Exhibit 10.1


 


SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as of August 2, 2017, between Neonode Inc., a Delaware
corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).


 


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


 


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


 


ARTICLE
I.

DEFINITIONS


 


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


 


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


 


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


 


“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
Designee” shall have the meaning ascribed to such term in Section 4.12.


 


“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 U.S. 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.


 


“Certificate
of Incorporation” means the Amended and Restated Certificate of Incorporation, as amended and corrected, of the Company.


 


“Charter
Amendment” means the amendment to the Certificate of Incorporation subject to stockholder approval as contemplated in
Section 3.1(h).


 






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“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1; provided, however, that such
closing shall not be before 9:00 a.m. (New York City time) on the Closing Date.


 


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


 


“Commission”
means the U.S. Securities and Exchange Commission.


 


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


 


“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 Reed Smith LLP, with offices located at 101 Second Street, Suite
1800, San Francisco, California 94105.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“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).


 






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


 


“Maximum
Amount” means, as to each Non-ROFR Purchaser, the maximum aggregate amount to be paid for Shares and Warrants hereunder
as specified below such Non-ROFR Purchaser’s name on the signature page of this Agreement and next to the heading “Maximum
Amount,” in U.S. dollars and in immediately available funds.


 


“Minimum
Amount” means, as to each Non-ROFR Purchaser, the minimum aggregate amount to be paid for Shares and Warrants hereunder
as specified below such Non-ROFR Purchaser’s name on the signature page of this Agreement and next to the heading “Minimum
Amount,” in U.S. dollars and in immediately available funds.


 


“Non-ROFR
Purchaser” means a Purchaser who is not a ROFR Purchaser.


 


“Participation
Amount” means, as to each ROFR Purchaser, the aggregate amount to be paid for Shares and Warrants hereunder pursuant
to the ROFR as specified below such ROFR Purchaser’s name on the signature page of this Agreement and next to the heading
“Participation Amount,” in U.S. dollars and in immediately available funds.


 


“Per
Share Purchase Price” equals $1.00 subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.


 


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


 


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


 


“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.2(b).


 


“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.2(b).


 


“Purchase
Notice” shall have the meaning ascribed to such term in Section 2.4(a).


 


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


 


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


 


“Required
Purchasers” means (i) prior to Closing, the Purchaser or Purchasers who, together with their Affiliates, has or have
agreed to purchase a majority of the Securities to be sold hereunder and (ii) from and after the Closing, the Purchaser or Purchasers
beneficially owning (calculated in accordance with Rule 13d-3 under the Exchange Act without giving effect to any limitation on
exercise of the Warrants set forth therein) at least a majority of the aggregate number of Shares and the Warrant Shares.


 






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“ROFR”
shall have the meaning ascribed to such term in Section 4.11.


 


“ROFR
Holder” shall have the meaning ascribed to such term in Section 4.11.


 


“ROFR
Purchaser” means a Purchaser who is a ROFR Holder that enters into this Agreement pursuant to the ROFR.


 


“Rule
144” means Rule 144 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(i).


 


“Securities”
means the Shares, the Warrants and the Warrant Shares.


 


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


 


“Series
B Preferred Stock” means the Series B Preferred Stock, par value $0.001 per share, of the Company.


 


“Shares”
means the shares of Common Stock issued or issuable to the Purchasers at Closing pursuant to this Agreement.


 


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


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as
specified in the Purchase Notice and next to the heading “Subscription Amount,” in U.S. dollars and in immediately
available funds.


 


“Subsidiary”
means any wholly-owned subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include
any direct or indirect wholly-owned 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 (“Nasdaq”), the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing).


 






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


 


“Transfer
Agent” means American Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing
address of 6201 15th Avenue, Brooklyn, NY 11219 and a facsimile number of (718) 765-8713, and any successor transfer agent of
the Company.


 


“U.S.”
means the United States of America.


 


“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section
2.2(a) hereof, which Warrants shall be exercisable twelve months from their date of issuance and have a term of exercise equal
to three years from the Closing Date, in the form of Exhibit A attached hereto.


 


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


 


ARTICLE
II.

PURCHASE AND SALE


 


2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to and shall sell, and
the Purchasers, severally and not jointly, agree to and shall purchase, up to an aggregate of $9,750,000 of Shares and Warrants.
On or before the Closing Date, each Purchaser shall have delivered immediately available funds, via wire transfer or certified
check, to the account of the Company or a Subsidiary as provided for in Section 2.5(b) or Section 2.6(b), as applicable, in an
amount at least equal to such Purchaser’s Subscription Amount as set forth on the Purchase Notice delivered by the Company
to each Purchaser pursuant to Section 2.4. Upon consummation of the Closing, the Company shall instruct the Transfer Agent to
deliver to each Purchaser, its respective Shares (or a direct registration system advice evidencing the electronic registration
of ownership of such Shares) and the Company or Company Counsel shall deliver to each Purchaser a Warrant as determined pursuant
to Section 2.2(a)(iv). Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of Company Counsel or such other location as the parties shall mutually agree.


 


2.2 Deliveries.


 


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


 


(i) this
Agreement duly executed by the Company;


 






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(ii) the
Purchase Notice;


 


(iii) a
copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, a
number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the
name of such Purchaser;


 


(iv) a
Warrant registered in the name of such Purchaser to purchase up to a whole number of shares of Common Stock equal to 1/3rd
of such Purchaser’s Shares, with an exercise price equal to $2.00, subject to adjustment therein (such Warrant certificate
may be delivered within three Trading Days of the Closing Date); provided, however, the number of shares of Common
Stock subject to such Warrant shall be rounded up to the nearest whole number so that the Warrant is not exercisable in part into
a fraction of a share; and


 


(v) the
Company’s wire instructions or bank account number.


 


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


 


(i) this
Agreement duly executed by such Purchaser;


 


(ii) such
Purchaser’s Subscription Amount, which shall be deducted from the Maximum Amount or the Participation Amount delivered by
such Purchaser in accordance with Section 2.5(b) or Section 2.6(b) as applicable; and


 


(iii) any
documentation reasonably necessary for the Transfer Agent to establish an account for such Purchaser.


 


2.3 Closing
Conditions.


 


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


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 


(iv) the
Company shall have filed with Nasdaq a Notification Form: Listing of Additional Shares for the listing of the Shares and Company
Counsel has confirmed to the Purchasers that Nasdaq has raised no objection with respect thereto;


 


(v) the
Company shall have received gross proceeds from the sale of the Shares and the Warrants as contemplated hereby of at least five
million eight-hundred fifty thousand dollars ($5,850,000);


 


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


 


(vii) No
judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have
been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents; and


 


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


 






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2.4 Subscription
and Purchase.


 


(a) Each
Purchaser acknowledges and agrees that it shall be obligated to deliver to the Company at the Closing the Subscription Amount
as to such Purchaser in the amount set forth in a written notice (the “Purchase Notice”) delivered by the Company
to such Purchaser no later than 9:00 a.m. (New York City time) on the Closing Date.


 


(b) The
Purchase Notice, a form of which is attached hereto as Annex I, shall specify (i) the Subscription Amount which such Purchaser
shall be obligated to deliver to the Company at the Closing, (ii) the number of Shares to be delivered by the Company pursuant
to Section 2.2(a)(iii) in consideration of the Subscription Amount, which shall be equal to the Subscription Amount divided by
the Per Share Purchase Price, and (iii) the number of Warrant Shares allocated to such Purchaser as determined in accordance with
2.2(a)(iv).


 


(c) The
Company acknowledges and agrees that (i) as to each Non-ROFR Purchaser, the Subscription Amount shall be not less than the Minimum
Amount and not more than the Maximum Amount set forth on the signature page hereto of such Non-ROFR Purchaser, and (i) as to each
ROFR Purchaser, the Subscription Amount shall be not more than the Participation Amount set forth on the signature page hereto
of such ROFR Purchaser.


 


2.5 Non-ROFR
Purchaser Subscription.


 


(a) By
executing this Agreement, each Non-ROFR Purchaser acknowledges and agrees that the Subscription Amount as to each Non-ROFR Purchaser
hereunder shall be determined by the Company in its sole and absolute discretion and in accordance with this Agreement; provided,
however, that such Subscription Amount shall be not less than the Minimum Amount and not more than the Maximum Amount set
forth on the signature page hereto of such Non-ROFR Purchaser.


 


(b) Each
Non-ROFR Purchaser undertakes and agrees to deliver to the Company the Maximum Amount, as to such Non-ROFR Purchaser, in immediately
available funds, via wire transfer or certified check, to the account of the Company or a Subsidiary, as instructed in writing
by the Company, no later than the Trading Day immediately preceding the Closing Date; provided, however, that each
Non-ROFR Purchaser shall endeavor in good faith to initiate transfer of such funds on or before the date of this Agreement so
that such funds may be delivered on the date of this Agreement or within two Business Days hereafter. The Purchaser shall not
be entitled to payment of interest with respect to such funds. The Company shall be deemed to hold such funds in trust for the
benefit of the respective Purchasers until the Closing Date.


 


2.6 ROFR
Purchaser Subscription.


 


(a) Notwithstanding
anything contained herein to the contrary, each ROFR Purchaser acknowledges and agrees that the Subscription Amount as to each
ROFR Purchaser hereunder shall be calculated by the Company, in accordance with the ROFR and this Agreement; provided,
however, that such Subscription Amount shall be not more than the Participation Amount set forth on the signature page
hereto of such ROFR Purchaser.


 






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(b) Each
Non-ROFR Purchaser undertakes and agrees to deliver to the Company the Participation Amount, as to such Non-ROFR Purchaser, in
immediately available funds, via wire transfer or certified check, to the account of the Company or a Subsidiary, as instructed
in writing by the Company, no later than the Trading Day immediately preceding the Closing Date. The Purchaser shall not be entitled
to payment of interest with respect to such funds. The Company shall be deemed to hold such funds in trust for the benefit of
the respective Purchasers until the Closing Date.


 


2.7 Excess
Payments.


 


(a) In
the event any Purchaser has delivered to the Company prior to Closing an amount of funds in excess of the Subscription Amount
of such Purchaser as specified on the Purchase Notice delivered to such Purchaser, the Company shall, no later than three Trading
Days subsequent to the later of either the Closing Date or the date such Purchaser shall have provided wire instructions or bank
account number to the Company, return to such Purchaser such excess amount, without any additional payment of interest thereon,
in immediately available funds, via wire transfer or certified check. The Company shall be deemed to hold such excess funds in
trust for the benefit of the respective Purchasers until so paid.


 


(b) In
the event of termination of this offering in accordance with Section 5.1 hereby, the Company shall, no later than three Trading
Days subsequent to the later of such date of termination or the date such Purchaser shall have provided wire instructions or bank
account number to the Company, return to such Purchaser any and all funds delivered by such Purchaser to the Company in furtherance
of this Agreement and in anticipation of the Closing, without any additional payment of interest thereon, in immediately available
funds, via wire transfer or certified check. The Company shall be deemed to hold such funds in trust for the benefit of the respective
Purchasers until so paid.


 


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:


 


(a) Subsidiaries.
All of the direct and indirect wholly-owned subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns,
directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and
all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or purchase securities.


 






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(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 (or the foreign equivalent thereof) 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
(or the foreign equivalent thereof) to conduct business and is in good standing (or the foreign equivalent thereof) 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, subject, with respect to the issuance of the Warrant Shares upon exercise of the Warrants, to effecting the Charter
Amendment. The execution and delivery of each of this Agreement and 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 Certificate of Incorporation (subject to effecting
the Charter Amendment) or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter
documents, (ii) subject to the Company’s satisfaction of its obligations with respect to the ROFR as set forth in Section
4.11, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which
the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected,
or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.


 


(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.4 of this Agreement, (ii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Securities and the listing of the Shares and the Warrant Shares for trading thereon in
the time and manner required thereby, (iii) the filing of Form D if required with the Commission and such filings as are required
to be made under applicable state securities laws, and (iv) the Charter Amendment subject to stockholder approval as contemplated
in Section 3.1(h) of this Agreement (collectively, the “Required Approvals”).


 


(f) Issuance
of the Securities. The Shares and Warrants 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 Warrant Shares, when issued in accordance
with the terms of the Warrants and subject to effecting the Charter Amendment, 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.
Subject to effecting the Charter Amendment, the Company shall reserve from its duly authorized capital stock the maximum number
of shares of Common Stock issuable pursuant to this Agreement and the Warrants.


 






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(g) Capitalization.
As of July 27, 2017, the authorized capital stock of the Company consisted of (A) 70,000,000 shares of Common Stock, of which
approximately 48,845,000 shares are issued and outstanding, 11,000 shares are issuable upon conversion of Series B Preferred Stock,
7,914,000 shares are issuable pursuant to outstanding warrants, 1,756,000 shares are issuable pursuant to outstanding compensatory
options, and 1,655,000 shares are reserved for issuance pursuant to the Company’s stock compensatory plans, and (B) 1,000,000
shares of preferred stock, of which 83 shares of Series B Preferred Stock are issued and outstanding. The Company has not issued
any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock compensatory plans, the issuance of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic report under the Exchange Act. Except with respect to the ROFR,
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 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 the capital stock of any Subsidiary,
or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. Subject to exercise of the ROFR,
the issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust
the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding securities or instruments
of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary.
The Company does not have any stock appreciation rights or “phantom stock” plans or any similar plan or agreement.
All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. Other than the Charter Amendment, 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.


 






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(h) Charter
Amendment. Subject to applicable law, the Certificate of Incorporation and the Company’s bylaws, the Company
hereby undertakes to hold a meeting of the stockholders of the Company within 60 days of the Closing Date, or at the soonest
practicable date thereafter in the event the Company is informed by the Commission that it intends to review the
Company’s proxy statement related to the Charter Amendment, at which the proposals to be submitted for stockholder
approval shall include an amendment to the Company’s Certificate of Incorporation to increase the number of authorized
shares of Common Stock to a number sufficient to permit the full exercise of the Warrants for Warrant Shares.


 


(i) SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and
none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. 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 U.S. 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.


 






    	 	13	 



     


    

 


(j) 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 one or more subsequent SEC Reports 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, (B) an unsecured short-term promissory
note dated June 9, 2017 for the principal amount of approximately $1.8 million with a maturity date of September 1, 2017, and
(C) liabilities that are 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 compensatory 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 or will not have been publicly disclosed prior to the Closing Date.


 


(k) 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. 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.


 


(l) 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.


 






    	 	14	 



     


    

 


(m) 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.


 


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


 


(o) 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.


 






    	 	15	 



     


    

 


(p) 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.


 


(q) 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.


 


(r) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, 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.


 






    	 	16	 



     


    

 


(s) 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 compensatory
plan of the Company.


 


(t) 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) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company or its Subsidiaries.


 


(u) Certain
Fees. Other than as set forth in this Section 3.1(u), no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank
or other Person with respect to the transactions contemplated by the Transaction Documents. The Company has agreed to pay an external
advisor resident outside the U.S. a fee equal to five percent (5.0%) of the aggregate Subscription Amount received by the Company
from each Purchaser who is not a U.S. person or a ROFR Holder. The Purchasers shall have no obligation with respect to any fees
or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be
due in connection with the transactions contemplated by the Transaction Documents.


 






    	 	17	 



     


    

 


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


 


(w) 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.


 


(x) Registration
Rights. Except as set forth in the SEC Reports, 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 Subsidiary.


 


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


 


(z) 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 Certificate of Incorporation (or similar charter documents) or the laws of
its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers 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 Purchasers’ ownership of the Securities.


 






    	 	18	 



     


    

 


(aa) 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 any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands
and confirms that the Purchasers 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 Purchasers 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 press releases
disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges
and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.


 


(bb) No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (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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(cc) Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to
carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports set forth
all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments, other than an unsecured short-term promissory note dated June 9, 2017 for the principal amount of approximately
$1.8 million with a maturity date of September 1, 2017. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (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 $50,000 due under leases required to
be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.


 


(dd) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all U.S. 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.


 


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


 


(ff)  Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, 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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(gg) Accountants.
The Company’s accounting firm is KMJ Corbin & Company LLP. To the knowledge and belief of the Company, such accounting
firm is a registered public accounting firm as required by the Exchange Act.


 


(hh) No
Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company which
could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.  


 


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


 


(jj)
Acknowledgment Regarding Purchaser’s Trading Activity. Notwithstanding anything in this Agreement or elsewhere herein
to the contrary (except for Sections 3.2(g) and 4.14), it is understood and acknowledged by the Company that: (i) none of the
Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold
the Securities for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including,
without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s publicly-traded securities, and (iii) each
Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative”
transaction.


 


(kk) 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 external advisor
as described in Section 3.1(u) of this Agreement.


 






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


 


(mm) 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”).


 


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


 


(oo) 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.


 


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


 






    	 	22	 



     


    

 


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


 


(rr) Other
Covered Persons. The Company is not aware of any person (other than any Issuer Covered Person) that has been or will be paid
(directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Securities pursuant to
Rule 506.


 


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


 


3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they
shall be accurate as of such date):


 


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


 






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(b) Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring 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 (without prejudice, however, to such Purchaser’s right at all times to sell or otherwise dispose of all or any part
of such Securities in compliance with applicable federal and state securities laws). Nothing contained herein shall be deemed
a representation or warranty by such Purchaser to hold the Securities for any period of time. Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its business.


 


(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants, it will be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act.


 


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


 


(e) General
Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, 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) Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits, annexes, and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions
as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the
Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.


 






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(g) Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting
forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall
only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement (collectively, “Trading Affiliates”). Other than disclosures to other
Persons party to this Agreement or to such Purchaser’s representatives (including, without limitation, its officers, directors,
partners, legal and other advisors, agents and Affiliates), each of whom is bound by a duty of confidentiality to such Purchaser
and whom such Purchaser has taken reasonable actions to cause them to maintain such confidentiality, such Purchaser has maintained
the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares
to borrow in order to effect Short Sales or similar transactions in the future.


 


(h) Warrants.
Such Purchaser understands and acknowledges that (i) unless the Charter Amendment is effected, such Purchaser may not be entitled
to exercise the Warrant it acquires at the Closing for Warrant Shares, and (ii) there can be no assurance that stockholder approval
of the Charter Amendment will be obtained.


 


(i) Second
Quarter Financials. Such Purchaser understands and acknowledges that, notwithstanding anything to the contrary in this Agreement,
the Company (including its officers and directors) may be in possession of material non-public information about the estimated
financial performance of the Company for its fiscal quarter ended June 30, 2017 (the “2Q17 Information”) not
known to such Purchaser that may impact the value of the Securities. Such Purchaser further understands and confirms that the
Company has offered to summarize the 2Q17 Information to such Purchaser on a confidential basis. If such Purchaser has declined
to accept a summary of the 2Q17 Information on a confidential basis, such Purchaser understands, based on its experience, the
disadvantage to which the Purchaser is subject due to the disparity of information between the Company and such Purchaser and,
notwithstanding this, such Purchaser has deemed it appropriate to engage in the transactions contemplated by this Agreement. If
such Purchaser has declined to accept a summary of the 2Q17 Information on a confidential basis, such Purchaser acknowledges and
agrees that, notwithstanding anything to the contrary in this Agreement, Company (including its officers and directors) shall
have no liability to such Purchaser whatsoever due to or in connection with the Company’s non-disclosure of the 2Q17 Information
in connection with the transactions contemplated hereby.


 






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The
Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations
and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection
with this Agreement or the consummation of the transactions 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 Securities
other than pursuant to an effective registration statement or Rule 144, the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration
of such transferred Securities under the Securities Act.


 


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


 


THE
SECURITIES REPRESENTED HEREBY HAVE 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, AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, HEDGED, PLEDGED, OR OTHERWISE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT
TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.


 


The
Purchasers further agree not to engage in hedging transactions with regard to the Securities unless in compliance with the Securities
Act.


 






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(c) Instruments,
whether certificated or uncertificated, evidencing the Securities shall not contain any legend (including the legend set forth
in Section 4.1(b) hereof), (i) while a registration statement covering the resale of such Security is effective under the Securities
Act, (ii) following any sale of such Security pursuant to Rule 144, (iii) if such Security is eligible for sale under Rule 144,
without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to
such Security and without volume or manner-of-sale restrictions, or (iv) 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). The Company
shall cause its counsel to issue a legal opinion to the Transfer Agent if required by the Transfer Agent to effect the removal
of the legend hereunder. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement
to cover the resale of the Warrant Shares, as applicable, or if such Warrant Shares may be sold under Rule 144 and the Company
is then in compliance with the current public information required under Rule 144, or if the Warrant Shares may be sold under
Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144
as to such Warrant Shares 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) then such Warrant Shares shall be issued free
of all legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4.1.


 


(d) Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser 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 instruments
representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.


 


4.2 Furnishing
of Information; Public Information.


 


(a) If
the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof, the Company agrees to
cause the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 60th calendar day
following the date hereof. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired,
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.


 






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(b) At
any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of
the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the
future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”)
then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial
liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an
amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s Securities on the day
of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty
days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public
information is no longer required for the Purchasers to transfer the Shares and the Warrant Shares pursuant to Rule 144. The payments
to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar
month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after
the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5%
per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue
actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.


 


4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the 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.


 


4.4 Securities
Laws Disclosure; Publicity. The Company shall (a) within four Business Days immediately following the date hereof, issue a
press release disclosing the material terms of the transactions contemplated hereby (the “Announcement Release”),
(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, and (c) no later than August 9, 2017, issue a press release disclosing the earnings and financial
performance of the Company for the fiscal quarter ending June 30, 2017 (the “Earnings Release”). From and after
the issuance of both the Announcement Release and the Earnings 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. In addition, effective upon the issuance of both the Announcement Release and the Earnings Release, the Company acknowledges
and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company,
any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any
of the Purchasers or any of their Affiliates on the other hand, which were entered into in connection with the transactions contemplated
by the Transaction Documents shall terminate. The Company and each Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and no Purchaser shall issue any such press release nor otherwise
make any such public statement without the prior consent of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case such Purchaser shall promptly provide the Company with prior notice
of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of
any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market,
without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection with 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 Purchasers with prior notice of such disclosure permitted under
this clause (b).


 






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


 


4.6 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to Section 4.4, 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 constitutes, or the Company
reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented to
the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
To the extent that the Company delivers any material, non-public information to a Purchaser without such Purchaser’s consent,
the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to Company, any of its
Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, and of
its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of,
such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that
any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding
the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.


 


4.7 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 the
promissory note described in Section 3.1(j) and other 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.


 


4.8 Indemnification
of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of
a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
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 such
Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants
or agreements made by the Company in this Agreement or in the other Transaction Documents 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 such Purchaser Parties, with respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser Parties may have with any such stockholder or any violations
by such Purchaser Parties of state or federal securities laws or any conduct by such Purchaser Parties 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, such Purchaser Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party seeking indemnity pursuant to this Agreement shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such
Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing,
(ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of counsel to the Purchaser Party, a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement
(y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party
in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8 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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4.9 Reservation
of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available
at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company
to issue Shares pursuant to this Agreement. Subject to the Charter Amendment, the Company undertakes to reserve and the Company
undertakes to continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of
Common Stock for the purpose of enabling the Company to issue Warrant Shares pursuant to any exercise of the Warrants.


 


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


 


4.11 Right
of First Refusal. Each Purchaser acknowledges that the offering contemplated by this Agreement is subject to a prior Right
of First Refusal (the “ROFR”), as described on Schedule 4.11 hereto, pursuant to a Securities Purchase
Agreement dated August 11, 2016 between the Company and the purchasers thereunder (each, a “ROFR Holder”).


 


4.12 Board
Representatives. On the Closing Date, the Required Purchasers shall be entitled to designate up to two individuals (each,
a “Board Designee”) to serve as a member of the Board of Directors; provided, however, that each
Board Designee must be eligible to serve as an “independent” director under applicable Nasdaq rules as determined
in good faith by the Board of Directors after consulting with Company Counsel. No later than the date of the 2017 Annual Meeting
of Stockholders of the Company, the Board of Directors shall appoint or nominate for election each Board Designee to the Board
of Directors, subject to satisfaction of all legal and governance requirements regarding service as a director of the Company.
The Purchasers, including the Required Purchasers, understand and acknowledge that the Company does not provide any representation
nor assurance that stockholders of the Company will vote for a Board Designee to the Board of Directors at the 2017 Annual Meeting
of Stockholders of the Company or any future Annual Meeting of Stockholders of the Company. The Purchasers, including the Required
Purchasers, understand and acknowledge that the Company does not provide any representation nor assurance that a Board Designee
will be re-nominated to the Board of Directors subsequent to the 2017 Annual Meeting of Stockholders of the Company. In the event
a Board Designee is not elected or ceases to serve as a director for any reason, the Required Purchasers shall not be entitled
to designate a replacement individual to fill such vacancy.


 






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


 


4.14 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that it will
not use the Securities for the purpose of covering a short position in the Common Stock that existed as of the date hereof. Each
Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf
or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s
securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement
are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain
the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and
the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained
in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time
that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described
in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company
in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser shall have any
duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.


 






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4.15 Legal
Representation. The Company and each Purchaser understands that Company Counsel has only rendered legal advice to the Company
and not to the Purchasers in connection with the transactions contemplated by this Agreement. Each Purchaser acknowledges that
it has had the opportunity and been advised by the Company to consult with independent counsel concerning entering into the transactions
contemplated by this Agreement.


 


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


 


4.17 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 Shares and the Warrant
Shares (subject, with respect to the issuance of the Warrant Shares upon exercise of the Warrants, to effecting the Charter Amendment)
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.


 


ARTICLE
V.

MISCELLANEOUS


 


5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before August 31, 2017; provided, however, that the right to terminate this Agreement
under this Section 5.1 shall not be available to a Purchaser whose failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of the transactions contemplated hereunder to occur on or before such date; provided,
further, 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. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent
fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.


 






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5.3 Entire
Agreement. The Transaction Documents, together with the exhibits, annexes, 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, annexes,
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 or email attachment as set forth on the signature pages attached hereto at or prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached hereto on
a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (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. To the extent that any notice provided pursuant to any Transaction Document
constitutes, or contains material, non-public information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.


 


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 the Company and the Required Purchasers 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. Any amendment effected in accordance with accordance with this Section 5.4
shall be binding upon each Purchaser and holder of Securities and the Company.


 


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


 


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


 






    	 	33	 



     


    

 


5.8 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.8 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 U.S. State of Delaware, 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 State of Delaware. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the State of Delaware for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or
Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding
is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party hereto shall
commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations
of the Company under Section 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing
party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such Action or Proceeding.


 


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.


 






    	 	34	 



     


    

 


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 such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the
case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid
to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).


 


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.


 


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 Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


5.16 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.


 






    	 	35	 



     


    

 


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


 


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.


 


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. 


 


(Signature
Pages Follow)


 






    	 	36	 



     


    







 


 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.


 





	NEONODE INC.


	 	Address for Notice:
	 	 	 	 
	By:	         	 	Email: lars.lindqvist@neonode.com
	 	
        Name: Lars Lindqvist

        Title:   Chief Financial Officer
	 	 




 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]


 






     


     


    







 


[NON-ROFR
PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]


 


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


 


Name
of Purchaser: ________________________________________________________


 


Signature
of Authorized Signatory of Purchaser: __________________________________


 


Name
of Authorized Signatory: ____________________________________________________


 


Title
of Authorized Signatory: ______________________________________________________


 


Email
Address of Authorized Signatory: ______________________________________________


 


Facsimile
Number of Authorized Signatory: ___________________________________________


 


Address
for Notice to Purchaser: ___________________________________________________


 


 


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


 


 


	Maximum
    Amount: $________________	Minimum
    Amount: $________________
	Maximum
    Shares: _________________	Minimum
    Shares: _________________
	Maximum
    Warrant Shares: __________________	Minimum
    Warrant Shares: __________________


 


EIN
Number: _______________________


 


[SIGNATURE
PAGES CONTINUE]


 






     


     


    







 


[ROFR
PURCHASER SIGNATURE PAGES TO


SECURITIES
PURCHASE AGREEMENT DATED AS OF AUGUST 2, 2017]


 


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


 


Name
of Purchaser: ________________________________________________________


 


Signature
of Authorized Signatory of Purchaser: __________________________________


 


Name
of Authorized Signatory: ____________________________________________________


 


Title
of Authorized Signatory: ______________________________________________________


 


Email
Address of Authorized Signatory: ______________________________________________


 


Facsimile
Number of Authorized Signatory: ___________________________________________


 


Address
for Notice to Purchaser: ___________________________________________________


 


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


 


 


	Participation
    Amount: $________________
	Participation
    Shares: _________________
	Participation
    Warrant Shares: __________________


 


EIN
Number: _______________________


 


[SIGNATURE
PAGES CONTINUE]


 






     


     


    







 


ANNEX
I


 


[NEONODE
INC. LETTERHEAD]


 


PURCHASE
NOTICE


 


TO:
[PURCHASER]


 


This
Purchase Notice is delivered to you pursuant to Section 2.4 of that certain Securities Purchase Agreement (the “Agreement”)
dated as of August 2, 2017 between Neonode Inc., a Delaware corporation (the “Company”) and the Purchasers thereto
including you.


 


Set
forth below are (i) the Subscription Amount which you are obligated to deliver to the Company at the Closing, (ii) the number
of Shares to be delivered by the Company to you pursuant to Section 2.2(a)(iii) of the Agreement, and (iii) the number of Warrant
Shares allocated to you pursuant to 2.2(a)(iv) of the Agreement.


 


	Subscription
    Amount: $________________
	Shares:
    _________________
	Warrant
    Shares: __________________


 


	NEONODE
    INC.	 
	 	 	 
	By:	 	 
	 	Name:
                                         Lars Lindqvist

                                           Title:
                                         Chief Financial Officer
	 




 






    	 	I-1	 



     


    

 


DISCLOSURE
SCHEDULES


 


SCHEDULE
3.1(a)


 


	Name	 	Jurisdiction
	 	 	 
	Neonode Technologies AB	 	Sweden
	 	 	 
	Neno User Interface Solutions AB	 	Sweden
	 	 	 
	Neonode Japan Inc.	 	Japan
	 	 	 
	Neonode Americas Inc.	 	U.S.
	 	 	 
	NEON Technology Inc.	 	U.S.
	 	 	 
	Neonode Korea Ltd.	 	South Korea
	 	 	 
	Neonode Taiwan Ltd.	 	Taiwan




 



    	 	S-1	 



     

    







 


SCHEDULE
4.11


 


4.11 Participation
in Future Financing.


 


(a) From
the date hereof until the date that is the 18 month anniversary of the Closing Date, upon any issuance by the Company or any of
its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units hereof
(a “Subsequent Financing”), each [Holder] shall have the right to participate in up to an amount of the Subsequent
Financing equal to 40% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and
price provided for in the Subsequent Financing; provided, this right shall not apply to any firm-commitment underwritten offering
of equity or equity-linked securities.


 


(b) At
least two (2) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each [Holder] a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such [Holder]
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon
the request of a [Holder], and only upon a request by such [Holder], for a Subsequent Financing Notice, the Company shall promptly,
but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such [Holder]. The Subsequent
Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and
shall include a term sheet or similar document relating thereto as an attachment.


 


(c) Any
[Holder] desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the second (2nd) Trading Day after all of the [Holders] have received the Pre-Notice that such [Holder]
is willing to participate in the Subsequent Financing, the amount of such [Holder]’s participation, and representing and
warranting that such [Holder] has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no such notice from a [Holder] as of such second (2nd) Trading Day, such [Holder] shall
be deemed to have notified the Company that it does not elect to participate.


 


(d) If
by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after all of the [Holders] have received the Pre-Notice, notifications
by the [Holders] of their willingness to participate in the Subsequent Financing (or to cause their designees to participate)
is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion
of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.


 


(e) If
by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after all of the [Holders] have received the Pre-Notice, the
Company receives responses to a Subsequent Financing Notice from [Holders] seeking to purchase more than the aggregate amount
of the Participation Maximum, each such [Holder] shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum. “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased on
the Closing Date by a [Holder] participating under this Section 4.11 and (y) the sum of the aggregate Subscription Amounts of
Securities purchased on the Closing Date by all [Holders] participating under this Section 4.11.


 






    	 	S-2	 



     

    

 


(f) The
Company must provide the [Holders] with a second Subsequent Financing Notice, and the [Holders] will again have the right of participation
set forth above in this Section 4.11, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated
for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the
initial Subsequent Financing Notice.


 


(g) The
Company and each [Holder] agree that if any [Holder] elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such [Holder] shall be required to agree to
any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination
of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of
such [Holder].


 


(h) Notwithstanding
anything to the contrary in this Section 4.11 and unless otherwise agreed to by such [Holder], the Company shall either confirm
in writing to such [Holder] that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such [Holder]
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the
Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to
the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such
[Holder], such transaction shall be deemed to have been abandoned and such [Holder] shall not be deemed to be in possession of
any material, non-public information with respect to the Company or any of its Subsidiaries.


 


 (i) Notwithstanding
the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance. 


 


 


S-3