SECURITIES PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of April 4, 2014, between World Moto, Inc., a Nevada corporation (the
“Company”) and the investors set forth in Schedule A attached hereto (each 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 the Purchasers, and the Purchasers,
severally and not jointly, desire 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 the Purchaser agree as follows:


 


ARTICLE I.


DEFINITIONS


 


1.1           Definitions.  In
addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings set forth in
this Section 1.1:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.


 


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


 


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


 


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


 


“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 a purchase and sale of the Securities pursuant to Section 2.1.


 


“Closing Date”
means the Trading Day on which all of the Transaction Documents with respect to a particular Closing have been executed and delivered
by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the relevant Subscription
Amount and (ii) the Company’s obligations to deliver the corresponding Securities, in each case, have been satisfied or waived. 


 




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“Closing Statement”
means the Closing Statement in the form on Annex A attached hereto.


 


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


 


“Common Stock”
means the common shares of the Company, par value $0.0001 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.


 


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


 


“Company
Counsel” means Greenberg Traurig, LLP, with offices located at 1201 K Street Suite 1100, Sacramento CA 95814.


 


“Conversion
Price” shall have the meaning ascribed to such term in the Debentures.


 


“Conversion
Shares” shall have the meaning ascribed to such term in the Debentures.


 


“Debentures”
means up to $1,000,000 of the 12% Senior Secured Convertible Debentures due, subject to the terms therein, twelve months from their
date of issuance, issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached hereto.


 


“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.


 


“Effective
Date” means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission,
(b) all of the Registrable Securities have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement
of the Company to be in compliance with current public information required under Rule 144 and without volume or manner of sale
restrictions, or (c) following the one year anniversary of the Closing Date, provided that a holder of Registrable Securities is
not an Affiliate of the Company, all of the Registrable Securities may be sold pursuant to an exemption from registration under
Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders
a standing written unqualified opinion that resales may then be made by such holders of the Registrable Securities pursuant to
such exemption which opinion shall be in form and substance reasonably acceptable to such holders. “Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(r). 


 


“Equity Linked
Offering” shall have the meaning set forth in Section 4.15.


 




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


 


“Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees, officers, directors or consultants of the Company pursuant
to any equity incentive plan or compensation arrangement duly adopted for such purpose, by a majority of the non-employee members
of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b)
shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a
bank or similar financial institution approved by the Board of Directors, (c) securities upon the exercise or exchange of or conversion
of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date
of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price
of such securities, (d) securities the issuance of which has been approved by the holders of majority in interest of the aggregate
principal amount of the then outstanding Debentures, (e) securities issued pursuant to acquisitions or strategic transactions approved
by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the
equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business
synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment
of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Maximum Rate”
shall have the meaning ascribed to such term in Section 5.17.


 




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 “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.


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.


 


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


 


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Underlying Shares (subject to reduction as required by the Commission pursuant to Rule 415 or otherwise)
by the Purchaser as provided for in the Registration Rights Agreement.


 


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


 


“Required
Minimum” shall have the meaning ascribed to such term in the Debentures.


 


“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.


 


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


 


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


 


“Securities”
means the Debentures and the Underlying Shares. 


 


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


 


“Security
Agreement” means the Security Agreement, dated the date hereof, among the Company and the Purchaser, in the form of Exhibit
C attached hereto.


 


“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 any sale of Securities pursuant to Rule 144). 


 


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


 




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“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.


 


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


 


“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange
or the OTC Bulletin Board (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Debentures, the Registration Rights Agreement, the Security Agreement, all exhibits
and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated
hereunder.


 


“Transaction
Offer” shall have the meaning set forth in Section 4.15.


 


“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.


 


“Underlying
Shares” means the shares of Common Stock issued or issuable in connection with the conversion or redemption of the Debentures
and issued and issuable in lieu of the cash payment of interest on the Debentures in accordance with the terms of the Debentures.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market other than the OTC Bulletin Board, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported
by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b)  if
the OTC Bulletin Board is the Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on a Trading Market
and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holders of a majority in interest of the aggregate principal amount of the then outstanding
Debentures and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.


 




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ARTICLE II.


PURCHASE AND SALE


 


2.1           Closing.  (a)
First Closing.  Subject to the satisfaction of the conditions to closing set forth herein, the purchase and sale
of Debentures, in the amounts and to the Purchasers aggregating $500,000 ($543,478 face amount, inclusive of 8% original issue
discount (8% OID”)), listed under the heading “First Closing” on Schedule A attached hereto shall take
place at the offices of counsel to the Purchasers at 61 Broadway, New York, NY 10006 or such other location as the parties shall
mutually agree, at 10:00 A.M., Eastern Standard Time, on April 4, 2014, or at such other time and place as the Company and the
Purchasers mutually agree upon orally or in writing (which time and place are designated as the “First Closing”).  Each
Purchaser shall deliver to the Company, via wire transfer with immediately available funds to a designated escrow account, an amount
equal to the Subscription Amount applicable to the First Closing as set forth on the signature page hereto executed by each such
Purchaser participating in the First Closing, and the Company shall deliver to each such  Purchaser its respective Debenture,
as determined pursuant to Section 2.2, and the Company and Purchasers shall deliver the other items set forth in Section 2.2 deliverable
at the First Closing.


 


(b) Subject to the
satisfaction of the conditions to closing set forth herein, within three business days after the effective date of the Registration
Statement, the Company shall sell, and the Purchasers shall purchase an additional $500,000 ($543,478 face amount, inclusive of
8% OID) of Debentures on the terms and conditions contained herein such that the aggregate principal amount of Debentures sold
pursuant to the terms of this Agreement shall equal $1,000,000, the date on which the transactions contemplated in this Section
1.3 shall be consummated shall be designated as “Subsequent Closing” and together with the First Closing, the
“Closings”).  Upon completion of any Subsequent Closing, the Company shall amend Schedule
A, without any further consents required, to reflect the purchase and sale of Securities at such Subsequent Closing.  


 


2.2          Deliveries.


 


	 	(a)	On or prior to any Closing Date pursuant to Section 2.1, the Company shall deliver or cause to be delivered to the Purchasers this Agreement, the Security Agreement and the Registration Rights Agreement duly executed by the Company.  In addition, on or prior to each Closing Date held pursuant to Section 2.1, the Company shall deliver or cause to be delivered to each Purchaser the following:


 


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


 


(ii)          a Debenture with a principal amount equal to the relevant Subscription Amount, adjusted for the 8% OID, registered in the name
of the applicable Purchaser; and


 


(iii)        an irrevocable letter of instructions to the Company’s
Transfer Agent in substantially the form of Exhibit E attached hereto.


 




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	 	(b)	On or prior to any Closing Date pursuant to Section 2.1, each Purchaser shall deliver or cause to be delivered to the Company this Agreement and the Registration Rights Agreement duly executed by the Purchaser.  In addition, on or prior to each Closing Date held pursuant to Section 2.1, each Purchaser shall deliver or cause to be delivered to the Company, the Purchaser’s relevant Subscription Amount by wire transfer to the account specified in Annex A.


 


2.3           Closing
Conditions.


 


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


 


(i)             the
accuracy in all material respects on the applicable Closing Date of the representations and warranties of the applicable Purchaser
contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);


 


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


 


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


 


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


 


(i)             the
accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Company
contained herein (unless as of a specific date therein);


 


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


 


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


 


(iv)           as
of the relevant Closing Date, trading in the Common Stock shall not have been suspended by the Commission or any Trading Market;
and


 


(v)           the Company
shall be current in it reporting obligations under the Exchange Act.


 




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ARTICLE III.


REPRESENTATIONS AND WARRANTIES


 


3.1           Representations
and Warranties of the Company.  Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall
be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties
to each Purchaser as of the date hereof and at each Closing Date:


 


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


 


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


 




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(d)           
No Conflicts.  The execution, delivery and performance by the Company of this Agreement and the other Transaction
Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated
hereby and thereby do not and will not: (i) 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, (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.  Other than as set forth on Schedule 3.1(e), 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) the filings required pursuant to Section 4.6 of this Agreement, (ii)
the filing with the Commission pursuant to the Registration Rights Agreement, (iii) the notice and/or application(s) to each applicable
Trading Market for the issuance and sale of the Securities and the listing of the Conversion Shares for trading thereon in the
time and manner required thereby, if applicable, 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 Securities.  The Securities are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.  The Underlying
Shares, when issued in accordance with the terms of the Transaction Documents, will be 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 a number of shares of Common Stock for issuance of the Underlying Shares
at least equal to the Required Minimum on the date hereof. 


 




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(g)          
 Capitalization.  The capitalization of the Company is as set forth on Schedule 3.1(g). No Person
has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as set forth in the SEC Reports (as defined below) and as a result
of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable
for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or 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 Securities 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 duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights
to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities.  There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders.


 


(h)           
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) of the Exchange Act, 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.  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. 


 




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(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 Securities contemplated by this Agreement, no event, liability, fact,
circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the
Company or its Subsidiaries or their respective businesses, properties, operations, assets 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 one Trading Day prior to the date that this representation is made.


 


(j)            
Litigation.  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 Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect.  Except as set forth on Schedule 3.1(j), 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 labor dispute exists or, to the knowledge of the Company, is imminent with respect
to any of the employees of the Company, 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.  To the
knowledge of the Company, no executive officer of the Company or any Subsidiary, 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 judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of
any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment
and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.


 


(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 (i) Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries
and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance
with GAAP and, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities
held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which
the Company and the Subsidiaries are in compliance.


 




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(o)           Intellectual
Property.  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 as described in the SEC Reports as necessary or required for use in connection with their respective
businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”).  None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise)
that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate
or be abandoned, within two (2) years from the date of this Agreement.  Neither the Company nor any Subsidiary has received,
since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise
has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not
have or reasonably be expected to not have a Material Adverse Effect.  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.


 


(p)           Insurance.  Except
as set forth on Schedule 3.1(p), 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, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription
Amount.  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 Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any 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 providing for the borrowing of money from or lending of money to, 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, stockholder, member 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.


 




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(r)           
Sarbanes-Oxley; Internal Accounting Controls.  The Company and the Subsidiaries are in compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date.  The
Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The
Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and
the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date,
the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the internal
control over financial reporting (as such term is defined in the Exchange Act) that have materially affected, or is reasonably
likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries. 


 


(s)        
   Certain Fees.  With the exception of the commission payable to Aegis Capital Corp., in its capacity
as placement agent in connection with the transactions contemplated by this Agreement, no brokerage or finder’s fees or commissions
are or will be payable by the Company or any Subsidiaries 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
Purchaser 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.


 


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


 


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


 




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(v)           
Registration Rights.  Other than as disclosed in the SEC Reports and the transactions contemplated by the Transaction
Documents, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of
the Company or any Subsidiaries.


 


(w)         
 Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g)
of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration.  Except as set forth in the SEC Reports, 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.
Except as set forth in the SEC Reports, the Company is, and has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance requirements. 


 


(x)           
Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary action,
if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of
the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including
without limitation as a result of the Company’s issuance of the Securities and the Purchaser’s ownership of the Securities.


 


(y)            Disclosure.  Except
with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information
that it believes constitutes or might constitute material, non-public information.  The Company understands and confirms
that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company.  All
of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective
businesses 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 Company acknowledges
and agrees that the Purchaser makes no nor has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.


 


(z)            
No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of (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.


 




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(aa)          Solvency.  
Except as set forth in the SEC Reports, the Company has no knowledge of any facts or circumstances which lead it to believe that
it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year
from the Closing Date.  The SEC Reports set forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.  For the purposes of this
Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $10,000
(other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $10,000 due under
leases required to be capitalized in accordance with GAAP.  Except as set forth in the SEC Reports, neither the Company
nor any Subsidiary is in default with respect to any Indebtedness. 


 


(bb)         Tax
Status. Except as set forth on Schedule 3.1(bb) and for matters that would not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all
United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required
by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports
or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.


 


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


 


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


 




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(ee)         Accountants.  The
Company’s accounting firm is GBH CPA’s, PC.  To the knowledge and belief of the Company, such accounting
firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect
to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2013.


 


(ff)           Seniority.  Except
as set forth in the SEC Reports, as of the Closing Date, no Indebtedness or other claim against the Company is senior to the Debentures
in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness
secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations
(which is senior only as to the property covered thereby).


 


(gg)         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 and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents.


 


(hh)         Acknowledgment
Regarding Purchaser’s Purchase of Securities.  The Company acknowledges and agrees that the Purchasers are
each acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby.  The Company further acknowledges that the Purchasers are not acting as financial advisors or fiduciaries
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby
and any advice given by the Purchasers or any of its representatives or agents in connection with the Transaction Documents and
the transactions contemplated thereby is merely incidental to each Purchaser’s purchase of the Securities.  The
Company further represents to the Purchasers that the Company’s decision to enter into this Agreement and the other Transaction
Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 


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


 


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


 




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(kk)         U.S. Real Property Holding Corporation.  The Company is not and has never been a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended.


 


(ll)            Bank
Holding Company Act.  Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding
Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”).  Neither the Company nor any of its Subsidiaries or Affiliates owns
or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five
percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.  Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 


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


 


(nn)         Bad Actor Disqualification.


 


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


 


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


 




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(iii) Notice
of Disqualification Events. The Company will notify the Placement Agent in writing of (i) any Disqualification Event relating
to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating
to any Issuer Covered Person, prior to any Closing of this Offering.


 


 


3.2           Representations
and Warranties of each Purchaser.  Each Purchaser hereby represents and warrants, severally and not jointly, as of
the date hereof and as of the Closing Date on which such Purchaser is purchasing Securities to the Company as follows (unless as
of a specific date therein):


 


(a)           
Organization; Authority.  If the Purchaser is an entity, the Purchaser is an entity duly incorporated or formed,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,
partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated
by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. If the Purchaser is an entity,
the execution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action,
as applicable, on the part of the Purchaser.  Each Transaction Document to which it is a party has been duly executed
by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally
binding obligation of the 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.  The Purchaser understands that the Securities are “restricted securities” and have not
been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the
Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation
of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any
other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable
state securities law (this representation and warranty not limiting the Purchaser’s right to sell the Securities pursuant
to the Registration Statement or otherwise in compliance with applicable federal and state securities laws).  The Purchaser
is acquiring the Securities hereunder in the ordinary course of its business.


 


(c)           
Purchaser Status.  At the time the Purchaser was offered the Securities, it was, and as of the date hereof it
is, and on each date on which it converts any Debentures it will be 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.


 




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


 


(e)          
 General Solicitation.  The Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities 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.


 


(f)          
 Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder,
the Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the
Purchaser, executed any transactions in any securities of the Company, including Short Sales, of the securities of the Company
during the period commencing as of the time that the 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 and ending
immediately prior to the execution hereof (it being understood and agreed that for all purposes of this Agreement, and,
without implication that the contrary would otherwise be true, that neither transactions nor purchases nor sales shall include
the location and/or reservation of borrowable shares of Common Stock).  Other than to other
Persons party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction).


 


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


 





ARTICLE IV.


OTHER AGREEMENTS OF THE PARTIES


 


4.1           Transfer
Restrictions.


 


(a)           The
Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer
of restricted Securities other than pursuant to an effective registration statement or Rule 144 or to the Company, 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 complies with applicable state and federal securities laws and does not require registration of such transferred Securities
under the Securities Act.  As a condition of such transfer of restricted Securities, any such transferee shall agree
in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the rights and obligations
of a Purchaser under this Agreement and the Registration Rights Agreement.


 




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(b)           Each
Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:


 


[NEITHER] THIS SECURITY [NOR THE SECURITIES
INTO WHICH THIS SECURITY IS [CONVERTIBLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY [AND THE SECURITIES ISSUABLE
UPON [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER
OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.


  


The Company acknowledges
and agrees that the Securities may be pledged by a Purchaser in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment
of the Securities hereunder, and no Purchaser effecting a pledge of Securities shall be required to provide the Company with any
notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document; provided
that a Purchaser and its pledgee shall be required to comply with the provisions of Section 4.1(a) hereof in order to effect a
sale, transfer or assignment of Securities to such pledgee. Subject to the foregoing, the Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities
to such pledgee by an Investor.


 


 




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(c)           Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities
Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144 (subject to execution and delivery by the holder of
such Underlying Shares and such holder’s broker-dealer of customary documentation acceptable to the Company with respect
to such Rule 144 sale), or (ii) if such legend is not required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) as determined by Company Counsel. The Company shall cause
its counsel to issue a legal opinion (at the expense of the holder of Underlying Shares) to the Transfer Agent promptly after the
Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. If all or any portion of a Debenture
is converted at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such
Underlying Shares may be sold by the applicable holder of Underlying Shares under Rule 144 without the requirement for the Company
to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume
or manner-of-sale restrictions or if such legend is not otherwise required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of the Commission) as determined by Company counsel
then such Underlying Shares shall be issued free of all legends.  The Company agrees that following the Effective Date
or such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following
the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares and, in connection
with any sale in reliance on Rule 144, such customary documentation acceptable to the Company and executed by such holder of Underlying
Shares and such holder’s broker-dealer in connection with such sale, as applicable, issued with a restrictive legend (such
third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to the Purchaser a certificate
representing such shares that is free from all restrictive and other legends.  The Company may not make any notation
on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.  Certificates
for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting
the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by the Purchaser. 


 


(d)           In
addition to the Purchaser’s other available remedies, if the Company fails (i) issue and deliver (or cause to be delivered)
to a Purchaser by the Legend Removal Date a certificate representing the Securities 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 Conversion Shares so delivered to the Company, and if after such date the Purchaser is required
by its brokerage firm to purchase (in an open market transaction or otherwise), or the Purchaser’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the Purchaser of the Conversion Shares which the Purchaser
was entitled to receive upon the conversion relating to such Legend Removal Date (a “Buy-In”), then the Company
shall (A) pay in cash to the Purchaser (in addition to any other remedies available to or elected by the Purchaser) the amount,
if any, by which (x) the Purchaser’s total purchase price (including any brokerage commissions) for the Common Stock so purchased
exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Purchaser was entitled to receive from the
conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the option of the Purchaser, either reissue (if surrendered) this Debenture
in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed
rescinded) or deliver to the Purchaser the number of shares of Common Stock that would have been issued if the Company had timely
complied with its delivery requirements under Section 4(c).  For example, if the Purchaser purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of a Debenture with respect to which
the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was
a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Purchaser $1,000.  The
Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser in respect of the Buy-In and,
upon request of the Company, evidence of the amount of such loss.    Nothing herein shall limit the Purchaser’s
right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required
by the Transaction Documents, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.


 




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(e)           The
Purchasers, severally and not jointly with the other Purchasers, agree with the Company that the Purchasers will sell any Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance
with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.


 


(f)              The
Company shall be responsible for providing a legal opinion upon each conversion to the effect that the Underlying Shares are exempt
from registration under the Securities Act, so long as the requirements of Rule 144 are satisfied.


 


4.2           
Acknowledgment of Dilution.  The Company acknowledges that the issuance of the Securities may result in dilution
of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions.  The Company
further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue
the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set
off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against
any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the
Company.


 


4.3           
Furnishing of Information; Public Information.  Until the earlier of (x) the first anniversary of the initial
date no Purchaser owns any Debentures and (y) the initial date no Purchaser owns any Securities, the Company covenants to maintain
the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.


 


4.4           
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 Securities
in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated
with the offer or sale of the Securities 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. 


 




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4.5           
Conversion and Exercise Procedures.  The form of Notice of Conversion included in the Debentures sets
forth the totality of the procedures required of a Purchaser in order to convert the Debentures.  Without limiting the
preceding sentences, no ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any Notice of Conversion form be required in order to convert the Debenture.  No additional
legal opinion, other information or instructions shall be required of a Purchaser to convert its Debentures.  The Company
shall honor conversions of the Debentures and shall deliver Underlying Shares in accordance with the terms, conditions and time
periods set forth in the Transaction Documents.


 


4.6           
Securities Laws Disclosure; Publicity.  The Company shall (a) by 9:30 a.m. (New York City time) on the Trading
Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated
hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission
within the time required by the Exchange Act.  From and after the issuance of such press release, the Company represents
to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers
by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with
the transactions contemplated by the Transaction Documents. 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 the applicable Purchaser, except: (a) as required by federal securities law in connection
with (i) any registration statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction
Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide the applicable Purchaser with prior notice of such disclosure permitted under this clause (b).


 


4.7           
Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company,
any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue
of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser.


 


4.8           
Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents or as otherwise required 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 the Purchaser shall have entered into a written
agreement with the Company regarding the confidentiality and use of such information.  The Company understands and confirms
that the Purchasers shall be relying on the foregoing covenant in effecting transactions in securities of the Company. 


 




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4.9           
Use of Proceeds.  The Company shall use the net proceeds from the sale of the Securities hereunder for working
capital purposes and shall not use such proceeds: (a) 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), (b) for the redemption of
any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA
or OFAC regulations.


 


4.10          Indemnification
of Purchasers.   Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser
and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not
an Affiliate of the Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of the Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings the Purchaser Party may have with any such stockholder or any violations by such  Purchaser
Party of state or federal securities laws or any conduct by the Purchaser Party which constitutes fraud, gross negligence, willful
misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity
may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of the Purchaser Party, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will
not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents.  The indemnification
required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred.  The indemnity agreements contained herein shall be in addition
to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may
be subject to pursuant to law.   


 




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4.11          Reservation
and Listing of Securities.


 


(a)            The
Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may then be required to fulfill its obligations in full under the Transaction Documents and shall confirm the
adequacy of such reserve promptly upon request.


 


(b)          
The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such
Trading Market an additional shares listing application covering a number of shares of Common Stock covering the Securities, (ii)
take all steps reasonably necessary to cause the Conversion Shares to be approved for listing or quotation on such Trading Market
as soon as possible thereafter, (iii) provide to the Purchaser evidence of such listing or quotation and (iv) maintain the listing
or quotation of such Common Stock on such date on such Trading Market or another Trading Market.


 


4.12          Certain
Transactions and Confidentiality.


 


(a)            Each
Purchaser covenants, severally and not jointly, that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding
with it will execute any Short Sales of any of the Company’s securities during the period commencing with the execution of
this Agreement and ending on the earlier of (i) the Maturity Date of the Debentures and (ii) the date such Purchaser no longer
owns Debentures (whether by conversion or transfer). 


 


(b)            Each
Purchaser covenants, severally and not jointly, that until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company, the Purchaser will maintain the confidentiality of the existence and terms of this transaction and the
information included in the Transaction Documents and the Disclosure Schedules. 


 


(c)            Except
as set forth in Sections 4.12(a) and 4.12(b) above, the Company expressly acknowledges and agrees that (i) the Purchasers shall
not be restricted from effecting transactions in any securities of the Company in accordance with applicable securities laws after
the time that the transactions contemplated by this Agreement are first publicly announced, and (ii) the Purchaser shall not have
any duty of confidentiality to the Company or its Subsidiaries after the transactions contemplated by this Agreement are first
publicly announced. 


 




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4.13          Form
D; Blue Sky Filings.  The Company agrees to timely file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof, promptly upon request of a 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 Securities 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 a Purchaser.


 


4.14              Offerings
of New Securities. Until the the date on which no Debentures remain outstanding, and with respect to any Purchaser,
the Company will not, directly or indirectly, effect any Subsequent Placement (as defined below)
unless the Company shall have first complied with this Section 4.14; provided, that the Company shall not be required to comply
with this Section 4.14 if such Subsequent Placement would be integrated with such prior offering by the principal Trading Market
in which the Common Stock is then trading (the “Principal Market”) or pursuant to the Securities Act, or any
other applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company are listed or designated.


 


(a)      At least tfour
(4) Business Days prior to any proposed or intended Subsequent Placement, the Company or its agent shall orally contact each Purchaser
and ask whether such Purchaser is willing to agree to receive material non-public information (each such notice, a “Pre-Notice”),
provided that neither the Company nor its agents shall provide any material, non-public information with respect to the Company
or any of its Subsidiaries to such Purchaser without the expressed written consent of such Purchaser to receive such material,
non-public information. Upon the written request of such Purchaser no later than one (1) Business Day after such Purchaser’s
receipt of such Pre-Notice, and only upon a written request by such Purchaser, the Company shall promptly, but no later than one
(1) Business Day after such request, deliver to such Purchaser by facsimile an irrevocable written notice (the “Offer
Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities
being offered (the “Offered Securities”) in a Subsequent Placement within one (1) Business Day of the determination
of the terms of such Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe
the price and other final terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities
to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities
are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such Purchaser (which offer being
non-transferable to any successor to such Purchaser) a pro rata portion of at least 30% of the Offered Securities allocated among
such Purchaser and the other Purchasers of Securities in this offering (the “Other Purchasers”) (a) based on
each Purchaser’s pro rata portion of all the Securities purchased in this offering (the “Basic Amount”),
and (b) if such Purchaser elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to
the Basic Amounts of the Other Purchasers as such Purchaser shall indicate it will purchase or acquire should the Other Purchasers
subscribe for less than their Basic Amounts (the “Undersubscription Amount”).


 




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(b)       To accept an
Offer, in whole or in part, a Purchaser must deliver a written notice to the Company prior to the end of the third (3rd)
full Business Day after such Purchaser’s receipt of the Offer Notice (for purposes of this Section 4.14(b), receipt of the
Offer Notice shall not be deemed to have occurred until such Purchaser shall have physically received such Offer Notice) (the “Offer
Period”), setting forth the portion of such Purchaser’s Basic Amount that such Purchaser elects to purchase and,
if such Purchaser shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Purchaser elects
to purchase (in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by such Purchaser and
all Other Purchasers are less than the total of all of the Basic Amounts, then, if such Purchaser has set forth an Undersubscription
Amount in its Notice of Acceptance, such Purchaser shall be entitled to purchase, in addition to the Basic Amounts subscribed for,
the Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed
the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription
Amount”), if such Purchaser has subscribed for any Undersubscription Amount, then such Purchaser shall be entitled to
purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Purchaser bears to the total Basic
Amounts of all Other Purchasers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent
it deems reasonably necessary.


 


(c)       The Company
shall have thirty (30) Business Days from the expiration of the Offer Period above to offer, issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not been given by such Purchaser (the “Refused
Securities”), but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring Person
or Persons or less favorable to the Company than those set forth in the Offer Notice.


 


(d)     The purchase
by such Purchaser of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and
each participating Purchaser of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance
to such Purchasers (the “Subsequent Placement Agreement”).


 


(f)      Any Offered
Securities not acquired by such Purchaser or other Persons in accordance with this Section 4.14 may not be issued, sold or exchanged
until they are again offered to such Purchaser under the procedures specified in this Agreement.


 




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(g)The Company
and each Purchaser agree that if such Purchaser elects to participate in the Offer, without the written consent of such Purchaser,
neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto shall
include any term or provision whereby such Purchaser shall be required to agree to any restrictions on trading as to any securities
of the Company with respect to any period after the public announcement of such Subsequent Placement beyond those restrictions
on the transfer or sale of the securities purchased in such Subsequent Placement agreed to by other purchasers in such Subsequent
Placement or be required to consent to any amendment to or termination of, or grant any waiver or release under or in connection
with, any agreement previously entered into with the Company or any instrument received from the Company.


 


(h)The restrictions
contained in this Section 4.14 shall not apply (1) in connection with the issuance of any Excluded Securities (as defined below)
and (2) to the extent that counsel to the Company has advised that with respect to a Subsequent Placement of Offered Securities
that are not being issued pursuant to a registration statement under the Securities Act, the exercising of the participation right
would result in the Company not being able to offer or sell the Offered Securities pursuant to any exemption from the registration
requirements of the Securities Act.


 


(i) Notwithstanding
anything herein to the contrary, the rights granted to the Purchasers pursuant to this Section 4.14 shall not be transferrable
to any other Person without the prior written consent of the Company.


 


(j)For the purposes
of this Section 4.14, the following definitions will apply:


 


(i)           “Convertible
Securities” means any shares or securities (other than Options) directly or indirectly convertible into or exercisable
or exchangeable for shares of Common Stock.


 


(ii)         “Excluded
Securities” means any securities of the Company issued in any Exempt Issuance.


 


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


 


(iv)        “Subsequent
Placement” means the sale, grant of any option to purchase, or other disposition of by the Company, directly or indirectly,
of any of the Company’s or its Subsidiaries’ equity or equity equivalent securities, including, without limitation,
any convertible debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances,
convertible into or exchangeable or exercisable for shares of Common Stock or Convertible Securities or Options.


   




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ARTICLE V.


MISCELLANEOUS


 


5.1           Termination. 
This Agreement may be terminated by Purchasers purchasing a majority in interest of the Debentures at the First Closing as to the
Purchasers’ obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other
Purchaser, by written notice to the other parties, if the First Closing has not been consummated on or before April 4, 2014; provided,
however, that such termination will not affect the right of any party to sue for any breach by any other party (or parties).


 


5.2           Fees
and Expenses.  At the First Closing, the Company has agreed to reimburse Purchasers for all reasonably documented
attorney’s fees for the transactions contemplated by this Agreement in the amount of $20,000, of which $5,000 has been paid
prior to the signing of this Agreement.  The Company shall also pay the Purchaser’s $10,000 for due diligence expenses.
The Company shall deliver to the Purchasers, prior to the Closing, a completed and executed copy of the Closing Statement, attached
hereto as Annex A.  The Company shall pay all Transfer Agent fees (including, without limitation, any fees required
for same-day processing of any instruction letter delivered by the Company and any conversion notice delivered by a Purchaser),
stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser provided that,
the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon conversion in a name other than that of the Purchaser and the Company shall not be required to issue
or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 


 


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 thereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


 


5.4           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 at or prior to 5:30 p.m. (New York City time)
on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via 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 second (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, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by each of the Company and a majority in interest of the Debentures or, in the case of a waiver,
by the party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission
of any party to exercise any right hereunder in any manner impair the exercise of any such right. 


 




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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 a majority in interest of the Debentures (other than by merger).  A Purchaser may assign any or all
of its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents
that apply to the “Purchaser.”


 


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 4.10 and this Section 5.8.


 


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, partners, members, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the City of New York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the 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, suit or proceeding to enforce any provisions
of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing party in such
action, suit 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.


 




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


 


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 each other party, it being understood
that the parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.


 


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


 


5.14          Replacement
of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction.  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
Securities.


 




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


 


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


 


5.17          Usury.  To
the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document.  Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate.  It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date
thereof forward, unless such application is precluded by applicable law.  If under any circumstances whatsoever, interest
in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded
to the Company, the manner of handling such excess to be at the Purchaser’s election.


 


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


 




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5.19          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. 


 


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


 


5.21          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.


 


5.22          Exculpation
Among Purchasers.  Each Purchaser acknowledges that it is not relying upon any person or entity, other than the Company
and its representatives, in making its investment or decision to invest in the Company.  Each Purchaser agrees that no
Purchaser nor the respective controlling persons, officers, directors, partners, members, agents, or employees of any Purchaser
shall be liable to any other Purchaser for any action heretofore or hereafter taken or omitted to be taken by any of them in connection
with the purchase of the Securities.


 


(Signature Pages Follow)


 




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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.


 


	WORLD MOTO, INC.	 	Address for Notice:

         

        131 MOO 9 THAILAND SCIENCE PARK INC-1 #2

        PHAHONYOTHIN ROAD

        KLONG1, KLONG LUANG

        PATHUMTHANI W1 12120

        THAILAND

	 	 	 
	By: 	   /s/
    Paul Giles	 	Fax: 011 662 564 7734
	 	Name: Paul Giles	 	 
	 	 	 
	With a copy to (which shall not constitute notice):	 	 
	 	 	 
	Greenberg Traurig, LLP

        1201 K Street Suite 1100

        Sacramento CA 95814

        Attn.:  Mark C. Lee, Esq.

        Facsimile:  (916) 868 0630
	 	 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS] 


 






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PURCHASER SIGNATURE PAGE 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:         Dominion
Capital                                                 



 


Signature of Authorized Signatory of Purchaser:


 


	      /s/ Mikhail Gurevich	 
	 
	Name of Authorized Signatory:
	 
	       Mikhail Gurevich 	 
	 
	Title of Authorized Signatory:
	 
	        Managing Member 	 
	 
	Subscription Amount: __$375,000
	 	 	 	 


 




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 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:         Redwood Management, LLC                               






 








	Signature of Authorized Signatory of Purchaser: 	 
	 	 
	     /s/ John DeNobile	 
	 	 
	Name of Authorized Signatory: 	 
	 	 
	        John DeNobile	 
	 	 
	Title of Authorized Signatory: 	 
	 	 
	         Manager	 
	 	 
	Subscription Amount: __$125,000	 







 


[SIGNATURE PAGES CONTINUE]


 




    	37



    	 



    

  


Annex A


 


CLOSING STATEMENT


 


Pursuant to the Securities Purchase Agreement,
dated as of April 4, 2014, the Investors shall purchase $500,000.00 of Debentures from World Moto, Inc., a Nevada corporation (the
“Company”).  All funds will be wired into an account maintained by the Company.  All funds
will be disbursed in accordance with this Closing Statement.


 


Disbursement Date:       April 4, 2014


 








I.      PURCHASE PRICE


  


	Gross Proceeds to be Received	 	$	500,000	 



 


II.     DISBURSEMENTS


  


	World Moto, Inc.	 	$	442,500	 
	Aegis Capital Corp.	 	$	37,500	 
	Sichenzia Ross Friedman Ference LLP	 	$	20,000	 
	 	 	 	 	 
	Total Amount Disbursed:	 	$	500,000	 








  


SCHEDULE A


 




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Schedule
Of Purchasers


 


First Closing


  





	Purchasers’ Name And

    Address	 	Principal Amount of 
Debentures	 
	Dominion Capital LLC
 11 Broadway 
New York, NY 10004	 	$	375.00	 
	 	 	 	 	 
	Redwood Management, LLC
 16850 Collins Ave. 
Suite 112-341 
Sunny Isles, FL 33160	 	$	125,000	 








 


Subsequent Closing


 


	Purchasers’ Name And 
Address	 	Principal Amount of 
Debentures	 
		 			 
	 	 	 	 	 
	 	 	 	 	 



 




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