Exhibit 10.1


 


SECURITIES PURCHASE AGREEMENT


 


THIS SECURITIES PURCHASE AGREEMENT (“Agreement”)
is made as of the 6th day of July, 2016 by and among Sevcon, Inc., a Delaware corporation (the “Company”), and
the Investors set forth on the signature pages affixed hereto (each an “Investor” and collectively the “Investors”).


 


Recitals


 


A.    The Company and the Investors
are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2)
under the Securities Act of 1933, as amended; and


 


B.    The Investors wish to
purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this
Agreement, (i) shares of the Company’s Common Stock, par value $0.10 per share (together with any securities into which such
shares may be reclassified, whether by merger, charter amendment or otherwise, the “Common Stock”) (the “Shares”),
and (ii) warrants in the form attached hereto as Exhibit A to purchase an aggregate number of shares of Common Stock equal
to 50% of the number of Shares (the “Warrant Shares”) at an exercise price of $10.00 per Warrant Share (subject
to adjustment) (the “Warrants”), the price of each unit of one Share and one-half Warrant to be $9.12; and


 


C.    Contemporaneous with
the sale of the Common Stock and Warrants, the parties hereto will execute and deliver a Registration Rights Agreement, in the
form attached hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to which the Company
will agree to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder, and applicable state securities laws.


 


In consideration of the mutual promises made herein
and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:


 


1.    Definitions. In
addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms
shall have the meanings set forth below:


 


“Affiliate” means, with respect
to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or
is under common Control with, such Person.


 


“Business Day” means a day,
other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.


 



     

     

    




“Closing Date” means at 10:00
a.m. Eastern Time on July 7, 2016 or such other date and time on which the Company and the Investors shall agree.


 


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


 


“Company’s Knowledge”
means the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.


 


“Confidential Information” means
trade secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, processes, procedures
and techniques, research and development information, computer program code, performance specifications, support documentation,
drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information).


 


“Control” (including the terms
“controlling”, “controlled by” or “under common control with”) means the possession, direct
or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.


 


“Effective Date” means the date
on which the initial Registration Statement is declared effective by the SEC.


 


“Effectiveness Deadline” means
the date on which the initial Registration Statement is required to be declared effective by the SEC under the terms of the Registration
Rights Agreement.


 


“Intellectual Property” means
all of the following: (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether
or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works;
(iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software (including but not
limited to data, data bases and documentation).


 


“Material Adverse Effect” means
a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business,
or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations
under the Transaction Documents.


 


“Material Contract” means any
contract, instrument or other agreement to which the Company or any Subsidiary is a party or by which it is bound and that has
been filed or was required to have been filed as an exhibit to the SEC Filings pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.


 



     

     

    




“Person” means an individual,
corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.


 


“Placement Agent” means Oppenheimer
& Co. Inc.


 


“Purchase Price” means []
Dollars ($[]).[1]


 


“Registration Statement” has
the meaning set forth in the Registration Rights Agreement.


 


“Regulation D” means Regulation
D as promulgated by the SEC under the 1933 Act.


 


“Required Investors” means (i)
prior to Closing, (A) each Investor which, together with its Affiliates, has agreed to purchase at least 25% of the Shares and
Warrants pursuant to this Agreement and (B) the Investors which, together with their respective Affiliates, have agreed to purchase
a majority of the Shares and Warrants pursuant to this Agreement, and (ii) from and after Closing, (A) each Investor which, together
with its Affiliates, beneficially owns (calculated as provided in Rule 13d-3 under the 1934 Act) at least 25% of the Securities
(without giving effect to any beneficial ownership limitation in the Warrants) and (B) the Investors which, together with their
respective Affiliates, beneficially own (calculated as provided in Rule 13d-3 under the 1934 Act) at least a majority of the Securities
(without giving effect to any beneficial ownership limitation in the Warrants) then beneficially owned by all of the Investors.


 


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


 


“SEC Filings” has the meaning
set forth in Section 4.6.


 


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


 


“Subsidiary” of any Person means
another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient
to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50%
or more of the equity interests of which) is owned directly or indirectly by such first Person.


 


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


 


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


 


___________________


[1] Insert aggregate Purchase
Price.


 



     

     

    




“Transaction Documents” means
this Agreement, the Warrants and the Registration Rights Agreement.


 


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


 


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


 


2.    Purchase and Sale
of the Shares and Warrants. Subject to the terms and conditions of this Agreement, on the Closing Date, each of the Investors
shall severally, and not jointly, purchase, and the Company shall sell and issue to the Investors, the Shares and Warrants in the
respective amounts set forth opposite the Investors’ names on the signature pages hereto in exchange for the Purchase Price
as specified in Section 3 below.


 


3.    Closing. The
Closing of the purchase and sale of the Shares and the Warrants shall take place at the offices of Locke Lord LLP, 111 Huntington
Avenue, Boston, Massachusetts 02199, or at such other location as the Company and the Investors shall mutually agree. At the Closing,
(a) the Company and each Investor shall deliver its respective deliverables to the other party(ies) pursuant to Sections 6.1 or
6.2 hereof, as the case may be, (b) each Investor shall deliver to the Company, via wire transfer to an account designated by the
Company, immediately available funds equal to such Investor’s proportionate share of the Purchase Price as set forth on the
signature pages hereto, (c) the Company shall provide irrevocable instructions to its transfer agent to issue to each Investor
its respective Shares either in certificated form or in book entry form in the Direct Registration System, as previously requested
in writing by such Investor, and (d) the Company shall deliver to each Investor a certificate representing such Investor’s
respective Warrants.


 


4.    Representations
and Warranties of the Company. The Company hereby represents and warrants to the Investors that, except as set forth in the
Disclosure Letter delivered by the Company to each Investor on or prior to the date hereof (the “Disclosure Letter”):


 


4. 1    Organization,
Good Standing and Qualification. The Company’s Subsidiaries are listed in Section 4.1 of the Disclosure Letter.
Each of the Company and its Subsidiaries is a corporation or other legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation and has all requisite corporate or similar power and authority to carry on
its business as now conducted and to own or lease its properties. Each of the Company and Sevcon USA, Inc. is duly qualified to
do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership
or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not
reasonably be expected to have a Material Adverse Effect.


 


4.2    Authorization.
The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization
of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation
for issuance) and delivery of the Securities. The Transaction Documents constitute the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally
and to general equitable principles and except as rights to indemnity and contribution may be limited by state or federal securities
laws or public policy.


 



     

     

    




4.3    Capitalization.
Section 4.3 of the Disclosure Letter sets forth, as of the date hereof (a) the authorized capital stock of the Company;
(b) the number of shares of capital stock issued and outstanding; (c) the number of shares of capital stock issuable pursuant to
the Company’s equity incentive plan; and (d) the number of shares of capital stock issuable and reserved for issuance pursuant
to securities (other than the Shares and the Warrants) exercisable for, or convertible into or exchangeable for any shares of capital
stock of the Company. All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of pre-emptive rights or similar statutory or contractual rights and
were issued in compliance with applicable state and federal securities law and any rights of third parties. All of the issued and
outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid, nonassessable
and free of pre-emptive rights, were issued in compliance with applicable state and federal securities law and any rights of third
parties and are owned by the Company, beneficially and of record, subject to no lien, encumbrance or other adverse claim. Except
as described in Section 4.3 of the Disclosure Letter, there are no outstanding warrants, options, convertible securities
or other rights, agreements or arrangements of any character under which the Company or any of its Subsidiaries is or may be obligated
to issue any equity securities of any kind and except as contemplated by this Agreement, neither the Company nor any of its Subsidiaries
is currently in negotiations for the issuance of any equity securities of any kind. Except for the Registration Rights Agreement,
there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind
among the Company and any of the securityholders of the Company relating to the securities of the Company held by them. Except
as provided in the Registration Rights Agreement, no Person has the right to require the Company to register any securities of
the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for
its own account or for the account of any other Person. The issuance and sale of the Securities hereunder will not obligate the
Company to issue shares of Common Stock or other securities to any other Person (other than the Investors) and will not result
in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security. The Company does not have outstanding
stockholder purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right to purchase
any equity interest in the Company upon the occurrence of certain events.


 


4.4    Valid Issuance.
The Shares have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued,
fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the
Investors), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.
The Warrants have been duly and validly authorized. Upon the due exercise of the Warrants, the Warrant Shares will be validly issued,
fully paid and non-assessable free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth
in the Transaction Documents or imposed by applicable securities laws and except for those created by the Investors. The Company
has reserved a sufficient number of shares of Common Stock for issuance upon the exercise of the Warrants.


 



     

     

    




4.5    Consents. The
authorization, execution, delivery and performance of the Transaction Documents and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than
filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and
federal securities laws which the Company undertakes to file within the applicable time periods. Subject to the accuracy of the
representations and warranties of each Investor set forth in Section 5 hereof, the Company has taken all action necessary to exempt
(i) the issuance and sale of the Securities, (ii) the issuance of the Warrant Shares upon due exercise of the Warrants, and (iii)
the other transactions contemplated by the Transaction Documents from the provisions of any stockholder rights plan or other “poison
pill” arrangement, any anti-takeover, business combination or control share law or statute binding on the Company or to which
the Company or any of its assets and properties may be subject and any provision of the Company’s Certificate of Incorporation
or Bylaws that is or could reasonably be expected to become applicable to the Investors as a result of the transactions contemplated
hereby, including without limitation, the issuance of the Securities and the ownership, disposition or voting of the Securities
by the Investors or the exercise of any right granted to the Investors pursuant to this Agreement or the other Transaction Documents.


 


4.6    Delivery of SEC
Filings; Business. The Company has made available to the Investors through the EDGAR system, true and complete copies of the
Company’s most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2015, and all other reports filed
by the Company pursuant to the 1934 Act since the filing of such Form 10-K and prior to the date hereof (each, as amended prior
to the date hereof, collectively, the “SEC Filings”). The SEC Filings are the only filings required of the Company
pursuant to the 1934 Act for such period. The Company and its Subsidiaries are engaged in all material respects only in the business
described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business
of the Company and its Subsidiaries, taken as a whole.


 


4.7    Use of Proceeds.
The net proceeds of the sale of the Shares and the Warrants shall be used by the Company for working capital and general corporate
purposes.


 


4.8    No Material Adverse
Change. Since December 31, 2015, except as identified and described in the SEC Filings or as described in Section 4.8
of the Disclosure Letter, there has not been:


 


(i)    any change
in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial
statements included in the Company’s Quarterly Report on 10-Q for the period ended April 2, 2016, except for changes in the
ordinary course of business which have not had and could not reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate;


 



     

     

    




(ii)    any declaration
or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or
any redemption or repurchase of any securities of the Company;


 


(iii)    any material
damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company or its Subsidiaries;


 


(iv)    any waiver,
not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it;


 


(v)    any satisfaction
or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or a Subsidiary, except in the ordinary
course of business and which is not material to the assets, properties, financial condition, operating results or business of the
Company and its Subsidiaries taken as a whole (as such business is presently conducted and as it is presently proposed to be conducted);


 


(vi)    any change
or amendment to the Company's Certificate of Incorporation or Bylaws, or material change to any Material Contract;


 


(vii)    any material
labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary;


 


(viii)    any material
transaction entered into by the Company or a Subsidiary other than in the ordinary course of business; or


 


(ix)    any other
event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect.


 


4.9   SEC Filings;
Section 12 Registration.


 


(a)At the time of filing thereof, the SEC Filings
complied as to form in all material respects with the requirements of the 1934 Act and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading.


 


(b)Each registration statement and any amendment
thereto filed by the Company since September 30, 2013 pursuant to the 1933 Act and the rules and regulations thereunder, as of
the date such statement or amendment became effective, complied as to form in all material respects with the 1933 Act and did not
contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein not misleading; and each prospectus filed pursuant to Rule 424(b) under the 1933 Act,
as of its issue date and as of the closing of any sale of securities pursuant thereto did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading.


 



     

     

    




(c)The Common Stock is registered pursuant
to Section 12(b) of the 1934 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 1934 Act nor has the Company received any notification
that the SEC is contemplating terminating such registration.


 


4.10 No Conflict, Breach, Violation or
Default. The authorization, execution, delivery and performance of the Transaction Documents by the Company and the authorization,
issuance and sale of the Securities will not (i) conflict with or result in a breach or violation of (a) any of the terms and provisions
of, or constitute a default under the Company’s Certificate of Incorporation or the Company’s Bylaws, both as in effect
on the date hereof (true and complete copies of which have been made available to the Investors through the EDGAR system), or (b)
any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction
over the Company, any Subsidiary or any of their respective assets or properties, or (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien, encumbrance
or other adverse claim 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 Material Contract, in the case
of (i)(b) and (ii) above, except for any such conflicts, violations, defaults or adverse claims that could not reasonably be expected
to result in a Material Adverse Effect, individually or in the aggregate.


 


4.11Tax Matters. The Company and each
Subsidiary has timely prepared and filed all tax returns required to have been filed by the Company or such Subsidiary with all
appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it. The charges, accruals and reserves
on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no
material unpaid assessments against the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment
of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority
except for any assessment which is not material to the Company and its Subsidiaries, taken as a whole. All taxes and other assessments
and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected
and paid to the proper governmental entity or third party when due. There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property. Except as described
on Section 4.11 of the Disclosure Letter, there are no tax sharing agreements or other such arrangements in effect between
the Company and any Subsidiary or other corporation or entity.


 


4.12Title to Properties. Except as disclosed
in the SEC Filings, the Company and each Subsidiary has good and marketable title to all real properties and all other properties
and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the SEC Filings,
the Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or currently planned to be made thereof by them.


 



     

     

    




4.13 Certificates, Authorities and Permits.
The Company and each Subsidiary possess adequate certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by it, the lack of which could not reasonably be expected to result in
a Material Adverse Effect, individually or in the aggregate, and neither the Company nor any Subsidiary has received any notice
of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely
to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.


 


4.14Labor Matters.


 


(a)Except as set forth in Section 4.14
of the Disclosure Letter, the Company is not a party to or bound by any collective bargaining agreements or other agreements with
labor organizations. The Company has not violated in any material respect any laws, regulations, orders or contract terms, affecting
the collective bargaining rights of employees, labor organizations or any laws, regulations or orders affecting employment discrimination,
equal opportunity employment, or employees’ health, safety, welfare, wages and hours, other than violations that could not
reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.


 


(b)(i) There are no labor disputes existing,
or to the Company's Knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any
other disruptions of or by the Company's employees, (ii) there are no claims pertaining to unfair labor practices or petitions
for election pending or, to the Company's Knowledge, threatened before the National Labor Relations Board or any other federal,
state or local labor commission relating to the Company's employees, and (iii) no demand for recognition or certification heretofore
made by any labor organization or group of employees is pending with respect to the Company.


 


(c) The Company is, and at all times since
September 30, 2014 has been, in compliance in all respects with all applicable laws respecting employment (including laws relating
to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages
and hours, and immigration and naturalization, other than any violation that could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate. There are no claims pending against the Company before the Equal Employment Opportunity
Commission or any other administrative body or in any court asserting any violation of Title VII of the Civil Rights Act of 1964,
the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance
barring discrimination in employment.


 



     

     

    




(d)Except as disclosed in the SEC Filings or
as described in Section 4.14 of the Disclosure Letter, the Company is not a party to, or bound by, any employment or other
contract or agreement that contains any severance, termination pay or change of control liability or obligation, including, without
limitation, any “excess parachute payment,” as defined in Section 280G(b) of the Internal Revenue Code.


 


4.15Intellectual Property.


 


(a)All Intellectual Property of the Company
and its Subsidiaries is currently in compliance with all legal requirements (including timely filings, proofs and payments of fees)
and is valid and enforceable. No Intellectual Property of the Company or its Subsidiaries which is necessary for the conduct of
Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be
conducted has been or is now involved in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no such
action is threatened. No patent of the Company or its Subsidiaries has been or is now involved in any interference, reissue, re-examination
or opposition proceeding.


 


(b)All of the licenses and sublicenses and
consent, royalty or other agreements concerning Intellectual Property which are necessary for the conduct of the Company’s
and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted to which
the Company or any Subsidiary is a party or by which any of their assets are bound (other than  generally commercially available,
non-custom, off-the-shelf software application programs having a retail acquisition price of less than $10,000 per license) (collectively,
“License Agreements”) are valid and binding obligations of the Company or its Subsidiaries that are parties
thereto and, to the Company’s Knowledge, the other parties thereto, enforceable in accordance with their terms, except to
the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws affecting the enforcement of creditors’ rights generally, and there exists no event or condition which
will result in a material violation or breach of or constitute (with or without due notice or lapse of time or both) a default
by the Company or any of its Subsidiaries under any such License Agreement.


 


(c)The Company and its Subsidiaries own or
have the valid right to use all of the Intellectual Property that is necessary for the conduct of the Company’s and each
of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted and for the ownership,
maintenance and operation of the Company’s and its Subsidiaries’ properties and assets, free and clear of all liens,
encumbrances, adverse claims or obligations to license all such owned Intellectual Property and Confidential Information, other
than licenses entered into in the ordinary course of the Company’s and its Subsidiaries’ businesses. The Company and
its Subsidiaries have a valid and enforceable right to use all third party Intellectual Property and Confidential Information that
is necessary for the conduct of the Company’s and its Subsidiaries’ respective businesses as currently conducted or
as currently proposed to be conducted.


 


(d)To the Company’s Knowledge, the conduct
of the Company’s and its Subsidiaries’ businesses as currently conducted does not infringe or otherwise impair or conflict
with (collectively, “Infringe”) any Intellectual Property rights of any third party or any confidentiality obligation
owed to a third party, and, to the Company’s Knowledge, the Intellectual Property and Confidential Information of the Company
and its Subsidiaries which are necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses
as currently conducted or as currently proposed to be conducted are not being Infringed by any third party. Except as specified
in Section 4.17 of the Disclosure Letter, there is no litigation or order pending or outstanding or, to the Company’s
Knowledge, threatened, that seeks to limit or challenge or that concerns the ownership, use, validity or enforceability of any
Intellectual Property or Confidential Information of the Company and its Subsidiaries and the Company’s and its Subsidiaries’
use of any Intellectual Property or Confidential Information owned by a third party, and, to the Company’s Knowledge, there
is no valid basis for the same.


 



     

     

    




(e)The consummation of the transactions contemplated
hereby and by the other Transaction Documents will not result in the alteration, loss, impairment of or restriction on the Company’s
or any of its Subsidiaries’ ownership or right to use any of the Intellectual Property or Confidential Information which
is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted
or as currently proposed to be conducted.


 


(f)The Company and its Subsidiaries have taken
reasonable steps to protect the Company’s and its Subsidiaries’ rights in their Intellectual Property and Confidential
Information. Each employee, consultant and contractor who has had access to Confidential Information which is necessary for the
conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed
to be conducted is subject to an obligation to maintain the confidentiality of such Confidential Information. Except under confidentiality
obligations, to the Company’s Knowledge, there has been no material disclosure of any of the Company’s or its Subsidiaries’
Confidential Information to any third party.


 


4.16Environmental Matters. Neither the
Company nor any Subsidiary is in violation in all material respects of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances
or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively,
“Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to
any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject
to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably
be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s
Knowledge, threatened investigation by any governmental authority that might lead to such a claim.


 


4.17Litigation. Except as described in
Section 4.17 of the Disclosure Letter, there are no pending actions, suits or proceedings against or affecting the Company,
its Subsidiaries or any of its or their properties; and no such actions, suits or proceedings have been threatened in writing or,
to the Company’s Knowledge, orally. Neither the Company nor any Subsidiary, nor any director or officer thereof in his capacity
as such, is or since November 1, 2013 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 Company’s Knowledge, there
is not pending or threatened, any investigation by the SEC involving the Company or any current or former director or officer of
the Company. The SEC 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 1933 Act or the 1934 Act.


 



     

     

    




4.18Financial Statements. The financial
statements included in each SEC Filing complied in all material respects with applicable accounting requirements and the rules
and regulations of the SEC with respect thereto as in effect at the time of filing (or to the extent corrected by a subsequent
restatement or amendment, at the time of such restatement or amendment) and present fairly, in all material respects, the consolidated
financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods
shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles
applied on a consistent basis (“GAAP”) (except as may be disclosed therein or in the notes thereto, and, in
the case of quarterly financial statements, as permitted by Form 10-Q under the 1934 Act).


 


4.19Insurance Coverage. The Company and
each Subsidiary maintains in full force and effect insurance coverage for the business being conducted and properties owned or
leased by the Company and each Subsidiary as set forth in Section 4.19 of the Disclosure Letter, and the Company reasonably believes
such insurance coverage to be adequate against all liabilities, claims and risks against which it is customary for comparably situated
companies to insure.


 


4.20 Exchange Listing. The Common
Stock is listed on the Nasdaq Capital Market. The Company has not, in the 12 months preceding the date hereof, received notice
from such Trading Market 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.


 


4.21Brokers and Finders. No Person will
have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or
upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of the Company, other than as described in Section 4.21 of the Disclosure
Letter.


 


4.22No Directed Selling Efforts or General
Solicitation. Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising
(as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.


 


4.23No Integrated Offering. 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 Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance
by the Company on Section 4(a)(2) for the exemption from registration for the transactions contemplated hereby or would require
registration of the Securities under the 1933 Act.


 



     

     

    




4.25Private Placement. Subject to the
accuracy of the Investors’ representations and warranties in Section 5 of this Agreement, the offer and sale of the Shares
to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act.


 


4.26Shell Company Status. The Company
is not an issuer identified in Rule 144(i)(1).


 


4.27 Questionable Payments.
Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of their respective current
or former directors, officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has on behalf
of the Company or any Subsidiary or in connection with their respective businesses: (a) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments
to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company or any Subsidiary;
or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.


 


4.28Transactions with Affiliates. Except
as disclosed in the SEC Filings, none of the officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than as holders
of restricted stock or stock options, and for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any
entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.


 


4.29Internal Controls. The Company is
in material compliance with the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the Company. 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 has established disclosure controls and procedures (as defined in 1934 Act Rules 13a-15(e) and 15d-15(e)) for the Company
and designed such disclosure controls and procedures to ensure that material information relating to the Company, including the
Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which
the Company’s most recently filed periodic report under the 1934 Act, as the case may be, is being prepared. The Company
has, except as disclosed in Section 4.29 of the Disclosure Letter, established internal control over financial reporting
(as defined in 1934 Act Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with GAAP. The Company's certifying officers have
evaluated the effectiveness of the Company's disclosure controls and procedures and the Company’s internal control over financial
reporting (collectively, “internal controls”) as of the end of the period covered by the most recently filed
quarterly report under the 1934 Act, in the case of disclosure controls and procedures, or annual report under the 1934 Act, in
the case of internal controls (each such date, an “Evaluation Date”). The Company presented in its most recently
filed quarterly report and annual report under the 1934 Act the conclusions of the certifying officers about the effectiveness
of such disclosure controls and procedures and internal controls, respectively, based on their evaluations as of the applicable
Evaluation Date. Except as disclosed in the SEC Filings or in Section 4.29 of the Disclosure Letter, since the date of the
Company’s most recent quarterly report under the 1934 Act, there have been no significant changes in the Company's internal
controls or, to the Company's Knowledge, in other factors that could significantly affect the Company's internal controls. The
Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with
GAAP and the applicable requirements of the 1934 Act.


 



     

     

    




4.30Disclosures. Neither the Company nor
any Person acting on its behalf has provided the Investors (other than any Investor that is a director or officer of the Company)
or their agents or counsel with any information that constitutes or might constitute material, non-public information, other than
the terms of the transactions contemplated hereby. The written materials delivered to the Investors in connection with the transactions
contemplated by the Transaction Documents do not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.


 


4.31Investment Company. The Company is
not required to be registered as, and immediately following the Closing will not be required to register as, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.


 


5.    Representations and
Warranties of the Investors. Each of the Investors hereby severally, and not jointly, represents and warrants to the Company
that:


 


5.1Organization and Existence. Such Investor
is a validly existing corporation, limited partnership or limited liability company and has all requisite corporate, partnership
or limited liability company power and authority to invest in the Securities pursuant to this Agreement.


 


5.2Authorization. The execution, delivery
and performance by such Investor of the Transaction Documents to which such Investor is a party have been duly authorized and each
will constitute the valid and legally binding obligation of such Investor, enforceable against such Investor in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors’ rights generally.


 



     

     

    




5.3Purchase Entirely for Own Account.
The Securities to be received by such Investor hereunder will be acquired for such Investor’s own account, not as nominee
or agent, and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act, and such Investor
has no present agreement, understanding or intention of selling, granting any participation in, or otherwise distributing the same
in violation of the 1933 Act without prejudice, however, to such Investor’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 Investor to hold the Securities for any period of time. Such Investor is not
a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in a business that would require it to be so registered.


 


5.4Investment Experience. Such Investor
acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and
experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated
hereby.


 


5.5Disclosure of Information. Such Investor
has had an opportunity to receive all information related to the Company requested by it and to ask questions of and receive answers
from the Company regarding the Company, the Subsidiaries and their respective businesses and the terms and conditions of the offering
of the Securities. Such Investor acknowledges receipt of copies of the SEC Filings. Neither such inquiries nor any other due diligence
investigation conducted by such Investor shall modify, limit or otherwise affect such Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.


 


5.6Restricted Securities. Such Investor
understands that the Securities are characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws
and applicable regulations such securities may be resold without registration under the 1933 Act only in certain limited circumstances.


 


5.7Legends. Such Investor understands
that, except as provided in Section 7.4 hereof, certificates evidencing the Securities may bear the following or any similar legend
(or, if the Securities are issued in book entry, rather than certificated, form, they shall be subject to a comparable designation):


 


(a)“The issuance of the securities represented
hereby has not been registered with the Securities and Exchange Commission in reliance upon an exemption from registration under
the Securities Act of 1933, as amended, and, accordingly, may not be transferred unless (i) pursuant to an effective registration
statement under the Securities Act of 1933, as amended, (ii) 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.”


 



     

     

    




(b)If required by the authorities of any state
in connection with the issuance or sale of the Securities, the legend required by such state authority.


 


5.8Accredited Investor. Such Investor
is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.


 


5.9No General Solicitation. Such Investor
did not learn of the investment in the Securities as a result of any general solicitation or general advertising.


 


5.10Brokers and Finders. No Person will
have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or
upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of such Investor.


 


5.11Prohibited Transactions. Since the
earlier of (a) such time as such Investor was first contacted by the Company or any other Person acting on behalf of the Company
regarding the transactions contemplated hereby or (b) thirty (30) days prior to the date hereof, neither such Investor nor any
Affiliate of such Investor which (x) had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating
to such Investor’s investments or trading or information concerning such Investor’s investments, including in respect
of the Securities, or (z) is subject to such Investor’s review or input concerning such Affiliate’s investments or
trading (collectively, “Trading Affiliates”) has, directly or indirectly, effected or agreed to effect any short
sale, whether or not against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under
the 1934 Act) with respect to the Common Stock, granted any other right (including, without limitation, any put or call option)
with respect to the Common Stock or with respect to any security that includes, relates to or derived any significant part of its
value from the Common Stock or otherwise sought to hedge its position in the Securities (each, a “Prohibited Transaction”).
Prior to the earliest to occur of (i) the termination of this Agreement, (ii) the Effective Date or (iii) the Effectiveness
Deadline, such Investor shall not, and shall cause its Trading Affiliates not to, engage, directly or indirectly, in a Prohibited
Transaction. Such Investor acknowledges that the representations, warranties and covenants contained in this Section 5.11 are being
made for the benefit of the Investors as well as the Company and that each of the other Investors shall have an independent right
to assert any claims against such Investor arising out of any breach or violation of the provisions of this Section 5.11.


 


5.12Placement Agent. Such Investor understands
that the Placement Agent has acted solely as the agent of the Company in the placement of the Securities, and that the Placement
Agent makes no representation or warranty with regard to the merits of this transaction or as to the accuracy of any information
such Investor may have received in connection therewith. Such Investor acknowledges that it has not relied on any information or
advice furnished by or on behalf of the Placement Agent.


 



     

     

    




6. Conditions to Closing.


 


6.1Conditions to the Investors’ Obligations.
The obligation of each Investor to purchase the Shares and the Warrants at the Closing is subject to the fulfillment to such Investor’s
satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by such Investor (as to
itself only):


 


(a)The representations and warranties made
by the Company in Section 4 hereof qualified as to materiality shall be true and correct as of the date hereof and as of the Closing
Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation
or warranty shall be true and correct as of such earlier date, and, the representations and warranties made by the Company in Section
4 hereof not qualified as to materiality shall be true and correct in all material respects as of the date hereof and as of the
Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as of such earlier date. The Company shall have performed
in all material respects all obligations and covenants herein required to be performed by it on or prior to the Closing Date.


 


(b)The Company shall have obtained any and
all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale
of the Securities and the consummation of the other transactions contemplated by the Transaction Documents, all of which shall
be in full force and effect.


 


(c)The Company shall have executed and delivered
the Registration Rights Agreement.


 


(d)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.


 


(e)No stop order or suspension of trading shall
have been imposed by the Nasdaq Capital Market, the SEC or any other governmental or regulatory body with respect to public trading
in the Common Stock.


 


(f)The Company shall have delivered a Certificate,
executed on behalf of the Company by its Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in subsections (a), (b), [(d), (e) and (f)] of this Section 6.1.


 


(g)The Company shall have delivered a Certificate,
executed on behalf of the Company by its Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board
of Directors of the Company approving the Transaction Documents and the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities, certifying the current versions of the Certificate of Incorporation and
Bylaws of the Company and certifying as to the signatures and authority of persons signing the Transaction Documents and related
documents on behalf of the Company.


 



     

     

    




(h)The Investors shall have received an opinion
from Locke Lord LLP, the Company's counsel, dated as of the Closing Date, in form and substance reasonably acceptable to the Investors
and addressing such legal matters as the Investors may reasonably request.


 


6.2    Conditions to Obligations
of the Company. The Company's obligation to sell and issue the Shares and the Warrants at the Closing is subject to the fulfillment
to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the
Company:


 


(a)The representations and warranties made
by the Investors in Section 5 hereof, other than the representations and warranties contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7,
5.8 and 5.9 (the “Investment Representations”), shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made
on and as of said date. The Investment Representations shall be true and correct in all respects when made, and shall be true and
correct in all respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The
Investors shall have performed in all material respects all obligations and covenants herein required to be performed by them on
or prior to the Closing Date.


 


(b)The Investors shall have executed and delivered
the Registration Rights Agreement.


 


(c)The Investors shall have delivered the Purchase
Price to the Company.


 


6.3    Termination
of Obligations to Effect Closing; Effects.


 


(a)The obligations of the Company, on the one
hand, and the Investors, on the other hand, to effect the Closing shall terminate as follows:


 


(i)Upon the mutual written consent
of the Company and the Investors;


 


(ii) By the Company if any of
the conditions set forth in Section 6.2 shall have become incapable of fulfillment, and shall not have been waived by the Company;


 


(iii)By an Investor (with respect
to itself only) if any of the conditions set forth in Section 6.1 shall have become incapable of fulfillment, and shall not have
been waived by the Investor; or


 


(iv)By either the Company or any
Investor (with respect to itself only) if the Closing has not occurred on or prior to July 18, 2016;


 


provided, however, that, except in the case of clause (ii) or (iii)
above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted
in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.


 



     

     

    




(b)In the event of termination by the Company
or any Investor of its obligations to effect the Closing pursuant to this Section 6.3, written notice thereof shall forthwith be
given to the other Investors by the Company and the other Investors shall have the right to terminate their obligations to effect
the Closing upon written notice to the Company and the other Investors. Nothing in this Section 6.3 shall be deemed to release
any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction
Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement
or the other Transaction Documents.


 


7.    Covenants and Agreements
of the Company.


 


7.1Reservation of Common Stock. The Company
shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose
of providing for the exercise of the Warrants, such number of shares of Common Stock as shall from time to time equal the number
of shares sufficient to permit the exercise of the Warrants issued pursuant to this Agreement in accordance with their respective
terms.


 


7.2No Conflicting Agreements. The Company
will not take any action, enter into any agreement or make any commitment that would conflict or interfere in any material respect
with the Company’s obligations to the Investors under the Transaction Documents.


 


7.3 Listing of Common Stock. The
Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on the Trading
Market on which it is currently listed, and concurrently with or prior to the Closing, the Company shall apply to list or quote
all of the Shares on such Trading Market and promptly secure the listing of all of the Shares on such Trading Market. The Company
further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such
application all of the Shares, and will take such other action as is necessary to cause all of the Shares to be listed 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. The obligations of the Company under this Section 7.3 shall terminate and be of no further
force and effect on the date on which the Company’s obligations under the Registration Rights Agreement to register or maintain
the effectiveness of any registration covering the Registrable Securities (as such term is defined in the Registration Rights Agreement)
shall terminate.


 



     

     

    




7.4Removal of Legends. In connection with
any sale or disposition of the Securities by an Investor pursuant to Rule 144 or pursuant to any other exemption under the 1933
Act such that the purchaser acquires freely tradable shares and upon compliance by the Investor with the requirements of this Agreement,
the Company shall or, in the case of Common Stock, shall cause the transfer agent for the Common Stock (the “Transfer
Agent”) to issue replacement certificates representing the Securities sold or disposed of without restrictive legends.
Upon the earlier of (i) registration for resale pursuant to the Registration Rights Agreement or (ii) the Shares becoming freely
tradable by a non-affiliate (without the need for current public information) pursuant to Rule 144 the Company shall (A) deliver
to the Transfer Agent irrevocable instructions that the Transfer Agent shall reissue a certificate representing shares of Common
Stock without legends upon receipt by such Transfer Agent of the legended certificates for such shares, together with either (1)
a customary representation by the Investor of compliance with Rule 144 as applicable to the shares of Common Stock represented
thereby or (2) a statement by the Investor that such Investor has sold the shares of Common Stock represented thereby in accordance
with the Plan of Distribution contained in the Registration Statement, and (B) cause its counsel to deliver to the Transfer Agent
one or more blanket opinions to the effect that the removal of such legends in such circumstances may be effected under the 1933
Act. From and after the earlier of such dates, upon an Investor’s written request, the Company shall promptly cause certificates
evidencing the Investor’s Securities to be replaced with certificates which do not bear such restrictive legends, and Warrant
Shares subsequently issued upon due exercise of the Warrants shall not bear such restrictive legends provided the provisions of
either clause (i) or clause (ii) above, as applicable, are satisfied with respect to such Warrant Shares. When the Company is required
to cause an unlegended certificate to replace a previously issued legended certificate, if: (1) the unlegended certificate is not
delivered to an Investor within three (3) Business Days of submission by that Investor of a legended certificate and supporting
documentation to the Transfer Agent as provided above and (2) prior to the time such unlegended certificate is received by the
Investor, the Investor, or any third party on behalf of such Investor or for the Investor’s account, purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of shares represented
by such certificate (a “Buy-In”), then the Company shall pay in cash to the Investor (for costs incurred either
directly by such Investor or on behalf of a third party) the amount by which the total purchase price paid for Common Stock as
a result of the Buy-In (including brokerage commissions, if any) exceeds the proceeds received by such Investor as a result of
the sale to which such Buy-In relates. The Investor shall provide the Company written notice indicating the amounts payable to
the Investor in respect of the Buy-In.


 


7.5    Subsequent
Equity Sales; Registration Statements.


 


(a)From the date hereof until ninety (90) days
after the Closing Date, without the consent of the Required Investors, neither the Company nor any Subsidiary shall issue shares
of Common Stock or Common Stock Equivalents. Notwithstanding the foregoing, the provisions of this Section 7.5(a) shall not apply
to (i) the issuance of the Warrant Shares, (ii) the issuance of Common Stock or Common Stock Equivalents upon the conversion or
exercise of any securities of the Company or a Subsidiary outstanding on the date hereof, provided that the terms of such security
are not amended after the date hereof to decrease the exercise price or increase the Common Stock or Common Stock Equivalents receivable
upon the exercise, conversion or exchange thereof, or (iii) the issuance of any Common Stock or Common Stock Equivalents pursuant
to any Company equity incentive plan approved by the Company’s shareholders and in place on the date hereof.


 



     

     

    




(b)The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of the 1933 Act) that will be integrated with the offer
or sale of the Securities in a manner that would require the registration under the 1933 Act of the sale of the Securities to the
Investors, or that will 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 stockholder approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.


 


(c)The Company shall not, from the date hereof
until after the Effective Date, prepare and file with the SEC a registration statement relating to an offering for its own account
or the account of others under the 1933 Act of any of its equity securities, other than any registration statement or post-effective
amendment to a registration statement (or supplement thereto) relating to the Company’s employee benefit plans registered
on Form S-8 or, in connection with an acquisition, on Form S-4.


 


7.6Equal Treatment of Investors. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes,
this provision constitutes a separate right granted to each Investor by the Company and negotiated separately by each Investor,
and is intended for the Company to treat the Investors as a class and shall not in any way be construed as the Investors acting
in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.


 


8.    Survival and Indemnification.


 


8.1Survival. The representations, warranties,
covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated by this Agreement.


 


8.2 Indemnification. The Company agrees
to indemnify and hold harmless each Investor and its Affiliates and their respective directors, officers, trustees, members, managers,
employees and agents, and their respective successors and assigns, from and against any and all losses, claims, damages, liabilities
and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection
with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement
thereof) (collectively, “Losses”) to which such Person may become subject as a result of any breach of representation,
warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will
reimburse any such Person for all such amounts as they are incurred by such Person.


 



     

     

    




8.3Conduct of Indemnification Proceedings.
Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim (including
having the exclusive right to settle or compromise such claim) with counsel reasonably satisfactory to the indemnified party; provided
that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying
party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim
and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written
advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims
(in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at
the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf
of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall
materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying
party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate
firm of attorneys at any time for all such indemnified parties.


 


9.    Miscellaneous.


 


9.1Successors and Assigns. This Agreement
may not be assigned by a party hereto without the prior written consent of the Company or the Investors, as applicable, provided,
however, that an Investor may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some or all of its Securities in a transaction complying with applicable securities laws without the prior written
consent of the Company or the other Investors, provided that such assignee agrees in writing to be bound, with respect to such
Securities, by the provisions of the Transaction Documents that apply to the “Investors”. The provisions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.


 


9.2 Counterparts; Faxes. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. 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 this Agreement
(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.


 



     

     

    




9.3Titles and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this
Agreement.


 


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


 


9.5Expenses. 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 (including, without limitation, any fees required
for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by an Investor), stamp
taxes and other taxes and duties levied in connection with the delivery of any Securities to the Investors.


 


9.6 Amendments and Waivers. Any term
of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of the Company and the Required Investors. Any
amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under
this Agreement at the time outstanding, each future holder of all such Securities, and the Company.


 


9.7 Publicity. Except as set forth
below, no public release or announcement concerning the transactions contemplated hereby shall be issued by the Company or the
Investors without the prior consent of the Company (in the case of a release or announcement by the Investors) or the Investors
(in the case of a release or announcement by the Company) (which consents shall not be unreasonably withheld), except as such release
or announcement may be required by law or the applicable rules or regulations of any securities exchange or securities market,
in which case the Company or the Investors, as the case may be, shall allow the Investors or the Company, as applicable, to the
extent reasonably practicable in the circumstances, reasonable time to comment on such release or announcement in advance of such
issuance. By 9:30 a.m. (New York City time) on the Trading Day immediately following the Closing Date, the Company shall issue
a press release disclosing the consummation of the transactions contemplated by this Agreement. No later than the fourth trading
day following the Closing Date, the Company will file a Current Report on Form 8-K attaching the press release described in the
foregoing sentence as well as copies of the Transaction Documents.


 



     

     

    




9.8  Severability. Any provision
of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as
if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable
in any respect.


 


9.9 Entire Agreement. This Agreement,
including the Exhibits and the Disclosure Schedules, and the other Transaction Documents constitute the entire agreement among
the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter hereof and thereof.


 


9.10Construction. 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.


 


9.11Further Assurances. The parties shall
execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to
carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.


 


9.12 Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State
of New York without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern
District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and
the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each
of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY
JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.


 



     

     

    




9.13 Independent Nature of Investors’
Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any
other Investor under any Transaction Document. The decision of each Investor to purchase Securities pursuant to the Transaction
Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction Document,
and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Investors 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 Investor acknowledges
that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights
under the Transaction Documents. Each Investor 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 Investor to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that each of
the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with multiple Investors
and not because it was required or requested to do so by any Investor.


 


 


[Signature pages follow]


 


 


 


 


 


 


 


 


 


 






     

     

    

 


IN WITNESS WHEREOF, the parties have executed this
Securities Purchase Agreement or caused their duly authorized officers to execute this Securities Purchase Agreement as of the
date first above written.


 


	SEVCON, inc.	 	Address for Notice:
	 	 	Sevcon, Inc.
	 	 	 	155 Northboro Road
	By:	 /s/ Paul N. Farquhar	 	Southborough, MA 01772
	 	Paul N. Farquhar	 	Attn:  Chief Financial Officer
	 	Vice President and Chief Financial Officer	 	Facsimile number: (508) 281-5341


 


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


 


Locke Lord LLP


111 Huntington Avenue


Boston, MA 02199


Attn: Matthew C. Dallett


Facsimile number: (617) 227-4420


 


 


 


 


 


 


 


 


 


 


 






     

     

    

 


INVESTOR SIGNATURE PAGES TO


 


SEVCON SECURITIES
PURCHASE AGREEMENT[2]


 


 


 


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 Investor: _____________________________________________________________


 


Signature of Authorized Signatory of Investor: ______________________________________


 


Name of Authorized Signatory: ____________________________________________________


 


Title of Authorized Signatory: _____________________________________________________


 


Facsimile Number of Authorized Signatory: __________________________________________


 


EIN: _______________________


 


 


Address for Notice to Investor:


 


 


 


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


 


 


 


Subscription Amount: $_________________


 


No. of Shares: _________________


 


No. of Warrants: _________________


 


 


___________________


[2] A Form W-9 (or W-8 for non-U.S. investors)
must also be provided by each investor.