SECURITIES PURCHASE AGREEMENT


 


SECURITIES PURCHASE
AGREEMENT (the "Agreement"), dated as of May 15, 2012, by and among KIT digital, Inc., a Delaware corporation,
with headquarters located at 26 West 17th Street, 2nd Floor, New York, NY 10011 (the "Company"), and the investors
listed on the Schedule of Buyers attached hereto (individually, a "Buyer" and collectively, the "Buyers").


 


WHEREAS:


 


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


 


B.           Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) that aggregate
number of shares of the Company's common stock, par value $0.0001 per share (the "Common Stock"), set forth opposite
such Buyer's name in column (3) on the Schedule of Buyers (which aggregate number for all Buyers together shall be 7,000,000 shares
of Common Stock and shall collectively be referred to herein as the "Common Shares") and (ii) Warrants, in substantially
the form attached hereto as Exhibit A (the "Warrants"), representing the right to acquire up to that number
of additional shares of Common Stock set forth opposite such Buyer's name in column (4) on the Schedule of Buyers (as exercised,
collectively, the "Warrant Shares").


 


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


 


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


 


E.           The
Company has engaged Canaccord Genuity Inc. as its exclusive placement agent (the "Placement Agent") for the offering
of the Securities on a “best efforts” basis.


 


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


 


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


 


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


 



    	 



    	 



    

 


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


 


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


 


(iii)        Purchase
Price. The aggregate purchase price for the Common Shares and the related Warrants to be purchased by each Buyer at the Closing
shall be the amount set forth opposite each Buyer's name in column (5) of the Schedule of Buyers (the "Purchase Price")
which shall be equal to $4.17 per Common Share and the related Warrants.


 


(iv)        Form
of Payment. On or prior to the Closing Date, after all closing conditions set forth in Section 7 have been satisfied, (i) each
Buyer shall pay its respective Purchase Price to the Company for the Common Shares and the Warrants to be issued and sold to such
Buyer at the Closing (less, in the case of Hudson Bay Master Fund Ltd. ("Hudson Bay"), the amounts withheld pursuant
to Section 4(h)), by wire transfer of immediately available funds to an escrow account established by the Company and the Placement
Agent with JPMorgan Chase Bank, as escrow agent, as set forth on Schedule I attached hereto. On the Closing Date, the Company
shall deliver to each Buyer (x) one or more stock certificates, evidencing the number of Common Shares such Buyer is purchasing
as is set forth opposite such Buyer's name in column (3) of the Schedule of Buyers and (y) Warrants (allocated in the amounts as
such Buyer shall request) which such Buyer is purchasing hereunder pursuant to which such Buyer shall have the right to acquire
up to such number of Warrant Shares as is set forth opposite such Buyer's name in column (4) of the Schedule of Buyers, in each
case duly executed on behalf of the Company and registered in the name of such Buyer or its designee.


 


(b)          Adjustment
Shares.


 


(i)          The
following terms used in this Section 1(b), shall have the following meanings:


 


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


 



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


 


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


 


(4)         "Bloomberg"
means Bloomberg Financial Markets.


 


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


 


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


 


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


 



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(8)         "Eligible
Market" means the Principal Market, The NASDAQ Capital Market, The NASDAQ Global Market, the NYSE MKT or The New York
Stock Exchange, Inc.


 


(9)         "First
Adjustment Date" means the date that is the earliest of (1) the date that is the fortieth (40th) Trading Day immediately
following the date that all Registrable Securities (as defined in the Registration Rights Agreement) and the Adjustment Shares
have become registered pursuant to an effective Registration Statement that is available for the resale of all such Registrable
Securities and Adjustment Shares, (2) the date that is the twentieth (20th) Trading Day immediately following the date that such
Buyer can sell all of the Registrable Securities and the Adjustment Shares without restriction or limitation pursuant to Rule 144
and (3) the date that is the twentieth (20th) Trading Day immediately following the date that is six (6) months immediately following
the Closing Date.


 


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


 


(11)        "Fundamental
Transaction" means that (A) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation)
another Person or Persons, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties
or assets of the Company or any of its Subsidiaries to another Person or Persons, or (iii) allow another Person to make a purchase,
tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company
(not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or
other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with another Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), or (v) reorganize,
recapitalize or reclassify its Common Stock or (B) any "person" or "group" (as these terms are used for purposes
of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of either (x) 50% of the aggregate ordinary voting power represented by issued and outstanding
shares of Common Stock, (y) 50% or more of the shares of Voting Stock of the Company not held by such Person or Persons as of the
date hereof or (z) a percentage of the aggregate Voting Stock of the Company sufficient to allow such Person to effect a statutory
short form merger or other transaction requiring other stockholders of the Company to surrender their shares of Common Stock without
approval of the stockholders of the Company.


 



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


 


(13)        "Parent
Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common shares
or common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person
or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the
Fundamental Transaction.


 


(14)        "Second
Adjustment Date" means a date after the First Adjustment Date that is the earliest of (1) the date that is the fortieth
(40th) Trading Day immediately following the date that all Registrable Securities and the Adjustment Shares are registered pursuant
to an effective Registration Statement that is available for the resale of all such Registrable Securities and Adjustment Shares,
(2) the date that is the twentieth (20th) Trading Day immediately following the date that such Buyer can sell all of the Registrable
Securities and the Adjustment Shares without restriction or limitation pursuant to Rule 144, (3) the date that is the twentieth
(20th) Trading Day immediately following the date that such Buyer can sell all of the Registrable Securities and the Adjustment
Shares without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1)
and (4) the date that is the twentieth (20th) Trading Day immediately following the date that is one (1) year immediately following
the Closing Date.


 


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


 


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


 



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(17)        "Third
Adjustment Date" means a date after the Second Adjustment Date that is the twentieth (20th) Trading Day immediately following
the earlier of (i) the date that such Buyer can sell all of the Registrable Securities and the Adjustment Shares without restriction
or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) and (ii) the date that is
one (1) year immediately following the Closing Date.


 


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


 


(19)        "Trading
Day" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).


 


(20)        "Voting
Stock" of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have
the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or
trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might
have voting power by reason of the happening of any contingency).


 


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


 



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


 



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


 



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(iv)        Principal
Market Regulation. The Company shall not be obligated to issue any Adjustment Shares and no Buyer shall have the right to receive
Adjustment Shares, and any such issuance shall be null and void and treated as if never made, to the extent the issuance of such
shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue without breaching
the Company's obligations under the rules or regulations of the Principal Market, whether or not the Common Stock is listed on
the Principal Market (the "Exchange Cap"), except that such limitation shall not apply in the event that the Company
obtains the approval of its stockholders as required by the applicable rules of the Principal Market for issuances of shares of
Common Stock in excess of such amount. Until such approval or written opinion is obtained, no Buyer shall be issued in the aggregate
Adjustment Shares, shares of Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the
numerator of which is the total number of Common Shares issued to such Buyer pursuant to the Securities Purchase Agreement on the
Issuance Date and the denominator of which is the aggregate number of Common Shares issued to all Buyers pursuant to the Securities
Purchase Agreement on the Issuance Date (with respect to each Buyer, the "Exchange Cap Allocation").


 


(v)         Cash
Settlement. In the event that the Company is prohibited from issuing any Adjustment Shares as a result of the operation of
Section 1(b)(iv) or for any other reason (other than Section 1(b)(iii)), in lieu of delivering the Adjustment Shares otherwise
required to be delivered pursuant to this Section 1(b), the Company shall pay the Buyers in cash by wire transfer of immediately
available funds in a dollar amount determined by multiplying the number of Adjustment Shares otherwise deliverable to such Buyer
pursuant to this Section 1(b) by ninety percent (90%) of the ten (10) lowest Weighted Average Prices of the Common Stock during
the twenty (20) Trading Days immediately preceding the date of such event. In the event the Company fails to make any cash payments
required under this Agreement by a specified deadline, such payments shall bear interest at the rate of one and one-half percent
(1.5%) per month (prorated for partial months) (or such lesser maximum amount that is permitted to be paid by applicable law) until
paid in full.


 


(vi)        Mechanics
of Issuance.


 


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


 



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


 


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


 


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


 



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(vii)       Certain
Adjustments. 


 


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


 


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


 


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


 


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


 



    	- 11 -



    	 



    

 


(5)         Fundamental
Transaction. If, at any time after the Closing Date and prior to an Adjustment Date, a Fundamental Transaction occurs, then
for each Adjustment Share otherwise issuable under Section 1(b) not issued prior to the date of such Fundamental Transaction, the
respective Buyer shall be entitled to receive the number of shares of capital stock of the successor or acquiring corporation or
of the Company, if it is the surviving corporation, and any additional consideration (the "Alternate Consideration")
receivable as a result of such Fundamental Transaction by holder of a share of Common Stock immediately prior to such Fundamental
Transaction.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Buyer shall be given the same choice as to the Alternate Consideration it receives upon the
issuance of an Adjustment Share following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the "Successor Entity") to assume in writing all of the
obligations of the Company under this Section 1(b) in accordance with the provisions of this Section 1(b)(vii)(5) pursuant to written
agreements in form and substance reasonably satisfactory to the Required Holders (as defined in the Registration Rights Agreement).
If a Fundamental Transaction is publicly announced or occurs prior to occurrence of an Adjustment Event or the issuance of the
Adjustment Shares, for all purposes under this Subsection (5) an Adjustment Date will have deemed to have occurred twenty (20)
Trading Days immediately preceding the consummation of such Fundamental Transaction and the applicable Adjustment Price shall be
deemed to equal ninety percent (90%) of the ten (10) lowest Weighted Average Prices of the Common Stock during the twenty (20)
Trading Days immediately following such deemed Adjustment Date (as adjusted for stock splits, stock dividends, recapitalizations,
reorganizations, reclassification, combinations, reverse stock splits or other similar events during such period). The Company
shall provide each Buyer with written notice, including a summary of material terms, of any Fundamental Transaction described in
the preceding sentence no less than fifteen (15) days prior to the consummation such Fundamental Transaction, provided that if
the Company does not have knowledge of such Fundamental Transaction or material terms thereof at least fifteen (15) days prior
to the consummation, the Company shall provide written notice, including a summary of material terms, within two (2) Trading Days
of having such knowledge.  


 


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


 





 



    	- 12 -



    	 



    

 


(7)         Notice
to Buyers. 


 


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


  


(B) Notice
of Certain Events. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company
shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock are converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, in each case prior to the later of an Adjustment Date or the issuance of the applicable
number of Adjustment Shares issuable in respect of such Adjustment Date, then, in each case, the Company shall cause to be mailed
to each Buyer at its last address, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided
that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  To the extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice
with the SEC pursuant to a Current Report on Form 8-K.


 


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


 



    	- 13 -



    	 



    

 


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


 


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


 


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


 


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


 


(d)          Information.
Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and
its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other
due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect
such Buyer's right to rely on the Company's representations and warranties contained herein. Such Buyer understands that its investment
in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its acquisition of the Securities. Such Buyer understands that
the Placement Agent has acted solely as the agent of the Company in this offering of the Securities and such Buyer has not relied
on the business or legal advice of the Placement Agent or any of its agents, counsel or affiliates in making its investment decision
hereunder, and confirms that none of such Persons has made any representations or warranties to such Buyer in connection with the
transactions contemplated herein.


 



    	- 14 -



    	 



    

 


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


 


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


 


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


 



    	- 15 -



    	 



    

 


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


 


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


 


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


 



    	- 16 -



    	 



    

 


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


 


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


 


3.          REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.


 


The Company represents
and warrants to each of the Buyers and the Placement Agent that:


 


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


 



    	- 17 -



    	 



    

 


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


 


(c)          Issuance
of Securities. The issuance of the Common Shares and the Warrants are duly authorized and, upon issuance in accordance with
the terms hereof, shall be validly issued and free from all taxes, liens and charges with respect to the issue thereof and the
Common Shares shall be fully paid and nonassessable with the holders being entitled to all rights accorded to a holder of Common
Stock. As of the Closing Date, a number of shares of Common Stock shall have been duly authorized and reserved for issuance which
equals or exceeds 130% of the aggregate of the maximum number of shares of Common Stock (the "Required Reserved Amount)
(i) issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth
in the Warrants) and (ii) as Adjustment Shares, taking into account the Adjustment Shares Cap. As of the date hereof, there are
102,058,960 shares of Common Stock authorized and unissued. Upon exercise of the Warrants in accordance with the Warrants, the
Warrant Shares will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens
and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.
The Adjustment Shares, when issued in accordance with the terms of Section 1(b), will be validly issued, fully paid and nonassessable
and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock. Assuming the accuracy of each of the representations and warranties
set forth in Section 2 of this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under
the 1933 Act.


 


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


 



    	- 18 -



    	 



    

 


(e)          Consents.
Neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing
or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for
it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and the Company is
unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any of the registration, application
or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements of the Principal Market
and has no knowledge of any facts that would reasonably lead to delisting or suspension of the Common Stock in the foreseeable
future. The issuance by the Company of the Securities shall not have the effect of delisting or suspending the Common Stock from
the Principal Market.


 


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


 


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


 



    	- 19 -



    	 



    

 


(h)          No
Integrated Offering. None of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of any of the Securities under the 1933 Act, whether through integration with prior offerings or
otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes of the 1933
Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its
Subsidiaries, their affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding
sentence that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities to
be integrated with other offerings for purposes of any such applicable stockholder approval provisions.


 


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


 


(j)          Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation (as defined in Section 3(r))
or the laws of the jurisdiction of its formation which is or could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's issuance of the Securities and any Buyer's ownership
of the Securities. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial
ownership of Common Stock or a change in control of the Company.


 



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(k)          SEC
Documents; Financial Statements. Except as disclosed in Schedule 3(k), during the two (2) years prior to the date hereof,
the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the
SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof or prior to the
Closing Date, and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated
by reference therein being hereinafter referred to as the "SEC Documents"). The Company has delivered to the Buyers
or their respective representatives true, correct and complete copies of the SEC Documents not available on the EDGAR system. As
of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and
the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective filing dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved ("GAAP") (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes
or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company 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 information provided by or on behalf of the Company to the Buyers which
is not included in the SEC Documents, including, without limitation, information referred to in Section 2(d) of this Agreement
or in the disclosure schedules to this Agreement, contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not
misleading.


 


(l)          Absence
of Certain Changes. Except as disclosed in Schedule 3(l), since December 31, 2011, there has been no material adverse
change and no material adverse development in the business, assets, properties, operations, condition (financial or otherwise),
results of operations or prospects of the Company or its Subsidiaries. Except as disclosed in Schedule 3(l), since December
31, 2011, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually
or in the aggregate, in excess of $500,000 outside of the ordinary course of business or (iii) had capital expenditures, individually
or in the aggregate, in excess of $500,000. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact that would reasonably lead a creditor to do so. The Company
and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), "Insolvent"
means, with respect to any Person, (i) the present fair saleable value of such Person's assets is less than the amount required
to pay such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to
incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed
to be conducted.


 



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


 


(n)          Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under any certificate of designations of any outstanding series of preferred stock of the Company (if any), its Certificate of
Incorporation or Bylaws (as defined in Section 3(r)) or their organizational charter or memorandum of association or certificate
of incorporation or articles of association or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation
of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries,
and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except for
possible violations which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements
of the Principal Market and has no knowledge of any facts or circumstances that would reasonably lead to delisting or suspension
of the Common Stock by the Principal Market in the foreseeable future. Except as set forth in Schedule 3(n), during the
two (2) years prior to the date hereof, the Common Stock has been designated for quotation on the Principal Market. Except as set
forth in Schedule 3(n), during the two (2) years prior to the date hereof, (i) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (ii) the Company has received no communication, written or oral, from the SEC
or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and its
Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations
or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary
has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.


 


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


 


(p)          Sarbanes-Oxley
Act. Except as set forth on Schedule 3(p), the Company is in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002, as amended, that are effective with respect to the Company as of the date hereof, and any and all
applicable rules and regulations promulgated by the SEC thereunder that are effective with respect to the Company as of the date
hereof.


 



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


 


(r)          Equity
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 150,000,000 shares of Common
Stock, of which as of the date hereof, 47,941,040 shares are issued and outstanding, 6,393,753 shares are reserved for issuance
pursuant to the Company's stock option and purchase plans, 1,408,267 shares are reserved for issuance pursuant to outstanding warrants
to purchase Common Stock, and 2,159,964 shares are reserved for issuance pursuant to securities (other than the aforementioned
options and Warrants) exercisable or exchangeable for, or convertible into, Common Stock. No preferred stock is authorized, issued
or 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 Schedule 3(r): (i) none of the Company's capital stock is 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 options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, or exercisable or exchangeable for, any 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, or exercisable or exchangeable for,
any shares of capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company or any of
its Subsidiaries; (v) 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 pursuant to the Registration Rights Agreement); (vi) there
are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company does
not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and (ix)
the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed
in the SEC Documents, other than those incurred in the ordinary course of the Company's or any of its Subsidiary's' respective
businesses and which, individually or in the aggregate, do not or would not have a Material Adverse Effect. The Company has furnished
or made available to the Buyers true, correct and complete copies of the Company's Certificate of Incorporation, as amended and
as in effect on the date hereof (the "Certificate of Incorporation"), and the Company's Bylaws, as amended and
as in effect on the date hereof (the "Bylaws"), and the terms of all securities convertible into, or exercisable
or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto.


 



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


 



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(t)          Absence
of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company's Subsidiaries or any of the Company's
or its Subsidiaries' officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, except
as set forth in Schedule 3(t). The matters set forth in Schedule 3(t) would not reasonably be expected to have a
Material Adverse Effect.


 


(u)          Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any reason to believe that it will 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.


 


(v)         Employee
Relations.


 


(i)          Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The
Company and its Subsidiaries believe that their relations with their employees are good. No executive officer of the Company or
any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such officer's employment with the Company or any such
Subsidiary. No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company or any of its Subsidiaries,
is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect
to any of the foregoing matters.


 


(ii)         The
Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure
to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.


 


(w)          Title.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as set forth on Schedule 3(w) and do not materially affect
the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any
of its Subsidiaries. Any real property and facilities held under lease by the Company and 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.


 



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(x)          Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and
registrations therefor ("Intellectual Property Rights") necessary to conduct their respective businesses as now
conducted. Except as set forth in Schedule 3(x), none of the Company's Intellectual Property Rights have expired or terminated
or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within two (2) years after the date
of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual
Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or
any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights.
Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their Intellectual Property Rights.


 


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


 


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


 



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(aa)         Investment
Company Status. The Company is not, and upon consummation of the sale of the Securities, and for so long any Buyer holds any
Securities, will not be, an "investment company," a company controlled by an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.


 


(bb)         Tax
Status. The Company and each of its Subsidiaries (i) has made or filed all U.S. federal and state income and all other 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, except
those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim.


 


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


 


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


 


(ee)         Eligibility
for Registration. The Company is eligible to register the Common Shares and the Warrant Shares for resale by the Buyers using
Form S-3 promulgated under the 1933 Act.


 



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


 


(gg)         Manipulation
of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) other than the Placement
Agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than
the Placement Agent, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities
of the Company.


 


(hh)                      Acknowledgement
Regarding Buyers' Trading Activity. The Company acknowledges and agrees that (i) except as set forth in Section 4(e), none
of the Buyers has been asked to agree, nor has any Buyer agreed, to desist from purchasing or selling, long and/or short, securities
of the Company, or "derivative" securities based on securities issued by the Company or to hold the Securities for any
specified term; (ii) any Buyer, and counter-parties in "derivative" transactions to which any such Buyer is a party,
directly or indirectly, presently may have a "short" position in the Common Stock, and (iii) each Buyer shall not be
deemed to have any affiliation with or control over any arm's length counter-party in any "derivative" transaction. The
Company further understands and acknowledges that one or more Buyers may engage in hedging and/or trading activities at various
times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of
the Warrant Shares and/or the Adjustment Shares are being determined and (b) such hedging and/or trading activities, if any, can
reduce the value of the existing stockholders' equity interest in the Company both at and after the time the hedging and/or trading
activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute
a breach of this Agreement, the Warrants or any of the documents executed in connection herewith.


 


(ii)         U.S.
Real Property Holding Corporation. The Company is not, has never been, and so long as any Securities remain outstanding, shall
not become, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon any Buyer's request.


 


(jj)         Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or affiliates is subject to the Bank Holding Company Act
of 1956, as amended (the "BHCA") and to regulation by the Board of Governors of the Federal Reserve System (the
"Federal Reserve"). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%)
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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(kk)         No
Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the Transaction Documents.


 


(ll)         Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their respective
agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information.
The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions
in securities of the Company. All disclosure provided to the Buyers regarding the Company, or any of its Subsidiaries, their business
and the transactions contemplated hereby, including the disclosure schedules to this Agreement, furnished by or on behalf of the
Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each
press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries
or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. The Company
acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.


 


(mm)         Shell
Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1) promulgated under the 1933 Act.


 


(nn)         Stock
Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock
option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date
such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company's stock
option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the
Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release
or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.


 


(oo)         No
Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company's
ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof,
the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions,
the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.


 



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4.          COVENANTS.


 


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


 


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


 


(c)          Reporting
Status. Until the date on which the Investors (as defined in the Registration Rights Agreement) shall have sold all of the
Common Shares, Adjustment Shares and Warrant Shares, none of the Warrants are outstanding and no additional Adjustment Shares
are issuable hereunder (the "Reporting Period"), the Company shall timely file all reports required to be filed
with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under
the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination,
and the Company shall take all actions necessary to maintain its eligibility to register the Common Shares and Warrant Shares for
resale by the Investors on Form S-3; provided that the Company shall not be in breach of this covenant so long as Rule 144 is available
for resales of all Common Shares, Adjustment Shares and Warrant Shares without any restriction or limitation by the Buyers and
without the requirement to be in compliance with Rule 144(c)(1).


 


(d)          Use
of Proceeds. The Company will use the proceeds from the sale of the Securities solely as set forth on Schedule 4(d).


 



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(e)          Short
Sales. During the period commencing on the date hereof and ending with the close of trading on the Principal Market on the
last Adjustment Date hereunder (such period, the "Restricted Period"), each Buyer, severally and not jointly with
the other Buyers, covenants that neither it nor any of its Buyer Trading Affiliates shall maintain a Net Short Position. For purposes
hereof, a "Net Short Position" by a person means a position whereby such person has executed one or more sales
of Common Stock that is marked as a "short sale" (as defined in Rule 200 of Regulation SHO under the 1934 Act) and that
is executed at a time when such Buyer has no equivalent offsetting long position in the Common Stock or contract for the foregoing.
For purposes of determining whether a Buyer has an equivalent offsetting long position in the Common Stock, all Common Stock (i)
that is owned by such Buyer, (ii) that may be issued as Adjustment Shares pursuant to Section 1(b) if reasonably determinable,
or (iii) that would be issuable upon exercise in full of the Warrants then held by such Buyer (assuming that such Warrants were
then fully exercisable, notwithstanding any provisions to the contrary) shall be deemed to be held long by such Buyer. Notwithstanding
the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a covenant, or preclude any actions, with
respect to the identification of the availability of, or securing of, available shares to borrow in order to effect short sales
or similar transactions not during the Restricted Period. As used herein, "Buyer Trading Affiliates" means any
Person acting on behalf of or pursuant to any understanding with such Buyer which had knowledge of the transactions contemplated
hereby, (x) has or shares discretion relating to such Buyer's investments and trading or information concerning such Buyer's investments
or (y) is subject to such Buyer's review or input concerning such Person's investments or trading.


 


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


 


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


 



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(h)          Fees.
The Company shall reimburse Hudson Bay (a Buyer) or its designee(s) (in addition to any other expense amounts paid to any Buyer
or its counsel prior to the date of this Agreement) for all costs and expenses incurred in connection with the transactions contemplated
by the Transaction Documents (including all legal fees and disbursements in connection therewith, documentation and implementation
of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which amount may be withheld
by such Buyer from its Purchase Price at the Closing to the extent not previously reimbursed by the Company. Such Buyer may from
time to time request that the Company reimburse such Buyer in $25,000 increments for such costs and expenses referenced in the
previous sentence, subject to refund of any such increments to the extent such actual costs and expenses at Closing are less than
the amount prepaid. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or
broker's commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated
hereby, including, without limitation, any fees or commissions payable to the Placement Agent. The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney's fees and out-of-pocket
expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents,
each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.


 


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


 


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


 



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(k)          Variable
Securities; Dilutive Issuances. For so long as any Warrants remain outstanding, the Company shall not, in any manner, issue
or sell any rights, warrants or options to subscribe for or purchase Common Stock or directly or indirectly convertible into or
exchangeable or exercisable for Common Stock at a price which varies or may vary with the market price of the Common Stock, including
by way of one or more reset(s) to any fixed price unless the conversion, exchange or exercise price of any such security cannot
be less than the then applicable Exercise Price (as defined in the Warrants) with respect to the Common Stock into which any Warrant
is exercisable. For so long as any Warrants remain outstanding, the Company shall not, in any manner, enter into or affect any
Dilutive Issuance (as defined in the Warrants) if the effect of such Dilutive Issuance is to cause the Company to be required to
issue upon exercise of any Warrant any Common Stock in excess of that number of shares of Common Stock which the Company may issue
upon exercise of the Warrants without breaching the Company's obligations under the rules or regulations of the Principal Market
or any applicable Eligible Market (as defined in the Warrants), in each case without giving effect to (x) limitations on exercise
contained in the Warrants and (y) the application of any applicable Exercise Floor Price (as defined in the Warrants) (the
"Securities Limitations"). For so long as any Warrants are outstanding, unless or until the Stockholder Approval
(as defined below) has been obtained, the Company shall not take any action if the effect of such action would be to cause the
Exercise Price to be reduced, in each case without giving effect to any Securities Limitations.


 


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


 



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(m)          Reservation
of Shares. So long as any Buyer owns any Securities, the Company shall take all action necessary to at all times have authorized,
and reserved for the purpose of issuance, no less than 130% of the number of shares of Common Stock issuable
upon exercise of the Warrants then outstanding (without taking into account any limitations on the exercise of the Warrants set
forth in the Warrants). If at any time the number of shares of Common Stock authorized and reserved for issuance
is not sufficient to meet the Required Reserved Amount, the Company will promptly take all corporate action necessary to authorize
and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations under Section 3(c), in the case of an insufficient number of authorized shares,
obtain stockholder approval of an increase in such authorized number of shares, and voting the management shares of the Company
in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to
meet the Required Reserved Amount. 


 


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


 


(o)          Additional
Issuances of Securities.


 


(i)          From
the date hereof until the date that is the ninety (90) day immediately following the date the Registration Statement(s) covering
the resale of all of the Registrable Securities (as defined in the Registration Rights Agreement) has been declared effective by
the SEC, the Company will not, directly or indirectly, file any registration statement with the SEC other than the Registration
Statement (as defined in the Registration Rights Agreement).


 


(ii)         From
the date hereof until nine (9) months after the Closing Date (the "Trigger Date"), the Company will not, unless
approved by the Required Holders, (i) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common Stock or Common
Stock Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a "Subsequent Placement")
or (ii) be party to any solicitations, negotiations or discussions with regard to the foregoing. For the avoidance of doubt, the
foregoing shall not apply to debt that is not convertible into or exchangeable or exercisable for Common Stock or Common Stock
Equivalents. Notwithstanding the foregoing, the Company shall be permitted, prior to the Trigger Date, to sell the equity securities
of each Subsidiary with an asterisk next to the name of such Subsidiary on Schedule 3(a).


 


(iii)        From
the Trigger Date until the eighteen (18) month anniversary of the Closing Date, the Company will not, directly or indirectly, effect
any Subsequent Placement unless the Company shall have first complied with this Section 4(o)(iv).


 



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(1)         The
Company shall deliver to each Buyer an irrevocable written notice (the "Offer Notice") of any proposed or
intended issuance or sale or exchange (the "Offer") of the securities being offered (the "Offered
Securities") in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe
the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities
to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities
are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such Buyers twenty-five percent
(25%) of the Offered Securities, allocated among such Buyers (a) based on such Buyer's pro rata portion of the Common Shares purchased
hereunder (the "Basic Amount"), and (b) with respect to each Buyer that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate it
will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the "Undersubscription Amount"),
which process shall be repeated until the Buyers shall have an opportunity to subscribe for any remaining Undersubscription Amount.


 


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


 



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


 


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


 


(5)         Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Buyers shall acquire from
the Company, and the Company shall issue to the Buyers, the number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 4(o)(iv)(3) above if the Buyers have so elected, upon the terms and conditions specified
in the Offer.


 


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


 



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(7)         The
Company and the Buyers agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement
with respect to such Offer nor any other transaction documents related thereto (collectively, the "Subsequent Placement
Documents") shall include any term or provisions whereby any Buyer shall be required to agree to any restrictions in trading
as to any securities of the Company owned by such Buyer prior to such Subsequent Placement, and (y) any registration rights set
forth in such Subsequent Placement Documents shall be similar in all material respects to the registration rights contained in
the Registration Rights Agreement.


 


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


 


(iv)        The
restrictions contained in subsection (ii) of this Section 4(o) shall not apply in connection with (x) the issuance of any Excluded
Securities (as defined in the Warrants) or (y) the issuance of any warrants in connection with the issuance or refinancing of debt
that is not convertible into, exchangeable or exercisable for Common Stock or Common Stock Equivalents, provided, that such
warrants shall not be exercisable before the earlier to occur of (x) the date that is sixty (60) days immediately following the
last Adjustment Date hereunder and (y) the date that is eight (8) months immediately following the Closing Date. The restrictions
contained in subsection (iii) of this Section 4(o) shall not apply in connection with the issuance of any Excluded Securities.


 


(p)          Public
Information. At any time during the period commencing from the six (6) month anniversary of the Closing Date and ending at
such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities, may
be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1),
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirements under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (each, a "Public Information Failure") then, as partial relief for the damages to any
holder of Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not
be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash
equal to one and one percent (1.0%) of the aggregate Purchase Price of such holder's Securities on the day of a Public Information
Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i) the
date such Public Information Failure is cured and (ii) such time that such Public Information Failure no longer prevents a holder
of Securities from selling such Securities pursuant to Rule 144 without any restrictions or limitations. The payments to which
a holder shall be entitled pursuant to this Section 4(p) are referred to herein as "Public Information Failure Payments."
Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which
such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full.


 



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(q)          Stockholder
Approval. The Company shall provide each stockholder entitled to vote at a special or annual
meeting of stockholders of the Company (the "Stockholder Meeting"), which shall
be called as promptly as practicable after the date hereof, but in no event later than four (4) months after the Closing (the "Stockholder
Meeting Deadline"), a proxy statement, in a form reasonably acceptable to the Buyers, soliciting each such stockholder's
affirmative vote at the Stockholder Meeting for approval of resolutions (the "Resolutions") providing for the
issuance of all of the Securities as described in the Transaction Documents (without the need for any Exercise Floor Price or any
other limit on the number of Adjustment Shares issuable hereunder or the number of Warrant Shares issuable pursuant to the Warrants)
in accordance with applicable law, the provisions of the Bylaws and the rules and regulations of the Principal Market (the
"Stockholder Approval" and the date such approval is obtained, the "Stockholder Approval Date"),
and the Company shall use its reasonable best efforts to solicit its stockholders' approval of
such Resolutions and to cause the Board of Directors of the Company to recommend to the stockholders
that they approve the Resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder
Meeting Deadline. If, despite the Company's reasonable best efforts, the Stockholder Approval is not obtained at the Stockholder
Meeting, the Company shall cause an additional Stockholder Meeting to be held each calendar quarter thereafter until Stockholder
Approval is obtained.


 


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


 


(s)          Closing
Documents. Promptly following the Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and
Schulte Roth & Zabel LLP a complete closing set of the executed Transaction Documents, Securities and any other documents required
to be delivered to any party pursuant to Section 7 hereof or otherwise.


 



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5.          REGISTER;
TRANSFER AGENT INSTRUCTIONS.


 


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


 


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


 


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


 


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


 


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


 


(ii)         Such
Buyer shall have delivered to the Company the Purchase Price (less, in the case of Hudson Bay, the amounts withheld pursuant to
Section 4(h)) for the Common Shares and the related Warrants being purchased by such Buyer at the Closing by wire transfer of immediately
available funds to an escrow account established by the Company and the Placement Agent with JPMorgan Chase Bank, as escrow agent,
as set forth on Schedule I attached hereto.


 



    	- 39 -



    	 



    

 


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


 


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


 


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


 


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


 


(ii)         Such
Buyer shall have received the opinion of Greenberg Traurig, LLP, the Company's outside counsel, dated as of the Closing Date, addressed
to such Buyer and the Placement Agent, in form and substance reasonably acceptable to such Buyer.


 


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


 


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


 


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


 


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


 



    	- 40 -



    	 



    

 


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


 


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


 


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


 


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


 


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


 


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


 


(xiii)       Such
Buyer shall have received the opinion of Greenberg Traurig, LLP, the Company's outside counsel, dated as of the Closing Date, addressed
to such Buyer, opining that (i) the holding period of the Adjustment Shares, when issued in accordance with the terms hereof, will
commence on the Closing Date for purposes of Rule 144 and (ii) assuming the facts that exist on the Closing Date are in effect
on the date of the sale of any Adjustment Shares after the holding period under Rule 144 has been satisfied, that the Adjustment
Shares may be sold pursuant to Rule 144 without any restrictive legend, all in form and substance reasonably acceptable to such
Buyer.


 


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


 



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8.           TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer on or before ten (10) Business Days from the date
hereof due to the Company's or such Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement
with respect to such breaching party at the close of business on such date by delivering a written notice to that effect to each
other party to this Agreement and without liability of any party to any other party; provided, however, that if this
Agreement is terminated pursuant to this Section 8, the Company shall remain obligated to reimburse Hudson Bay or its designee(s),
as applicable, for the expenses described in Section 4(h) above.


 


9.            MISCELLANEOUS.


 


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


 


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


 


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


 


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


 



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(e)          Entire
Agreement; Amendments. Except for the financial obligations of the Company set forth in the Binding Terms section of the Term
Sheet dated as of May 12, 2012 by and between the Company and Hudson Bay, which shall survive, this Agreement and the other Transaction
Documents supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting
on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and, except as
set forth above, the instruments referenced herein and therein contain the entire understanding of the parties with respect to
the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the Required Holders, and any amendment to this Agreement
made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities and the Company;
provided that any such amendment or waiver that complies with the foregoing but that disproportionately, materially and adversely
affects the rights and obligations of any Buyer relative to the comparable rights and obligations of the other Buyers shall require
the prior written consent of such adversely affected Buyer. No provisions hereto may be waived other than by an instrument in writing
signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less
than all of the Buyers or holders of the applicable Securities then outstanding. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration
(other than the reimbursement of legal fees) also is offered to all of the parties to the Transaction Documents, holders of Common
Shares or holders of the Warrants, as the case may be. The Company has not, directly or indirectly, made any agreements with any
Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no
Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise.


 


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


 



    	- 43 -



    	 



    

 


If to the Company:


 


KIT digital, Inc.


26 West 17th Street, 2nd Floor


 


New York, NY 10011


Telephone:       (646) 553-4845


Facsimile:         (212) 730-4561

Attention:         Mr. Barak Bar-Cohen


Chief Executive Officer


E-mail:             barak.bar-cohen@kit-digital.com


 


With a copy to:


 


Greenberg Traurig, LLP


MetLife Building


200 Park Avenue


New York, New York 10166


Telephone:       (212) 801-9200

Facsimile:         (212) 801-6400

Attention:         Spencer G. Feldman, Esq.


E-mail:              feldmans@gtlaw.com


 


If to the Transfer Agent:


 


Continental Stock Transfer & Trust Co.


17 Battery Place


New York, New York 10004

Telephone:       (212) 509-4000

Facsimile:         (212) 616-7615

Attention:         Ms. Margaret Villani


 


E-mail:               fmvillani@continentalstock.com


 


If to a Buyer, to its address, facsimile
number and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer's representatives as set forth on the
Schedule of Buyers,


 


with a copy (for informational purposes only) to:


 


Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Telephone:       (212) 756-2000

Facsimile:         (212) 593-5955

Attention:         Eleazer N. Klein, Esq.

E-mail:              eleazer.klein@srz.com


 






    	- 44 -



    	 



    



 


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


 


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


 


(h)          No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that
each Indemnitee shall have the right to enforce the obligations of the Company with respect to Section 9(k) and except that (i)
the Placement Agent is an intended third party beneficiary of (A) the Buyers' representations and warranties set forth in the last
sentence of Section 2(d) and (B) the Company’s representations and warranties set forth in Section 3 hereof and (ii) the
Placement Agent shall be an addressee of the legal opinion identified in Section 7(a)(ii) hereof.


 


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


 


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


 



    	- 45 -



    	 



    

 


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


 


(l)          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.


 


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


 



    	- 46 -



    	 



    

 


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


 


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


 


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


 


[Signature Page Follows]


 



    	- 47 -



    	 



    

 


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


 


 


	 	COMPANY:
	 	 
	 	KIT DIGITAL, INC.
	 	 
	 	By:	/s/ Barak Bar-Cohen
	 	 	Barak Bar-Cohen
	 	 	Chief Executive Officer 


 


[Signature
Page to Securities Purchase Agreement]


 



    	 



    	 



    

 


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


 


 


	 	BUYERS:
	 	 
	 	 
	 	By:	 
	 	 	Name: 
	 	 	Title: 


 


[Signature
Page to Securities Purchase Agreement]