SECURITIES
PURCHASE AGREEMENT


This
Securities Purchase Agreement (this “Agreement”) is dated as of March 12, 2014, between OptimizeRx Corp., a
Nevada corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and collectively the “Purchasers”).


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement.


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


ARTICLE
I.

DEFINITIONS


1.1             
Definitions


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


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


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. With respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser
will be deemed to be an Affiliate of such Purchaser.


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


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.


“Closing”
means the closing of the purchase and sale of the Shares pursuant to Section 2.1.


“Closing
Date” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii)
the Company’s obligations to deliver the Shares have been satisfied or waived.


“Commission”
means the Securities and Exchange Commission.


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


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


“Company
Counsel” means Cane Clark LLP, with offices located at 3273 E. Warm Springs Rd., Las Vegas, NV 89120.



    	 



    	 



    




“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.


“Effective
Date” means the date that the initial Registration Statement filed by the Company pursuant to the Registration Rights
Agreement is first declared effective by the Commission.


“Escrow
Agent” shall mean First Republic Bank & Trust.


“Escrow
Agreement” shall mean the escrow agreement entered into prior to the date hereof, by and among the Company, Merriman
Capital, Inc. and the Escrow Agent pursuant to which the Purchasers shall deposit Subscription Amounts with the Escrow Agent to
be applied to the transactions contemplated hereunder.


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


 


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


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).


“Investor
Agreement” means the Investor Agreement, dated the date hereof, between the Company and Radoff.


“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).


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


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


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


“Per
Share Purchase Price” equals $1.20, subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.


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


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


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


“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers,
in the form of Exhibit A attached hereto.


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchasers of the Shares.


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).



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“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


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


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


“Shares”
means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 


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


“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, include any subsidiary
of the Company formed or acquired after the date hereof.


“Trading
Day” means a day on which the New York Stock Exchange is open for trading.


“Trading
Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange, the OTC Bulletin Board or the OTCQB.


“Transaction
Documents” means this Agreement, the Registration Rights Agreement, the Escrow Agreement and any other documents or
agreements executed in connection with the transactions contemplated hereunder.


“Transfer
Agent” means Empire Stock Transfer, Inc., the current transfer agent of the Company, with a mailing address of 1859
Whitney Mesa Dr. Henderson, NV 89014 and a facsimile number of (702) 974-1444, and any successor transfer agent of the Company.


ARTICLE
II.

PURCHASE AND SALE


2.1             
Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with
the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally
and not jointly, agree to purchase, a minimum of $7,500,000 of Shares and up to a maximum of $10,000,000 of Shares. Upon satisfaction
of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or
such other location as the parties shall mutually agree.



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2.2             
Deliveries


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


(i)                
this Agreement duly executed by the Company;


(ii)              
a certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase
Price, registered in the name of such Purchaser;


(iii)            
the Registration Rights Agreement duly executed by the Company;


(iv)            
a legal opinion of Company Counsel, substantially in the form of Exhibit B attached hereto;


(v)              
an Officer’s Certificate executed by the Company’s Chief Executive Officer; 


(vi)            
an irrevocable letter of instruction by the Company to its transfer agent concerning the Shares; and


(vii)          
delivery of the executed Investor Agreement to Radoff 


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


(i)                
this Agreement duly executed by such Purchaser;


(ii)              
such Purchaser’s Subscription Amount by wire transfer to the Escrow Account; and


(iii)            
the Registration Rights Agreement duly executed by such Purchaser.


2.3             
Closing Conditions. 


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


(i)                
the accuracy in all respects on the Closing Date of the representations and warranties of the Purchasers contained herein; 


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


(iii)            
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.


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


(i)                
the accuracy in all respects on the Closing Date of the representations and warranties of the Company contained herein;


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



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


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


ARTICLE
III.

REPRESENTATIONS AND WARRANTIES


3.1             
Representations and Warranties of the Company. 


Except
as set forth under the corresponding section of the disclosure schedules delivered to the Purchasers concurrently herewith (the
“Disclosure Schedules”) which Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the representations
and warranties set forth below to each PurchaserExcept as set forth in the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify the specific representations made in a particular section to the corresponding
section of the Disclosure Schedules, from the date hereof and at Closing, the Company hereby makes the following representations
and warranties to each Purchaser:


(a)               
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens,
and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, then all
other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.


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


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



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


(e)               
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other
than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Registration Statement,
(iii) application(s) to each applicable Trading Market for the listing of the Shares for trading thereon in the time and manner
required thereby and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable
state securities laws (collectively, the “Required Approvals”).


(f)               
Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement.


(g)              
Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall
also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date
hereof. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other
than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion or exercise
of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. Except
as set forth in Schedule 3.1(g) attached hereto, no Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Shares and except as set forth in Schedule 3.1(g) attached hereto, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of
Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Shares will not obligate
the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.
All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the
Board of Directors or others is required for the issuance and sale of the Shares. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s stockholders.



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(h)              
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as
applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Except as provided in the Company’s Form 8-K filed on February 11, 2014, the financial
statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.


(i)                
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i)
there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information.
Except for the issuance of the Shares contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability
or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties,
operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the
time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date
that this representation is made.


(j)                
Litigation. Except as provided in Schedule 3.1(i), there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or the Shares or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal
or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or
officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 



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(k)              
Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any
of the employees of the Company or any such Subsidiary which could reasonably be expected to result in a Material Adverse Effect.
None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No
executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract
or agreement or any restrictive covenant in favor of any third party, 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. The Company
and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


(l)                
Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws
that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.


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


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


(o)              
Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). Except as provided in Schedule 3.1(i), neither the Company nor any Subsidiary has received
a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or
infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



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(p)              
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries
are engaged. Neither the Company nor any 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 without a significant increase in cost.


(q)              
Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of
the Company or any such Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any such Subsidiary
is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits,
including stock option agreements under any stock option plan of the Company.


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


(s)               
Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the Trading Market.


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


(u)              
Registration Rights. Except as set forth in Schedule 3.1(v) attached hereto, other than each of the Purchasers, no Person
has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.


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



    	9



    	 



    




(w)            
Disclosure. All disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business
and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not
contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made and when made, not misleading. 


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


(y)              
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.


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


(aa)           
Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on
behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is
in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.


(bb)          
No Disagreements with Accountants and Lawyers.There are no 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 which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents,
and the Company is current with respect to any fees owed to its accountants and lawyers. 


(cc)           
No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of
the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer
Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii)
under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or
(d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification
Event.



    	10



    	 



    




3.2             
Representations and Warranties of the Purchasers


.
Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing
Date to the Company as follows:


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


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


(c)               
Purchaser Status. At the time such Purchaser was offered the Shares, it was, and at the date hereof it is either: (i) an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii)
a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required
to be registered as a broker-dealer under Section 15 of the Exchange Act. 


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


(e)               
General Solicitation. Such Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or
other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or
radio or presented at any seminar or any other general solicitation or general advertisement.



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(f)               
Short Sales and Confidentiality Prior To The Date Hereof. Other than consummating the transactions contemplated hereunder,
such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly
or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period
commencing from the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person
representing the Company setting forth the material terms of the transactions contemplated hereunder until the date hereof (“Discussion
Time”). Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser's assets and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser's assets, the representation
set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Shares covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser
has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction).


ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES


4.1             
Transfer Restrictions.  


(a)               
The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement.


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


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
TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE 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
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the Shares to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged
or secured Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further,
no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer
of the Shares, including, if the Shares are subject to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of
the Securities Act to appropriately amend the list of Selling Stockholders thereunder.



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(c)               
Removal of Legends. Certificates evidencing the Shares shall not be required to contain the legend set forth in Section
4.1(b) above or any other legend (i) while a registration covering the resale of such shares is effective under the Securities
Act, (ii) following any sale of such Shares pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company),
(iii) if such Shares are eligible to be sold, assigned or transferred under Rule 144 (provided that a Purchaser provides the Company
with reasonable assurances that such Shares are eligible for sale, assignment or transfer under Rule 144, which shall not include
an opinion of counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that
such Purchaser provides the Company with an opinion of counsel to such Purchaser, in a generally acceptable form, to the effect
that such sale, assignment or transfer of the Shares may be made without registration under the applicable requirements of the
Securities Act or (v) if such legend is not required under applicable requirements of the Securities Act (including, without limitation,
controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing,
the Company shall no later than three (3) Trading Days following the delivery by a Purchaser to the Company or the transfer agent
(with notice to the Company) of a legended certificate representing such Shares (endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other
deliveries from such Purchaser as may be required above in this Section 4.1(c), as directed by such Purchaser, either: (A) provided
that the Company’s transfer agent is participating in the Depostory Trust Company (“DTC”) Fast Automated Securities
Transfer Program, credit the aggregate number of shares of Common Stock to which such Purchaser shall be entitled to such Purchaser’s
or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s
transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver at the Company’s
expense (via reputable overnight courier) to such Purchaser, a certificate representing such Shares that is free from all restrictive
and other legends, registered in the name of such Purchaser or its designee (the date by which such credit is so required to be
made to the balance account of such Purchaser’s or such Purchaser’s nominee with DTC or such certificate is required
to be delivered to such Purchaser pursuant to the foregoing is referred to herein as the “Required Delivery Date”).
The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of such Shares or the removal
of any legends with respect to any Shares in accordance herewith.


(d)              
Failure to Timely Deliver; Buy-In. If the Company fails to (i) issue and deliver (or cause to be delivered) to a Purchaser
by the Required Delivery Date a certificate representing the Shares so delivered to the Company by such Purchaser that is free
from all restrictive and other legends or (ii) credit the balance account of such Purchaser’s or such Purchaser’s
nominee with DTC for such number of such Shares so delivered to the Company, and if on or after the Required Delivery Date such
Purchaser (or any other Person in respect, or on behalf, of such Purchaser) purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of shares of
Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock,
that such Purchaser so anticipated receiving from the Company without any restrictive legend, then, in addition to all other remedies
available to such Purchaser, the Company shall, within three (3) Trading Days after such Purchaser’s request and in such
Purchaser’s sole discretion, either (i) pay cash to such Purchaser in an amount equal to such Purchaser’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including
brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”), at which point the Company’s
obligation to so deliver such certificate or credit such Purchaser’s balance account shall terminate and such shares shall
be cancelled, or (ii) promptly honor its obligation to so deliver to such Purchaser a certificate or certificates or credit such
Purchaser’s DTC account representing such number of shares of Common Stock that would have been so delivered if the Company
timely complied with its obligations hereunder and pay cash to such Purchaser 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 (as the case may be) that the Company was required
to deliver to such Purchaser by the Required Delivery Date multiplied by (B) the lowest closing sale price of the Common Stock
on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company of the applicable
shares of Common Stock and ending on the date of such delivery and payment under this clause (ii).



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4.2             
Furnishing of Information


.
Until the time that no Purchaser owns Shares, the Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the
Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. As long as any Purchaser
owns Shares, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers
and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Shares
under Rule 144. The Company further covenants that it will take such further action as any holder of Shares may reasonably request,
to the extent required from time to time to enable such Person to sell such Shares without registration under the Securities Act
within the requirements of the exemption provided by Rule 144.


4.3             
Integration


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


4.4             
Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City time) on the Trading Day
immediately following the date hereof, issue a Current Report on Form 8-K, disclosing the material terms of the transactions contemplated
hereby, and filing the Transaction Documents as exhibits thereto. From and after the issuance of the filing of such Current Report
on Form 8-K, the Company shall have disclosed all material, non-public information (if any) regarding the Company or any of its
Subsidiaries delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company and
each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior
notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market,
without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with (A) any
registration statement contemplated by the Registration Rights Agreement and (B) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (ii) to the extent such disclosure is required by law or Trading Market regulations,
in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (ii).


4.5             
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the
Transaction Documents, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.



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4.6             
Use of Proceeds. The Company shall use the net proceeds from the sale of the Shares hereunder (i) to consummate the transactions
with Vicis Capital Master Fund as set forth on Schedule 4.6 attached hereto and (ii) for working capital purposes and shall
not use such proceeds for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in
the ordinary course of the Company’s business and prior practices).


4.7             
Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling
the Company to issue Shares pursuant to this Agreement. 


4.8             
Listing of Common Stock.(a) The Company hereby agrees to use best efforts to maintain the listing of the Common Stock on
a Trading Market, and as soon as reasonably practicable following the Closing (but not later than the earlier of the Effective
Date and the first anniversary of the Closing Date) to list all of the Shares on such Trading Market. The Company further agrees,
if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of
the Shares, and will take such other action as is necessary to cause all of the Shares to be listed on such other Trading Market
as promptly as possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common
Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Trading Market.


4.9             
Equal Treatment of Purchasers. 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 is also offered to all of the
parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each
Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers
as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Shares or otherwise.


4.10         
Short Sales and Confidentiality After The Date Hereof. Each Purchaser, severally and not jointly with the other Purchasers,
covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any Short
Sales during the period commencing at the Discussion Time and ending at the time that the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers,
covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described
in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information
included in the Disclosure Schedules.  Notwithstanding the foregoing, no Purchaser makes any representation, warranty or
covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated
by this Agreement are first publicly announced as described in Section 4.4.  


4.11         
 Delivery of Shares After Closing. The Company shall deliver, or cause to be delivered, the respective Shares purchased
by each Purchaser to such Purchaser within 3 Trading Days of the Closing Date.


4.12         
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Shares as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to the Purchasers at
the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence
of such actions promptly upon request of any Purchaser.


ARTICLE
V.

MISCELLANEOUS


5.1             
Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder
only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the
other parties, if the Closing has not been consummated on or before March 31, 2014; provided, however, that no such
termination will affect the right of any party to sue for any breach by the other party (or parties).



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5.2             
Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, and except with respect
to a $5,000 legal retainer payable by the Company to Purchaser’s counsel, the law firm of Greenberg Traurig, LLP, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall
pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to the
Purchasers.


5.3             
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


5.4             
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd Trading Day following the date of mailing, if sent
by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required
to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.


5.5             
Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in
the case of an amendment, by the Company and the Purchasers of at least 51% of the Shares still held by the Purchasers or, in
the case of a waiver, by the party against whom enforcement of any such waived provision is sought; provided that in no event
shall any amendment adversely affect a Purchaser's rights and obligations hereunder in a manner different from any other Purchaser
without such Purchaser's prior written consent. No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder
in any manner impair the exercise of any such right.


5.6             
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed
to limit or affect any of the provisions hereof.


5.7             
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written
consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any
Person to whom such Purchaser assigns or transfers any Shares, provided such transferee agrees in writing to be bound, with respect
to the transferred Shares, by the provisions of the Transaction Documents that apply to the “Purchasers.”


5.8             
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.8.



    	16



    	 



    




5.9             
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard
to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is
an inconvenient venue for such proceeding. 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 via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.


5.10         
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Shares.


5.11         
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as
if such facsimile or “.pdf” signature page were an original thereof.


5.12         
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.


5.13         
Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances
shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement
Shares.


5.14         
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction
Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way
for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained
herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by
the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented
by its own separate legal counsel in their review and negotiation of the Transaction Documents. Other than the Investor Agreement,
the Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by the Purchasers.



    	17



    	 



    




5.15         
Saturdays, Sundays, Holidays, etc.If the last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on
the next succeeding Business Day.


5.16         
Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to
revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
hereto.


5.17         
Waiver of Jury Trial. In any action, suit or proceeding in any jurisdiction brought by any party against any other party,
the parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally,
irrevocably and expressly waives forever trial by jury.


 


(Signature
Pages Follow)




    	18



    	 



    

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


 


	OptimizeRx
                                         Corp.

         

         
	Address
                                         for Notice:

        400
        Water Street, Suite 200, Rochester, MI 48307

	By:__________________________________________

        Name:

        Title:

         
	Fax:

        248-453-5529

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

         

        Cane
        Clark, LLP

        3273
        E. Warm Springs, Rd.

        Las
        Vegas, NV 89120

        Fax:
        (702) 944-7100

         
	


 


 


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]




    	19



    	 



    

[PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]


 


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


Name
of Purchaser: ________________________________________________________


Signature
of Authorized Signatory of Purchaser: __________________________________


Name
of Authorized Signatory: ____________________________________________________


Title
of Authorized Signatory: _____________________________________________________


Email
Address of Purchaser:________________________________________________


Fax
Number of Purchaser: ________________________________________________


Address
for Notice of Purchaser:


 


 


 


 


Address
for Delivery of Shares for Purchaser (if not same as address for notice):


 


 


 


 


 


Subscription
Amount: $_________________


 


Shares:
_________________


 


EIN
Number: [PROVIDE THIS UNDER SEPARATE COVER]


 


 




    	20



    	 



    

Schedule
3.1(a)


 


OptimizeRx
Corporation, a Michigan corporation



    	21



    	 



    






Schedule 3.1(g)


 


The
following table sets forth, as of February 7, 2014, the beneficial ownership of our common and preferred stock by each executive
officer and director, by each person known by us to beneficially own more than 5% of the our common stock and by the executive
officers and directors as a group. Unless otherwise noted, the address of each beneficial owner is located at 400 Water Street,
Ste. 200, Rochester, MI 48307.


 


	Title
    of class	Name
    and address of beneficial owner (1)	Amount
    of beneficial ownership	Percent
    of class (2)
	Common	David
    Lester(3)	483,348	2%
	Common	David
    Harrell(4)	3,538,750	17%
	Common	Terence
    J. Hamilton(5)	974,500	4%
	Total
    of All Directors and Executive Officers:	4,996,598	23%
	 	 	 
	More
    Than 5% Beneficial Owners:	 	 
	Common/

        Preferred
	Vicis
        Capital Master Fund(6)

         
	16,386,350	55%


 


	(1)	As
    used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a
    security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the
    disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial
    ownership" of any security that such person has the right to acquire within 60 days after such date.
	(2)	The percent of
    class is based on 20,663,884 voting shares as of February 7, 2014, comprised of 15,163,874 shares of the Company’s common
    stock issued and outstanding as of February 7, 2014, 35 shares of the Company’s Series A Convertible Preferred Stock
    issued and outstanding as of February 7, 2014, which has the power to vote 3,500,000 shares, and 30 shares of the Company’s
    Series B Convertible Preferred Stock issued and outstanding as of June 14, 2013, which has the power to vote 2,000,010 shares.
	(3)	Includes 428,348
    shares held in his name, and options to purchase 55,000 shares of common stock at $1.00 per share.
	(4)	Includes 3,136,250
    shares held in his name, options to purchase 402,500 shares of common stock at prices ranging from of $1.00 to $1.81 per share.
	(5)	Includes 697,000
    shares held in his name and options to purchase 277,500 shares of common stock at a price of $1.00 per share.
	(6)	Includes 886,370
    shares of common stock held in its name, 35 shares of the Company’s Series A Convertible Preferred Stock, which has
    the power to vote 3,500,000 shares, 30 shares of the Company’s Series B Convertible Preferred Stock, which has the power
    to vote 2,000,010 shares, and warrants to purchase 10,000,000 shares of common stock at strike prices ranging from $2.00 to
    $3.00 per share.


 




    	22



    	 



    

Schedule
3.1(g) cont.


 


The
Company has the following warrants and options outstanding: 


 


	Number	Type	Exercise
    Price($)	Total
    ($)
	9,000,000(1)
    	Warrants	1.50	13,500,000
	 	 	 	 
	100,000
    	Warrants	2.00	200,000
	 	 	 	 
	1,000,000
    	Warrants	2.25	2,250,000
	 	 	 	 
	1,000,000(1)
    	Warrants	3.00	3,000,000
	 	 	 	 
	10,000
    	Options	1.85	18,500
	 	 	 	 
	250,000
    	Options	0.35	87,500
	 	 	 	 
	100,000
    	Warrants	0.35	35,000
	 	 	 	 
	200,000
    	Options	1.81	362,000
	 	 	 	 
	25,000
    	Options	1.12	28,000
	 	 	 	 
	430,000
    	Options	1.00	430,000
	 	 	 	 
	200,000
    	Options	0.73	146,000
	 	 	 	 
	50,000
    	Warrants	0.89	44,500
	 	 	 	 
	25,000
    	Options	1.58	39,500
	 	 	 	 
	 	 	 	 
	 	 	 	 
	12,390,000
    	 	 	20,141,000
	 	 	 	 
	 	 	 	Weighted
    Average Price $1.625585149


 


		(1)	These
                                         warrants are held by Vicis Capital Master Fund. Upon repurchase by the Company, the outstanding
                                         options and warrants to purchase 12,390,000 shares of the Company’s stock will
                                         be reduced to 2,390,000 shares of the Company’s stock.

                                         



 






    	23



    	 



    

Schedule 3.1(g) cont.


 


Vicis
Capital Master Fund


 


The
following agreements qualify the representations made in Section 3.1(g) of the Agreement. The following agreements are exhibits
to the Form 8-K filed by the Company on September 21, 2011 with the Commission.


 


Termination
Agreement and Release, dated September 16, 2011 


Securities
Purchase Agreement, dated September 16, 2011 


Amended
and Restated Guarantee Agreement, dated September 16, 2011 


Second
Amended and Restated Registration Rights Agreement, dated September 16, 2011 


Third
Amended and Restated Security Agreement, dated September 16, 2011 


Third
Amended and Restated Guarantor Security Agreement, dated September 16, 2011


 


The
following agreements are exhibits to the Form 8-K filed by the Company on June 11, 2010 with the Commission.


 


Certificate
of Designation – Series B Preferred Stock


Warrant,
dated June 4, 2010


Securities
Purchase Agreement, dated June 4, 2010


Registration
Rights Agreement, dated June 4, 2010


Amended
& Restated Security Agreement, dated June 4, 2010


Guaranty
Agreement, dated June 4, 2010


Amended
& Restated Guarantor Security Agreement, June 4, 2010


 


The
following agreements are exhibits to the Form S-1 filed by the Company on November 12, 2008 with the Commission.


 


Certificate
of Designation, filed on September 5, 2008


Securities
Purchase Agreement, dated September 8, 2008


Form
of Series A Warrant


Registration
Rights Agreement, dated September 8, 2008


Security
Agreement, dated September 8, 2008


Guaranty
Agreement, dated September 8, 2008


Guarantor
Security Agreement, dated September 8, 2008


 



    	24



    	 



    




Schedule
3.1(i)


 


Risk
Factors


 


Risks
Relating to Business and Financial Condition


 


Because
we have historically experienced losses and only recently experienced profits, if we are unable to achieve profitability, our
financial condition and company could suffer.


 


Since
the inception of our business we have historically incurred losses. We have only recently experienced profits and increased revenues.
Our ability to maintain profitability depends on our ability to generate sales through our technology platform and advertising
model while maintaining reasonable expense levels. In particular, although we intend to increase significantly our spending on
marketing, these efforts may not be effective in promoting delivery. If we do not achieve sustainable profitability, we may not
be able to continue our operations.


 


Because we have recently learned that our financial statements
have errors regarding revenue share expenses, our results of operations may be different than disclosed in our financial statements.


 


We
recently announced a needed adjustment to the accounting policy so that revenue share expenses are properly accrued each quarter
and at the end of the year, versus when they are paid. The method of recording revenue share payments previously aligned with
our contractual terms with our platform partners -- which generally required payment 30 days after we received the fees from our
sponsored manufacturers in the following quarter. Therefore, for year-end 2012 and each quarter of 2013, there will be a journal
entry needed to record the revenue share amounts due on an accrual basis rather than recording these as an expense when they are
paid. We will likely disclosure the restated numbers for these periods in subsequent filings. As such, the financial numbers will
be adjusted in our ongoing SEC filings and the results of operations may differ from what we have disclosed.


 


We
depend on certain key sales and technology personnel for our success and currently need to expand our staff.


 


Our
success depends on the continued availability and contributions of members of our sales, and technology team and other key personnel.
As such, our success depends in large measure on the continued service of these individuals in their respective positions. Furthermore,
recruiting and retaining qualified personnel to expand the number of customers for which we manage delivery for will be critical
to our success. The loss of members of our sales or technology team or our inability to attract or retain other qualified personnel
could significantly weaken our team, harm our ability to compete effectively and harm our long-term business prospects.


 


Our
failure to obtain retain or attract additional customers could prevent us from successfully executing our business plan.


 


We
currently work with many leading pharmaceutical companies, including Pfizer, Lilly and Novartis. Our failure to retain existing
customers or expand additional customers could harmfully impact our business.


 


We
may be unable to support our technology to further scale our operations successfully.


 


Our
plan is to grow rapidly through further integration of our technology in electronic platforms. Our growth will place significant
demands on our management and technology development, as well as our financial, administrative and other resources. We cannot
guarantee that any of the systems, procedures and controls we put in place will be adequate to support the commercialization of
our operations. Our operating results will depend substantially on the ability of our officers and key employees to manage changing
business conditions and to implement and improve our financial, administrative and other resources. If we are unable to respond
to and manage changing business conditions, or the scale of our products, services and operations, then the quality of our services,
our ability to retain key personnel and our business could be harmed.


 


If
we are unable to maintain our contracts with electronic prescription platforms, our business will suffer.


 


We
are reliant upon our contracts with leading electronic prescribing platforms, including Allscripts and DrFirst. We will need to
maintain these relationships as well as diversify them. The inability to do so could adversely impact the Company’s business.



    	25



    	 



    




 


Developing
and implementing new and updated applications, features and services for our public and private portals may be more difficult
than expected, may take longer and cost more than expected and may not result in sufficient increases in revenue to justify the
costs


 


Attracting
and retaining users of our public portals and clients for our private portals requires us to continue to improve the technology
underlying those portals and to continue to develop new and updated applications, features and services for those portals. If
we are unable to do so on a timely basis or if we are unable to implement new applications, features and services without disruption
to our existing ones, we may lose potential users and clients.


 


We
rely on a combination of internal development, strategic relationships, licensing and acquisitions to develop our portals and
related applications, features and services. Our development and/or implementation of new technologies, applications, features
and services may cost more than expected, may take longer than originally expected, may require more testing than originally anticipated
and may require the acquisition of additional personnel and other resources. There can be no assurance that the revenue opportunities
from any new or updated technologies, applications, features or services will justify the amounts spent.


 


If
we are unable to adhere to the regulatory and competitive climate in which we operate, we could be materially and negatively impacted.



 


Do
to the labyrinth of regulations in healthcare space, state and federal, as well as political sensitivity of healthcare delivery
the proposed business model could be negatively impacted or fail.


 


The
markets in which we operate are intensely competitive, continually evolving and, in some cases, subject to rapid change.


 


		• 	Our public
    portals face competition from numerous other companies, both in attracting users and in generating revenue from advertisers
    and sponsors. We compete for users with online services and Web sites that provide savings on medications and healthcare products,
    including both commercial sites and not-for-profit sites. We compete for advertisers and sponsors with: health-related web
    sites; general purpose consumer web sites that offer specialized health sub-channels; other high-traffic web sites that include
    both healthcare-related and non-healthcare-related content and services; search engines that provide specialized health search;
    and advertising networks that aggregate traffic from multiple sites.
			
		• 	Our private portals
    compete with: providers of healthcare decision-support tools and online health management applications; wellness and disease
    management vendors; and health information services and health management offerings of healthcare benefits companies and their
    affiliates.
			
		• 	Our Publishing and
    Other Services segment’s products and services compete with numerous other offline publications, some of which have
    better access to traditional distribution channels than we have, and also compete with online information sources.


 


Many
of our competitors have greater financial, technical, product development, marketing and other resources than we do. These organizations
may be better known than we are and have more customers or users than we do. We cannot provide assurance that we will be able
to compete successfully against these organizations or any alliances they have formed or may form. Since there are no substantial
barriers to entry into the markets in which our public portals participate, we expect that competitors will continue to enter
these markets.


 


Developments
in the healthcare industry could adversely affect our business


 


Most
of our revenue is derived from the healthcare industry and could be affected by changes affecting healthcare spending. We are
particularly dependent on pharmaceutical, biotechnology and medical device companies for our advertising and sponsorship revenue.


 


General
reductions in expenditures by healthcare industry participants could result from, among other things:


 


		• 	government
    regulation or private initiatives that affect the manner in which healthcare providers interact with patients, payers or other
    healthcare industry participants, including changes in pricing or means of delivery of healthcare products and services;
			
		• 	consolidation of healthcare
    industry participants;
			
		• 	reductions in governmental
    funding for healthcare; and
			
		• 	adverse changes in
    business or economic conditions affecting healthcare payers or providers, pharmaceutical, biotechnology or medical device
    companies or other healthcare industry participants.


 



    	26



    	 



    




Even
if general expenditures by industry participants remain the same or increase, developments in the healthcare industry may result
in reduced spending in some or all of the specific market segments that we serve or are planning to serve. For example, use of
our products and services could be affected by:


 


		• 	changes
    in the design of health insurance plans;
			
		• 	a decrease in the
    number of new drugs or medical devices coming to market; and
			
		• 	decreases in marketing
    expenditures by pharmaceutical or medical device companies, including as a result of governmental regulation or private initiatives
    that discourage or prohibit advertising or sponsorship activities by pharmaceutical or medical device companies.


 


In
addition, our customers’ expectations regarding pending or potential industry developments may also affect their budgeting
processes and spending plans with respect to products and services of the types we provide.


 


The
healthcare industry has changed significantly in recent years and we expect that significant changes will continue to occur. However,
the timing and impact of developments in the healthcare industry are difficult to predict. We cannot assure you that the markets
for our products and services will continue to exist at current levels or that we will have adequate technical, financial and
marketing resources to react to changes in those markets.


 


Because
we are embroiled in various lawsuits with uncertain consequences, the outcome of potential judgments may negatively affect our
financial condition and results of operations


 


We
are involved in the following lawsuits.


 


On
February 6, 2013, we filed a Complaint for Patent Infringement against Physicians Interactive Inc., Physicians Interactive Holdings,Inc.
and Skyscape.com, in which we allege that one or more of those entities has infringed on United States Patent No. 8,341,015. As
of September 30, 2013, the defendants responded denying the assertions made in our Complaint, and the matter is currently being
litigated in federal court in Detroit, Michigan.


 


We
recently learned of an action in New Jersey brought by Milton J. Wilpon and the Milton Wilpon 2000 Trust. Last November 2013,
we were served notice that we would be added as an additional party to the case titled Mitlon Wilson et al. v. Continental Capital
Corporation, C-289-06, in the Superior Court of New Jersey. There is an existing default judgment of roughly $700,000 plus fees
and costs. We are uncertain of the substance of the allegations lodged against the existing defendants and now perhaps us, as
we are likely now a party to the action. We intend to investigate and, if necessary, vigorously defend the matter. We hope to
have more information in subsequent SEC filings.


 


These
lawsuits are ongoing, uncertain and involve a substantial degree of risk. If we are unable to successfully defend these actions,
our financial condition and results of operations will suffer.


 


Risks
Relating to Our Securities


If
we are unable to receive subscriptions for $6,000,000, we will not be able to exercise our option and buy out Vicis. 


The
shares are being offered by the Company on a "best efforts" basis. We reserve the right to enter into agreements with
one or more broker-dealers to sell the shares, with such broker-dealers receiving sales commissions of up to 10% of the price
of the shares and other forms of compensation, including warrants. We can provide no assurance that this offering will be completely
sold out. Our main purpose in this offering is to repurchase the securities held by Vicis so we have a better capital structure.
If less than $6,000,000 is available to us, we will not be able to exercise our option and buy out Vicis.



    	27



    	 



    




 


If
a market for our common stock does not develop, shareholders may be unable to sell their shares.


 


Our
common stock is publicly traded under the symbol “OPRX” on the OTCQB operated by OTC Markets Group, Inc, an electronic
inter-dealer quotation medium for equity securities. We do not currently have an active trading market. There can be no assurance
that an active and liquid trading market will develop or, if developed, that it will be sustained.


 


Because
we will be subject to the “Penny Stock” rules once our shares are quoted on the over-the-counter bulletin board, the
level of trading activity in our stock may be reduced.


The
Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any listed, trading
equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to
certain exemptions. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that
prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the
penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities.


 


Risks
Relating to an Investment in Our Securities


We
will have broad discretion in applying the net proceeds of this offering and may not use those proceeds in ways that will enhance
the market value of our securities.


We
have significant flexibility in applying the net proceeds we will receive in this offering. We will use the proceeds that we receive
from the sale of the shares in this offering to mainly further our interest in the company. A large portion of the proceeds are
expected to retire the holdings of Vicis Capital Master Fund. This use of proceeds is mainly designed to improve our capital structure
and avoid the dividends we are required to pay the shareholder. As part of your investment decision, you will not be able to assess
or direct how we apply these net proceeds. If we do not apply these funds effectively, we may lose significant business opportunities.
Furthermore, our stock price could decline if the market does not view our use of the net proceeds from this offering favorably.


 


Our
future capital needs could result in dilution of your investment.


Our
Board of Directors may determine from time to time that there is a need to obtain additional capital through the issuance of additional
shares of our common stock or other securities. We may sell a substantial number of additional shares of our common stock in connection
with a private placement or public offering of shares of our common stock (or other series or class of capital stock to be designated
in the future). Investors in subsequent offerings may also have rights, preferences and privileges senior to our current stockholders
which may adversely impact our current stockholders. We could also issue common stock to certain parties, such as vendors and
service providers, as payment for products and services, which would dilute your interest in the Company and may dilute the net
tangible book value per share of our common stock. Sales of a substantial number of shares of our common stock under any of the
circumstances described above could also adversely affect the market price for our common stock and make it more difficult for
you to sell shares of stock you acquire in this offering at times and prices that you feel are appropriate.


 


The
securities laws may restrict transferability of the securities sold in the offering.


The
shares have not been registered under the Securities Act or registered or qualified under any state or foreign securities laws.
Such securities are being issued based upon our reliance upon an exemption from registration under the Securities Act for an offer
and sale of securities that does not involve a public offering. Unless such securities are so registered, they may not be offered
or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities
Act and applicable state or foreign securities laws. Purchasers subscribing for shares of Shares will first be required to make
representations and covenants concerning these transfer restrictions which are necessary to satisfy the requirements of the exemption
from registration being relied upon by us for the issuance. The certificates representing shares of the Common Stock will bear
a legend indicating that they are so restricted.


 


You
must make an independent investment analysis in connection with this offering.


No
independent legal, accounting or business advisors have been appointed to represent the interests of prospective Purchasers in
connection with this offering. Neither the Company nor any of its officers, directors, employees or agents makes any representation
or expresses any opinion with respect to the merits of an investment in shares offered hereby, including, and without limitation,
the Company’s proposed value or the value of shares of common stock or preferred stock.


 


The
Company provided financial projections based on assumptions made by management that may or not be accurate as events unfold. Each
prospective Purchaser is therefore encouraged to engage independent accountants, appraisers, attorneys and other advisors to (i)
conduct due diligence review as the prospective investor may deem necessary and advisable, and (ii) provide advice with respect
to the merits of an investment in the shares offered hereby and applicable risk factors as a prospective investor may deem necessary
and advisable to rely upon. The Company will fully cooperate with any prospective Purchaser who desires to conduct an independent
analysis, so long as it determines, in its sole discretion, that cooperation is not unduly burdensome.


 


Because
Purchasers in this Offering may be considered underwriters, they may be subject to unfavorable laws that may apply to their detriment.


 


Purchasers
purchasing shares in the offering with a view to selling or otherwise distributing those securities may be considered to be underwriters,
subjecting such Purchasers to potential liability tinder Section 11 of the Securities Act. Further, if deemed an underwriter a
Purchaser could not rely on Rule 144 of the Securities Act to sell or otherwise distribute the securities purchased in the offering.


 




    	28



    	 



    

 


Schedule
3.1(v)


 


See
the agreements listed under the heading “Vicis Capital Master Fund” in Schedule 3.1(g).




    	29



    	 



    

Schedule
4.6


 


The
Company estimates that its net proceeds from the sale of Shares in this Offering will be approximately $9,000,000, if $10,000,000
is sold, after deducting estimated expenses associated with the Offering (including a 10% fee to broker-dealers). We intend to
use the net proceeds of this Offering as follows:


 


	Net
    Proceeds	$9,000,000
	Retire
    Preferred Stock(1)	$6,000,000
	Working
    Capital	$3,000,000
	Total	$9,000,000


		(1)	The
                                         Company intends on acquiring the 35 outstanding shares of Series A Convertible Preferred
                                         Stock and 30 outstanding shares of Series B Preferred Stock from Vicis Master Capital
                                         Fund (“Vicis”). On January 10, 2013, the Company entered into a Securities
                                         Redemption Option Agreement with Vicis that provides it with an option to purchase all
                                         of the outstanding shares and derivative securities held by Vicis for total payment of
                                         nine million dollars ($9,000,000). The shares and derivative securities include the Series
                                         A Convertible Preferred Stock, Series B Convertible Preferred Stock, Common Stock, and
                                         warrants to purchase shares of Series A Convertible Preferred Stock and Series B Convertible
                                         Preferred Stock held by Vicis. A copy of the Securities Redemption Option Agreement is
                                         attached as Exhibit 10.1 to the Form 8-K that the Company filed with the Commission on
                                         January 11, 2013 and is incorporated herein by reference. On January 2, 2014, the Company
                                         executed Amendment No. 1 to Securities Redemption Option Agreement with Vicis to, among
                                         other things, extend the term of our option to March 31, 2014 and reduce the price of
                                         the option from nine million dollars ($9,000,000) to six million dollars ($6,000,000).



 


Except
as provided above, the Company cannot specify with certainty the particular uses for the net proceeds to be received upon completion
of this Offering and, at the date hereof, cannot accurately predict the amounts that it may spend for any particular purpose.
The amounts of the Company’s actual expenditures will be influenced by several factors, including the timing and extent
of its expansion opportunities, the amount of cash used by our operations and the occurrence of unforeseen opportunities and events.
Management will have broad discretion in determining the uses of the net proceeds of this Offering.




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Exhibit
A


 


Registration
Rights Agreement




    	31



    	 



    

Exhibit
B


 


FORM
OF LEGAL OPINION



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