either as a result of its execution and performance of its obligations under this Agreement or otherwise.


 


3.9          GOOD
STANDING. The Investor is a Limited Partnership, duly organized, validly existing and in good standing in the Cayman Islands.


 


3.10        TAX
LIABILITIES. The Investor understands that it is liable for its own tax liabilities.


 


3.11        REGULATION
M. The Investor will comply with Regulation M under the 1934 Act, if applicable. 


 


SECTION IV


REPRESENTATIONS AND WARRANTIES OF THE
COMPANY


 


Except as set forth
in the Schedules attached hereto, or as disclosed on the Company’s SEC Documents, the Company represents and warrants to
the Investor that:


 


4.1          ORGANIZATION
AND QUALIFICATION. The Company is a corporation duly organized and validly existing in good standing under the laws of the
State of Nevada, and has the requisite corporate power and authorization to own its properties and to carry on its business as
now being conducted. Both the Company and the companies it owns or controls (“Subsidiaries”) are duly qualified
to do business and are in good standing in every jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the
Company and its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments
to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the At-the-Market
Financing Transaction Documents.


 


4.2          AUTHORIZATION;
ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.


 


		i.	The Company has the requisite corporate power and authority
to enter into and perform this Investment Agreement and the Registration Rights Agreement (collectively, the “At-the-Market
Financing Transaction Documents”), and to issue the Securities in accordance with the terms hereof and thereof.



 


		ii.	The execution and delivery of the At-the-Market Financing
Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including
without limitation the reservation for issuance and the issuance of the Securities pursuant to this Agreement, have been duly
and validly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company,
its Board of Directors, or its shareholders.



 


		iii.	The At-the-Market Financing Transaction Documents have
been duly and validly executed and delivered by the Company.



 


		iv.	The At-the-Market Financing Transaction Documents constitute
the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.



 


4.3          CAPITALIZATION.
As of the date hereof, the authorized capital stock of the Company consists of, 150,000,000 shares of Common Stock with $0.001
par value, of which as of the date hereof, 88,141,068 shares are issued and outstanding,. All of such outstanding shares have been,
or upon issuance will be, validly issued and are fully paid and nonassessable.


 


Except as disclosed in
the Company’s publicly available filings with the SEC or as otherwise set forth on Schedule 4.3:


 


		i.	no shares of the Company’s capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company;



 



    	 



    	 



    

 


		ii.	there are no outstanding debt securities;



 


		iii.	there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries
or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries;



 


		iv.	there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated
to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement);



 


		v.	there are no outstanding securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries;



 


		vi.	there are no securities or instruments containing anti-dilution or similar provisions that will
be triggered by the issuance of the Securities as described in this Agreement;



 


		vii.	the Company does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement; and



 


		viii.	there is no dispute as to the classification of any shares of the Company’s capital stock.



 


The Company has furnished
to the Investor, or the Investor has had access through EDGAR to, true and correct copies of the Company’s Amended and Restated
Certificate of Incorporation, as in effect on the date hereof (the “Certificate of Incorporation”), and the
Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible
into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto.


 


4.4          ISSUANCE
OF SHARES. The Company has reserved 30,000,000 Shares for issuance pursuant to this Agreement, which have been duly authorized
and reserved (subject to adjustment pursuant to the Company’s covenant set forth in Section 5.5 below) pursuant to
this Agreement. Upon issuance in accordance with this Agreement, the Securities will be validly issued, fully paid for and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof. In the event the Company cannot register a sufficient
number of Shares for issuance pursuant to this Agreement, the Company will use its best efforts to authorize and reserve for issuance
the number of Shares required for the Company to perform its obligations hereunder as soon as reasonably practicable.


 


4.5          NO
CONFLICTS. The execution, delivery and performance of the At-the-Market Financing Transaction Documents by the Company and
the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate
of Incorporation, any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company
or the By-laws; or (ii) conflict with, or constitute a material default (or an event which with notice or lapse of time or both
would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, contract, indenture mortgage, indebtedness or instrument to which the Company or any of its Subsidiaries
is a party, or to the Company’s knowledge result in a violation of any law, rule, regulation, order, judgment or decree (including
United States federal and state securities laws and regulations and the rules and regulations of the Principal Market or principal
securities exchange or trading market on which the Common Stock is traded or listed) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries
is in violation of any term of, or in default under, the Certificate of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company or the By-laws or their organizational charter or by-laws,
respectively, or any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not individually or in the aggregate have or constitute a Material Adverse
Effect. The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any
law, statute, ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency,
or court, except for possible violations the sanctions for which either individually or in the aggregate would not have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act or any securities laws
of any states, to the Company’s knowledge, the Company is not required to obtain any consent, authorization, permit or order
of, or make any filing or registration (except the filing of a registration statement as outlined in the Registration Rights Agreement
between the Parties) with, any court, governmental authority or agency, regulatory or self-regulatory agency or other third party
in order for it to execute, deliver or perform any of its obligations under, or contemplated by, the At-the-Market Financing Transaction
Documents in accordance with the terms hereof or thereof. All consents, authorizations, permits, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date
hereof and are in full force and effect as of the date hereof. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company is not, and will not be, in violation of the listing requirements of
the Principal Market as in effect on the date hereof and on each of the Closing Dates and is not aware of any facts which would
reasonably lead to delisting of the Common Stock by the Principal Market in the foreseeable future.


 



    	 



    	 



    

 


4.6          SEC
DOCUMENTS; FINANCIAL STATEMENTS. As of the date hereof, the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered
to the Investor or its representatives, or they have had access through EDGAR to, true and complete copies of the SEC Documents.
As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act
and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents,
at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC
with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles,
by a firm that is a member of the Public Companies Accounting Oversight Board (“PCAOB”) consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
No other written information provided by or on behalf of the Company to the Investor which is not included in the SEC Documents,
including, without limitation, information referred to in Section 4.3 of this Agreement, contains any untrue statement
of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstance
under which they are or were made, not misleading. Neither the Company nor any of its Subsidiaries or any of their officers, directors,
employees or agents have provided the Investor with any material, nonpublic information which was not publicly disclosed prior
to the date hereof and any material, nonpublic information provided to the Investor by the Company or its Subsidiaries or any
of their officers, directors, employees or agents prior to any Closing Date shall be publicly disclosed by the Company prior to
such Closing Date.


 


4.7          ABSENCE
OF CERTAIN CHANGES. Except as otherwise set forth in the SEC Documents, the Company does not intend to change the business
operations of the Company in any material way. The Company has not taken any steps, and does not currently expect to take any steps,
to seek protection pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings.


 


4.8          ABSENCE
OF LITIGATION AND/OR REGULATORY PROCEEDINGS. Except as set forth in the SEC Documents, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’
officers or directors in their capacities as such, in which an adverse decision could have a Material Adverse Effect.


 


4.9          ACKNOWLEDGMENT
REGARDING INVESTOR’S PURCHASE OF SHARES. The Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the At-the-Market Financing Transaction Documents and the transactions contemplated
hereby and thereby and any advice given by the Investor or any of its respective representatives or agents in connection with the
At-the-Market Financing Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the
Investor’s purchase of the Securities, and is not being relied on by the Company. The Company further represents to the Investor
that the Company’s decision to enter into the At-the-Market Financing Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.


 


4.10        NO
UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as set forth in the SEC Documents, as of the date hereof,
no event, liability, development or circumstance has occurred or exists, or to the Company’s knowledge is contemplated to
occur, with respect to the Company or its Subsidiaries or their respective business, properties, assets, prospects, operations
or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration
statement filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly
announced.


 


4.11        EMPLOYEE
RELATIONS. Neither the Company nor any of its Subsidiaries is involved in any union labor dispute nor, to the knowledge of
the Company or any of its Subsidiaries, is any such dispute threatened. Neither the Company nor any of its Subsidiaries is a party
to a collective bargaining agreement, and the Company and its Subsidiaries believe that relations with their employees are good.
No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the
Company’s employ or otherwise terminate such officer’s employment with the Company.


 



    	 



    	 



    

 


4.12        INTELLECTUAL
PROPERTY RIGHTS. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. Except
as set forth in the SEC Documents, none of the Company’s trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights necessary to conduct its business as now or as proposed to be conducted have expired or terminated,
or are expected to expire or terminate within two (2) years from the date of this Agreement. The Company and its Subsidiaries do
not have any knowledge of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar
rights of others, or of any such development of similar or identical trade secrets or technical information by others and, except
as set forth in the SEC Documents, there is no claim, action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention,
copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and the Company
and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its
Subsidiaries have taken commercially reasonable security measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.


 


4.13        ENVIRONMENTAL
LAWS. The Company and its Subsidiaries (i) are, to the knowledge of the management and directors of the Company and its Subsidiaries,
in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental
Laws”); (ii) have, to the knowledge of the management and directors of the Company, received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance,
to the knowledge of the management and directors of the Company, with all terms and conditions of any such permit, license or approval
where, in each of the three (3) foregoing cases, the failure to so comply would have, individually or in the aggregate, a Material
Adverse Effect.


 


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


 


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


 


4.16        REGULATORY
PERMITS. The Company and its Subsidiaries have in full force and effect all certificates, approvals, authorizations and permits
from the appropriate federal, state, local or foreign regulatory authorities and comparable foreign regulatory agencies, necessary
to own, lease or operate their respective properties and assets and conduct their respective businesses, and neither the Company
nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate,
approval, authorization or permit, except for such certificates, approvals, authorizations or permits which if not obtained, or
such revocations or modifications which, would not have a Material Adverse Effect.


 


4.17        INTERNAL
ACCOUNTING CONTROLS. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles by a firm with membership to the PCAOB and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.


 


4.18        NO
MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers
has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party
to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse
Effect.


 






    	 



    	 



    
 












 


4.19         TAX
STATUS. The Company and each of its Subsidiaries has made or filed all United States federal and state income and all other
tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and 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, except those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.


 


4.20         CERTAIN
TRANSACTIONS. Except as set forth in the SEC Documents filed at least ten (10) days prior to the date hereof and except for
arm’s length transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less
favorable than the Company could obtain from disinterested third parties and other than the grant of stock options disclosed in
the SEC Documents, none of the officers, directors, or employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.


 


4.21         DILUTIVE
EFFECT. The Company understands and acknowledges that the number of shares of Common Stock issuable upon purchases pursuant
to this Agreement will increase in certain circumstances including, but not necessarily limited to, the circumstance wherein the
trading price of the Common Stock declines during the period between the Effective Date and the end of the Open Period. The Company’s
executive officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement
and recognize that they have a potential dilutive effect on the shareholders of the Company. The Board of Directors of the Company
has concluded, in its good faith business judgment, and with full understanding of the implications, that such issuance is in the
best interests of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set forth
in the At-the-Market Financing Transaction Documents, its obligation to issue shares of Common Stock upon purchases pursuant to
this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests
of other shareholders of the Company.


 


4.22         LOCK-UP.
The Company shall cause its officers, insiders, directors, and affiliates or other related parties under control of the Company,
to refrain from selling Common Stock during each Pricing Period.


 


4.23         NO
GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor any person acting on its behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of
the Common Stock to be offered as set forth in this Agreement.


 


4.24         NO
BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS. No brokers, finders or financial advisory fees or commissions will
be payable by the Company, its agents or Subsidiaries, with respect to the transactions contemplated by this Agreement, except
as otherwise disclosed in this Agreement.


 


SECTION V


COVENANTS OF THE COMPANY


 


5.1           BEST
EFFORTS. The Company shall use all commercially reasonable efforts to timely satisfy each of the conditions set forth in Section
7 of this Agreement.


 


5.2           REPORTING
STATUS. Until one of the following occurs, the Company shall file all reports required to be filed with the SEC pursuant to
the 1934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which would terminate
its status as a reporting company under the 1934 Act: (i) this Agreement terminates pursuant to Section 8 and the Investor
has the right to sell all of the Securities without restrictions pursuant to Rule 144(k) promulgated under the 1933 Act, or such
other exemption (ii) the date on which the Investor has sold all the Securities and this Agreement has been terminated pursuant
to Section 8.


 


5.3           USE
OF PROCEEDS. The Company will use the proceeds from the sale of the Shares (excluding amounts paid by the Company for fees
as set forth in the At-the-Market Financing Transaction Documents) for general corporate and
working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors,
in its good faith deem to be in the best interest of the Company.


 



    	 



    	 



    

 


5.4           FINANCIAL
INFORMATION. During the Open Period, the Company agrees to make available to the Investor via EDGAR or other electronic means
the following documents and information on the forms set forth: (i) within five (5) Trading Days after the filing thereof with
the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
Registration Statements or amendments filed pursuant to the 1933 Act; (ii) copies of any notices and other information made available
or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders;
and (iii) within two (2) calendar days of filing or delivery thereof, copies of all documents filed with, and all correspondence
sent to, the Principal Market, any securities exchange or market, or the National Association of Securities Dealers, Inc., unless
such information is material nonpublic information.


 


5.5           RESERVATION
OF SHARES. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance,
a sufficient number of shares of Common Stock to provide for the issuance of the Securities to the Investor as required hereunder.
In the event that the Company determines that it does not have a sufficient number of authorized shares of Common Stock to reserve
and keep available for issuance as described in this Section 5.5, the Company shall use all commercially reasonable efforts
to increase the number of authorized shares of Common Stock by seeking shareholder approval for the authorization of such additional
shares.


 


5.6           LISTING.
The Company shall promptly secure and maintain the listing of all of the Registrable Securities (as defined in the Registration
Rights Agreement) on the Principal Market and each other national securities exchange and automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, such listing of all Registrable
Securities from time to time issuable under the terms of the At-the-Market Financing Transaction Documents.
Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting
or suspension of the Common Stock on the Principal Market (excluding suspensions of not more than one (1) trading day resulting
from business announcements by the Company). The Company shall promptly provide to the Investor copies of any notices it receives
from the Principal Market regarding the continued eligibility of the Common Stock for listing on such automated quotation system
or securities exchange. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section
5.6.


 


5.7           TRANSACTIONS
WITH AFFILIATES. The Company shall not, and shall cause each of its Subsidiaries not to, enter into, amend, modify or supplement,
or permit any Subsidiary to enter into, amend, modify or supplement, any agreement, transaction, commitment or arrangement with
any of its or any Subsidiary’s officers, directors, persons who were officers or directors at any time during the previous
two (2) years, shareholders who beneficially own 5% or more of the Common Stock, or Affiliates or with any individual related by
blood, marriage or adoption to any such individual or with any entity in which any such entity or individual owns a 5% or more
beneficial interest (each a “Related Party”), except for (i) customary employment arrangements and benefit programs
on reasonable terms, (ii) any agreement, transaction, commitment or arrangement on an arms-length basis on terms no less favorable
than terms which would have been obtainable from a disinterested third party other than such Related Party, or (iii) any agreement,
transaction, commitment or arrangement which is approved by a majority of the disinterested directors of the Company. For purposes
hereof, any director who is also an officer of the Company or any Subsidiary of the Company shall not be a disinterested director
with respect to any such agreement, transaction, commitment or arrangement. “Affiliate” for purposes hereof
means, with respect to any person or entity, another person or entity that, directly or indirectly, (i) has a 5% or more equity
interest in that person or entity, (ii) has 5% or more common ownership with that person or entity, (iii) controls that person
or entity, or (iv) is under common control with that person or entity. “Control” or “Controls”
for purposes hereof means that a person or entity has the power, directly or indirectly, to conduct or govern the policies of another
person or entity.


 


5.8           FILING
OF FORM 8-K. On or before the date which is four (4) Trading Days after the Execution Date, the Company shall file a Current
Report on Form 8-K with the SEC describing the terms of the transaction contemplated by the At-the-Market
Financing Transaction Documents in the form required by the 1934 Act, if such filing is required.


 


5.9           CORPORATE
EXISTENCE. The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence of the
Company.


 


5.10         NOTICE
OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE A PUT. The Company shall promptly notify the Investor
upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an
offering of the Securities: (i) receipt of any request for additional information by the SEC or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement
or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification
with respect to the suspension of the qualification or exemption from qualification of any of the Securities for sale in any jurisdiction
or the initiation or notice of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in
such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or
documents so that, in the case of a Registration Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in
the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading; and (v) the Company’s reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to Investor any such supplement or amendment to the
related prospectus. The Company shall not deliver to Investor any Put Notice during the continuation of any of the foregoing events
in this Section 5.10.


 



    	 



    	 



    

 


5.11         TRANSFER
AGENT. Upon effectiveness of the Registration Statement, and for so long as the Registration Statement is effective, the Company
shall deliver instructions to its transfer agent to issue Shares to the Investor that are covered for resale by the Registration
Statement free of restrictive legends.


 


5.12         ACKNOWLEDGEMENT
OF TERMS. The Company hereby represents and warrants to the Investor that: (i) it is voluntarily entering into this Agreement
of its own freewill, (ii) it is not entering this Agreement under economic duress, (iii) the terms of this Agreement are reasonable
and fair to the Company, and (iv) the Company has had independent legal counsel of its own choosing review this Agreement, advise
the Company with respect to this Agreement, and represent the Company in connection with this Agreement.


 


SECTION VI


CONDITIONS OF THE COMPANY’S OBLIGATION
TO SELL


 


The obligation hereunder
of the Company to issue and sell the Securities to the Investor is further subject to the satisfaction, at or before each Closing
Date, of each of the following conditions set forth below. These conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole discretion.


 


6.1           The
Investor shall have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company.


 


6.2           The
Investor shall have delivered to the Company the Purchase Price for the Securities being purchased by the Investor between the
end of the Pricing Period and the Closing Date via a Put Settlement Sheet (hereto attached as Exhibit D). After receipt
of confirmation of delivery of such Securities to the Investor, the Investor, by wire transfer of immediately available funds pursuant
to the wire instructions provided by the Company will disburse the funds constituting the Purchase Amount. The Investor shall have
no obligation to disburse the Purchase Amount until the Company delivers the Shares pursuant to a Put Notice.


 


6.3           No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated
by this Agreement.


 


SECTION VII


FURTHER CONDITIONS OF THE INVESTOR’S
OBLIGATION TO PURCHASE


 


The obligation of
the Investor hereunder to purchase Shares is subject to the satisfaction, on or before each Closing Date, of each of the following
conditions set forth below.


 


7.1           The
Company shall have executed the At-the-Market Financing Transaction Documents and delivered the
same to the Investor.


 


7.2           The
Common Stock shall be authorized for quotation on the Principal Market and trading in the Common Stock shall not have been suspended
by the Principal Market or the SEC, at any time beginning on the date hereof and through and including the respective Closing Date
(excluding suspensions of not more than one (1) Trading Day resulting from business announcements by the Company, provided that
such suspensions occur prior to the Company’s delivery of the Put Notice related to such Closing).


 


7.3           The
representations and warranties of the Company shall be true and correct as of the date when made and as of the applicable Closing
Date as though made at that time and the Company shall have performed, satisfied and complied with the covenants, agreements and
conditions required by the At-the-Market Financing Transaction Documents to be performed, satisfied
or complied with by the Company on or before such Closing Date. The Investor may request an update as of such Closing Date regarding
the representation contained in Section 4.3.


 


7.4           The
Company shall have executed and delivered to the Investor the certificates representing, or have executed electronic book-entry
transfer of, the Securities (in such denominations as the Investor shall request) being purchased by the Investor at such Closing.


 


7.5           The
Board of Directors of the Company shall have adopted resolutions consistent with Section 4.2(ii) (the “Resolutions”)
and such Resolutions shall not have been amended or rescinded prior to such Closing Date.


 


7.6           No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated
by this Agreement.


 



    	 



    	 



    

 


7.7           The
Registration Statement shall be effective on each Closing Date and no stop order suspending the effectiveness of the Registration
statement shall be in effect or to the Company’s knowledge shall be pending or threatened. Furthermore, on each Closing Date
(I) neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with
respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration
Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC’s concerns have been
addressed and Investor is reasonably satisfied that the SEC no longer is considering or intends to take such action), and (II)
no other suspension of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus shall exist.


 


7.8           At
the time of each Closing, the Registration Statement (including information or documents incorporated by reference therein) and
any amendments or supplements thereto shall not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading or which would require public disclosure
or an update supplement to the prospectus.


 


7.9           If
applicable, the shareholders of the Company shall have approved the issuance of any Shares in excess of the Maximum Common Stock
Issuance in accordance with Section 2.5 or the Company shall have obtained appropriate approval pursuant to the requirements
of Nevada law and the Company’s amended and restated Articles of Incorporation and By-laws.


 


7.10         The
conditions to such Closing set forth in Section 2.3 shall have been satisfied on or before such Closing Date.


 


7.11         The
Company shall have certified to the Investor the number of Shares of Common Stock outstanding when a Put Notice is given to the
Investor. The Company’s delivery of a Put Notice to the Investor constitutes the Company’s certification of the existence
of the necessary number of shares of Common Stock reserved for issuance.


 


SECTION VIII


TERMINATION


 


This Agreement shall
terminate upon any of the following events:


 


8.1           when
the Investor has purchased an aggregate of Twenty-Four Million dollars ($24,000,000) in the Common Stock of the Company pursuant
to this Agreement; or


 


8.2           on
the date which is thirty-six (36) months after the Effective Date; or,


 


8.3           at
such time that the Registration Statement is no longer in effect.


 


Any and all shares,
or penalties, if any, due under this Agreement shall be immediately payable and due upon termination of the Line.


SECTION IX


SUSPENSION


 


This Agreement shall
be suspended upon any of the following events, and shall remain suspended until such event is rectified:


 


		i.	The trading of the Common Stock is suspended by the SEC, the Principal Market or FINRA for a period
of two (2) consecutive Trading Days during the Open Period; or,



 


		ii.	The Common Stock ceases to be registered under the 1934 Act or listed or traded on the Principal
Market. Immediately upon the occurrence of one of the above-described events, the Company shall send written notice of such event
to the Investor.








 


SECTION X


INDEMNIFICATION


 


In consideration of
the parties mutual obligations set forth in the Transaction Documents, each of the parties (in such capacity, an “Indemnitor”)
shall defend, protect, indemnify and hold harmless the other and all of the other party’s shareholders, officers, directors,
employees, counsel, and direct or indirect investors and any of the foregoing person’s agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and reasonable expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (I) any misrepresentation
or breach of any representation or warranty made by the Indemnitor or any other certificate, instrument or document contemplated
hereby or thereby; (II) any breach of any covenant, agreement or obligation of the Indemnitor contained in the At-the-Market
Financing Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; or (III)
any cause of action, suit or claim brought or made against such Indemnitee by a third party and arising out of or resulting from
the execution, delivery, performance or enforcement of the At-the-Market Financing Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby, except insofar as any such misrepresentation,
breach or any untrue statement, alleged untrue statement, omission or alleged omission is made in reliance upon and in conformity
with information furnished to Indemnitor which is specifically intended for use in the preparation of any such Registration Statement,
preliminary prospectus, prospectus or amendments to the prospectus. To the extent that the foregoing undertaking by the Indemnitor
may be unenforceable for any reason, the Indemnitor shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The indemnity provisions contained herein shall be in
addition to any cause of action or similar rights Indemnitor may have, and any liabilities the Indemnitor or the Indemnitees may
be subject to.


 






    	 



    	 



    



 


SECTION XI


GOVERNING LAW; DISPUTES SUBMITTED TO
ARBITRATION.


 


11.1         Law
Governing this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware without regard to principles of conflicts of laws. Any action brought by either party against the other concerning
the transactions contemplated by this Agreement shall be brought only in the state courts of Delaware or in the federal courts
located in the state and county of Delaware. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon
forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection
herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial
by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs.
In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party
hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in
connection with this Agreement or any other Transaction Documents 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.


 


11.2         LEGAL
FEES; AND MISCELLANEOUS FEES. Except as otherwise set forth in the At-the-Market Financing Transaction
Documents, each party shall pay the fees and expenses of its advisers, counsel, the 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. Any attorneys’ fees and expenses incurred by either the Company or the Investor in connection with the preparation,
negotiation, execution and delivery of any amendments to this Agreement or relating to the enforcement of the rights of any party,
after the occurrence of any breach of the terms of this Agreement by another party or any default by another party in respect of
the transactions contemplated hereunder, shall be paid on demand by the party which breached the Agreement and/or defaulted, as
the case may be. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of any Securities.


 


11.3         COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.
This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the
same force and effect as if such signature page were an original thereof.


 


11.4         HEADINGS;
SINGULAR/PLURAL. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and
masculine shall include the feminine.


 


11.5         SEVERABILITY.
If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.


 


11.6         ENTIRE
AGREEMENT; AMENDMENTS. This Agreement is the FINAL AGREEMENT between the Company and the Investor with respect to the terms
and conditions set forth herein, and, the terms of this Agreement may not be contradicted by evidence of prior, contemporaneous,
or subsequent oral agreements of the Parties. No provision of this Agreement may be amended other than by an instrument in writing
signed by the Company and the Investor, and no provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. The execution and delivery of the At-the-Market Financing
Transaction Documents shall not alter the force and effect of any other agreements between the Parties, and the obligations
under those agreements.


 



    	 



    	 



    

 


11.7         NOTICES.
Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered (I) upon receipt, when delivered personally; (II) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (III) one (1)
day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such communications shall be:


 


	If to the Company:	 	
        Lone Star Gold, Inc.

        6565 Americas Parkway NE, Suite 200,


Albuquerque, NM 87110

        Attn: Dan M. Ferris

        Telefax:

	 	 	 
	If to the Investor:	 	
        Fairhills Capital Offshore Ltd.

        245 Main Street, Suite 302

        White Plains, NY 10601

        Attn: Edward Bronson

        Telefax: (646) 390-8433




 


Each party shall provide
five (5) days prior written notice to the other party of any change in address or facsimile number.


 


11.8         NO
ASSIGNMENT. This Agreement may not be assigned.


 


11.9         NO
THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and is not for the benefit of,
nor may any provision hereof be enforced by, any other person, except that the Company acknowledges that the rights of the Investor
may be enforced by its general partner.


 


11.10        SURVIVAL.
The representations and warranties of the Company and the Investor contained in Sections 3 and 4, the agreements and covenants
set forth in Sections 5 and 6, and the indemnification provisions set forth in Section 10, shall survive each of the Closings
and the termination of this Agreement.


 


11.11        PUBLICITY.
The Company and the Investor shall consult with each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such
public statement without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed, except
that no prior consent shall be required if such disclosure is required by law, in which such case the disclosing party shall provide
the other party with prior notice of such public statement. Notwithstanding the foregoing, the Company shall not publicly disclose
the name of the Investor without the prior consent of the Investor, except to the extent required by law. The Investor acknowledges
that this Agreement and all or part of the At-the-Market Financing Transaction Documents may
be deemed to be “material contracts” as that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company
may therefore be required to file such documents as exhibits to reports or registration statements filed under the 1933 Act or
the 1934 Act. The Investor further agrees that the status of such documents and materials as material contracts shall be determined
solely by the Company, in consultation with its counsel.


 


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


 


11.13        PLACEMENT
AGENT. If so required, the Company agrees to pay a registered broker dealer, to act as placement agent, a percentage of the
Put Amount on each Put toward the fee as outlined in that certain placement agent agreement entered into between the Company and
the placement agent. The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on
behalf of other persons or entities for fees of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the At-the-Market Financing Transaction Documents. The Company shall indemnify
and hold harmless the Investor, their employees, officers, directors, agents, and partners, and their respective affiliates, from
and against all claims, losses, damages, costs (including the costs of preparation and attorney’s fees) and expenses incurred
in respect of any such claimed or existing fees, as such fees and expenses are incurred.


 


11.14        NO
STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party, as the parties mutually agree that
each has had a full and fair opportunity to review this Agreement and seek the advice of counsel on it.


 


11.15        REMEDIES.
The Investor shall have all rights and remedies set forth in this Agreement and the Registration Rights Agreement and all rights
and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which
the Investor has by law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by reason of any default or breach of any provision
of this Agreement, including the recovery of reasonable attorneys fees and costs, and to exercise all other rights granted by law.





 



    	 



    	 



    







 


11.16         PAYMENT
SET ASIDE. To the extent that the Company makes a payment or payments to the Investor hereunder or under the Registration Rights
Agreement or the Investor enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver
or any other person under any law (including, without limitation, any bankruptcy law, 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. 


 


11.17         PRICING
OF COMMON STOCK. For purposes of this Agreement, the bid price of the Common Stock shall be as reported on Bloomberg.


 


SECTION XII


NON-DISCLOSURE OF NON-PUBLIC INFORMATION


 


The Company shall not
disclose non-public information to the Investor, its advisors, or its representatives.


 


Nothing herein shall
require the Company to disclose non-public information to the Investor or its advisors or representatives, and the Company represents
that it does not disseminate non-public information to any investors who purchase stock in the Company in a public offering, to
money managers or to securities analysts, provided, however, that notwithstanding anything herein to the contrary, the Company
will, as hereinabove provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters, of
any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which
it becomes aware, constituting non-public information (whether or not requested of the Company specifically or generally during
the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in the Registration
Statement would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein
in order to make the statements, therein, in light of the circumstances in which they were made, not misleading. Nothing contained
in this Section 12 shall be construed to mean that such persons or entities other than the Investor (without the written
consent of the Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting
due diligence in accordance with the terms of this Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by such persons or entities, that the Registration Statement
contains an untrue statement of material fact or omits a material fact required to be stated in the Registration Statement or necessary
to make the statements contained therein, in light of the circumstances in which they were made, not misleading.


 


SECTION XIII


ACKNOWLEDGEMENTS OF THE PARTIES


 


Notwithstanding anything
in this Agreement to the contrary, the parties hereto hereby acknowledge and agree to the following: (i) the Investor makes no
representations or covenants that it will not engage in trading in the securities of the Company, other than the Investor will
not short the Company’s common stock at any time during this Agreement; (ii) the Company shall, by 8:30 a.m. EST on the trading
day following the date hereof, file a current report on Form 8-K disclosing the material terms of the transactions contemplated
hereby and in the other At-the-Market Financing Transaction Documents; (iii) the Company has
not and shall not provide material non-public information to the Investor unless prior thereto the Investor shall have executed
a written agreement regarding the confidentiality and use of such information; and (iv) the Company understands and confirms that
the Investor will be relying on the acknowledgements set forth in clauses (i) through (iii) above if the Investor effects any transactions
in the securities of the Company.


 


[Signature page follows]


 



    	 



    	 



    

 


Your signature on this
Signature Page evidences your agreement to be bound by the terms and conditions of the Investment Agreement as of the date first
written above. The undersigned signatory hereby certifies that he has read and understands the Investment Agreement, and the representations
made by the undersigned in this Investment Agreement are true and accurate, and agrees to be bound by its terms.


 


	 	FAIRHILLS OFFSHORE CAPITAL LTD.
	 	 
	 	By:	/s/ Edward Bronson
	 	Name: Edward Bronson
	 	Title: Senior Managing Member
	 	 
	 	LONE STAR GOLD, INC.
	 	 
	 	By:	/s/ Dan Ferris
	 	Name: Dan M. Ferris
	 	Title: Chief Executive Officer


 


[SIGNATURE PAGE OF INVESTMENT AGREEMENT]


 



    	 



    	 



    

 


Schedule 4.3


 


On January 13, 2012, the Company entered
into a Redemption Agreement with John G. Rhoden (the “Redemption Agreement”). Pursuant to the Redemption Agreement,
Mr. Rhoden transferred and assigned 22,500,000 shares of the Company’s Common Stock (the “Redemption Shares”)
to the Company. The Company and Mr. Rhoden agreed that the Redemption Shares would be cancelled and returned to the status of authorized
but unissued shares of Common Stock.





After signing the Redemption Agreement,
the Company learned that one of the original stock certificates representing Mr. Rhoden’s shares had been lost. The Company
has been working with its transfer agent, Corporate Stock Transfer, Inc. (“CST”), to cancel the stock certificate representing
the Redemption Shares.





As of the date of this Agreement, the Redemption
Shares are still listed in the name of John G. Rhoden on the records of CST. Therefore, the number of issued and outstanding shares
on the records of CST is currently 110,641,068. However, the Company’s 10K reported that 88,141,068
shares were issued and outstanding, noting that this number took into account the redemption of the Redemption Shares. 





The Company anticipates that the discrepancy
will be resolved by the date of the Company’s next 10Q, or May 15, 2012.


 



    	 



    	 



    

 


LIST OF EXHIBITS


 


	EXHIBIT A	Registration Rights Agreement
	EXHIBIT B	Opinion of Company’s Counsel
	EXHIBIT C	Put Notice
	EXHIBIT D	Put Settlement Sheet


 



    	 



    	 



    

 


EXHIBIT A


REGISTRATION RIGHTS AGREEMENT


See attached.


 



    	 



    	 



    

 


EXHIBIT B


 


FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT


 


	 	Date: __________


 


[TRANSFER AGENT]


 


	Re:	Lone Star Gold, Inc.



 


Ladies and Gentlemen:


 


We are counsel to Lone Star Gold, Inc.,
a Nevada corporation (the “Company”), and have represented the Company in connection with that certain Investment Agreement
(the “Investment Agreement”) entered into by and among the Company and Fairhills Capital Offshore Ltd. (the “Investor”)
pursuant to which the Company has agreed to issue to the Investor shares of the Company’s common stock with $0.001 par value
(the “Common Stock”) on the terms and conditions set forth in the Investment Agreement. Pursuant to the Investment
Agreement, the Company also has entered into a Registration Rights Agreement with the Investor (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the shares of Common Stock issued or issuable under the Investment Agreement under
the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the
Registration Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form S- ___ (File No. 333-________)
(the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names the Investor as a selling shareholder thereunder.


 


In connection with the foregoing, we advise
you that the Registration Statement has become effective under the 1933 Act at [enter the time of effectiveness] on [enter
the date of effectiveness] and to the best of our knowledge, no stop order suspending its effectiveness has been issued and
no proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for
resale under the 1933 Act pursuant to the Registration Statement.


 


	 	Very truly yours,
	 	 
	 	[Company Counsel]


 



    	 



    	 



    

 


EXHIBIT C


FORM OF PUT NOTICE


 


Date:


 


RE: Put Notice Number __


 


Dear Mr. Bronson,


 


This is to inform you that as of today,
Lone Star Gold, Inc., a Nevada corporation (the “Company”), hereby elects to exercise its right pursuant to the Investment
Agreement to require Fairhills Capital Offshore Ltd. to purchase shares of its common stock. The Company hereby certifies that:


 


The amount of this put is $__________.


 


The Pricing Period runs from _______________
until _______________.


 


The current number of shares of common
stock issued and outstanding is: _________________.


 


The number of shares currently available
for issuance on the S-1 is: ________________________.


 


Regards, 


LONE STAR GOLD, INC.


 


	By:	 	 
	Name: Dan M. Ferris	 
	Title: Chief Executive Officer	 


 



    	 



    	 



    

 


EXHIBIT D


 


PUT SETTLEMENT SHEET


 


Date: ________________


 


Dear Mr. ________,


 


Pursuant to the Put given by Lone Star
Gold, Inc. to Fairhills Offshore Capital Ltd. (“Fairhills”) on _________________ 201_, we are now submitting the amount
of common shares for you to issue to Fairhills.


 


Please have a certificate bearing no restrictive
legend totaling __________ shares issued to Fairhills Offshore Capital Ltd. immediately and send via DWAC to the following account:


 


[INSERT]


 


If not DWAC eligible, please send FedEx
Priority Overnight to:


 


[INSERT ADDRESS]


 


Once these shares are received by us, we
will have the funds wired to the Company.


 


Regards,


 


FAIRHILLS OFFSHORE CAPITAL LTD.


 


	By:	 	 
	Name: Edward Bronson	 
	Title: Senior Managing Member