Exhibit
10.1





 


SECURITIES
PURCHASE AGREEMENT


 


This
Securities Purchase Agreement (this “Agreement”) is dated as
of April 17, 2020, between Digital Ally, Inc., a Nevada corporation (the “Company”), and the purchasers identified
on the signature pages hereto (including each successors and assigns, 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/or Rule 506 promulgated thereunder, the Company desires to issue and
sell to the Purchasers, and the Purchasers, desire to purchase from the Company, Securities of the Company as more fully described
in this Agreement;


 


WHEREAS,
the Company desires to fulfill in part its obligation to deliver a portion of the Notes (Unrestricted Notes), and a portion of
the Conversion Shares (Unrestricted Conversion Shares), which will be registered pursuant to the Company’s effective shelf
registration statement on Form S-3, File No. 333-225227 (the “Shelf Registration Statement”) under the Securities
Act in an aggregate sum not to exceed $500,000;


 


WHEREAS,
at the Closing, the Company will deliver to each Purchaser (a) two (2) Notes, (i) one (1) Unrestricted Note (which Unrestricted
Note and the Unrestricted Conversion Shares issuable thereunder will be registered pursuant to a Prospectus and Prospectus Supplement
relating to the Shelf Registration Statement) and (ii) one (1) Restricted Note (which Restricted Note and the Conversion Shares
issuable thereunder will be registered pursuant to a new registration statement on Form S-1, which the Company is required to
file, as more fully set forth herein and in accordance with the Registration Rights Side Letter (the “Required Registration
Statement”)) and (b) a Warrant to purchase shares of Common Stock (which Warrant Shares issuable thereunder will be
registered pursuant to Required Registration Statement);


 


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: (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the Transaction Documents (as defined herein), and (b) the following terms
have the meanings set forth in this Section 1.1:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.6.


 


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


 




    	 



    	 



    

 


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


 


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


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which the Federal Reserve Bank of New York is not open for business.


 


“Closing”
means the Closing of the purchase and sale of the Securities pursuant to Section 2.2.


 


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


 


“Commission”
means the United States 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.


 


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


 


“Conversion
Shares” shall mean the Restricted Conversion Shares and the Unrestricted Conversion Shares.


 


“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(q).


 


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


 




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“Exempt
Issuance” means the issuance of (a)
shares of Common Stock or options to employees, officers, directors, advisors or independent contractors of the Company pursuant
to any stock or option plan duly adopted for such purpose, (b) shares of Common Stock, warrants or options to advisors or independent
contractors of the Company for compensatory purposes, (c) securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date hereof, provided that such securities have not been amended since the date hereof to increase the number
of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (d) securities issuable
pursuant to any contractual anti-dilution obligations of the Company in effect as of the date hereof, provided that such obligations
have not been materially amended since the date of hereof, and (e) securities issued pursuant to acquisitions or any other strategic
transactions approved by the Board of Directors, provided that any such issuance shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing
in securities.


 


“Exercise
Price” shall have the meaning ascribed to such term in the Warrants.


 


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


 


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


 


“Indebtedness”
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.


 


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


 


“Intellectual
Property Security Agreement” means that certain Intellectual
Property Security Agreement required to be delivered pursuant to Section 2.3 of this Agreement, in the form attached hereto
as Exhibit A.


 


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


 


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


 


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


 


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


 




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


 


“Note”
and “Notes” mean the Unrestricted Notes and the Restricted Notes


 


“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.


 


“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.13(b).


 


“Principal
Amount” means, as to each Purchaser, the amount set forth below each Purchaser’s signature block on the signature
pages hereto next to the heading “Principal Amount,” in United States Dollars, which shall equal each Purchaser’s
Subscription Amount.


 


“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.


 


“Prohibited
Short Sale” shall have the meaning ascribed to such term in Section 4.12.


 


“Prospectus”
means the final prospectus filed for the Shelf Registration Statement.


 


“Prospectus
Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with
the Commission and delivered by the Company to each Purchaser at the Closing in connection with the Shelf Registration Statement.


 


“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Purchaser”
or “Purchasers” shall have the meaning ascribed to such terms in the preamble, provided that if there
is only one Purchaser then all references to Purchasers in this Agreement shall mean a single Purchaser.


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.9.


 


“Registration
Rights Side Letter” means the letter
in the form of Exhibit B attached hereto, which sets forth certain registration rights with respect to the Securities.


 


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


 




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“Required
Registration Statement” shall have the meaning ascribed to such term in the Recitals.


 


“Restricted
Conversion Shares” means the Conversion Shares issuable upon conversion of the Restricted Notes and which are required
to be registered pursuant to the Required Registration Statement.


 


“Restricted
Note” and “Restricted Notes” mean the Senior Secured Convertible Promissory Notes due, subject to
the terms therein, twelve (12) months from the date of issuance, issued by the Company to the Purchasers hereunder, in the form
of Exhibit C attached hereto and which are required to be registered under the Required Registration Statement.


 


“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Conversion Shares or Warrant Shares issuable upon conversion
or exercise in full of the Notes or Warrants, respectively (including Conversion Shares issuable as payment of interest on the
Notes), ignoring any conversion or exercise limits set forth therein, and assuming that the Conversion Price and Exercise Price
is at all times on and after the date of determination 100% of the Conversion Price or Exercise Price on the Trading Day immediately
prior to the date of determination.


 


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


 


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


 


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


 


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


 


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


 


“Security
Agreement” means the Security Agreement dated on or about the date hereof by and among the Company, the Subsidiaries,
and the Purchasers as hereinafter amended and/or supplemented altogether with all exhibits, schedules and annexes to such Security
Agreement, pursuant to which all Liabilities and Indebtedness of the Company to the Purchasers under the Transaction Documents
are secured by the Collateral which security interest in the Collateral shall be perfected by the Lenders UCC-1, filed with the
Secretary of State of the State of Nevada, to the extent perfectable by the filing of a UCC 1 Financing Statement, or if applicable,
a UCC 3 Financing Statement Amendment and such other documents and instruments related thereto, which Security Agreement is annexed
hereto as Exhibit D.


 




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“Shelf
Registration Statement” shall have the meaning ascribed to such term in the Recitals.


 


“Shell
Company” means an entity that fits within the definition of “shell company” under (a) Rule 12b-2, promulgated
under the Exchange Act, and (b) Rule 144.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act.


 


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


 


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


 


“Subsidiary
Guarantee” means that certain Subsidiary Guarantee required
to be delivered pursuant to Section 2.3 of this Agreement, in the form attached hereto as Exhibit E.


 


“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 American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select Market;
the New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Notes, the Warrants, the Security Agreement, the Intellectual Property Security
Agreement, the Subsidiary Guarantees, the Perfection Certificate, the Transfer Agent Instruction Letter, and all exhibits and
schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.


 


“Transfer
Agent” means Action Stock Transfer Corporation, the current transfer agent of the Company, with a mailing address of
2469 E. Fort Union Blvd, Suite 214, Salt Lake City, Utah 84121 and a phone number of 801-274-1088, attention: Justeene Blankenship,
and any successor transfer agent of the Company.


 


“Transfer
Agent Instruction Letter” means the letter from the Company to the Transfer Agent which instructs the Transfer Agent
to reserve the Conversion Shares and Warrant Shares for issuance pursuant to the Transaction Documents, in the form of Exhibit
F attached hereto.


 




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“Unrestricted
Conversion Shares” means the Conversion Shares issuable upon conversion of the Unrestricted Notes and which are required
to be registered pursuant to the Shelf Registration Statement.


 


“Unrestricted
Note” and “Unrestricted Notes” mean the Senior Secured Convertible Promissory Notes due, subject
to the terms therein, twelve (12) months from the date of issuance, issued by the Company to the Purchasers hereunder, in the
form of Exhibit G attached hereto and which are required to be registered under the Shelf Registration Statement.


 


“Warrants”
means the warrants to purchase one million two hundred thirty-seven thousand six hundred twenty-four (1,237,624) shares
of Common Stock in the form attached as Exhibit H to this Agreement.


 


“Warrant
Shares” shall have the meaning ascribed to such term in the Warrants.


 


ARTICLE
II.


PURCHASE
AND SALE


 


2.1
Purchase. On the Closing Date, subject to the following paragraph and upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this Agreement by the applicable parties hereto, the
Purchasers for such amount set forth opposite each such Purchaser’s name in column (3) of the Schedule of Purchasers will
purchase, severally and not jointly, an aggregate of up to One Million, Five Hundred Thousand Dollars ($1,500,000) in Subscription
Amount corresponding to an aggregate of up to One Million, Six Hundred and Sixty-Six Thousand, Six Hundred and Sixty-Six Dollars
($1,666,666) in Principal Amount of Notes and the Warrants (the “Closing”).


 


2.2
Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with
the execution and delivery of this Agreement by the applicable parties hereto, the Company agrees to sell, and each Purchaser,
agrees to purchase, such Purchaser’s Closing Subscription Amount as set forth on the signature page hereto executed by such
Purchaser. At the Closing, each such Purchaser shall deliver to the Company, via wire transfer to an account designated by the
Company, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser, and the Company shall deliver to such Purchaser its Notes, as determined pursuant to Section 2.3(a),
and the Company and such Purchaser shall deliver the other items set forth in Section 2.3 deliverable at the Closing. Upon satisfaction
of the covenants and conditions set forth in Sections 2.3 and 2.4 for the Closing, the Closing shall occur at the offices of Sullivan
& Worchester LLP or such other location as the parties shall mutually agree, and may
by agreement be undertaken remotely by electronic exchange of Closing documentation.


 




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2.3
Deliveries.


 


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


 


(i)
this Agreement duly executed by the Company;


 


(ii)
a Restricted Note and an Unrestricted Note with the applicable Principal Amount equal to the
respective amounts set forth opposite such Purchaser’s name in column (2) on the Schedule of Purchasers,
registered in the name of the Purchaser;


 


(iii)
Warrants exercisable for such number of shares
of Common Stock as is set forth across from such Purchaser’s name in column (4) of the Schedule of Purchasers being purchased
by such Purchaser at the Closing pursuant to this Agreement.


 


(iv)
the Security Agreement, duly executed by the
Company and UCC-1s;


 


(v)
the Intellectual Property Security Agreement and Subsidiary Guarantee, each duly executed by the Company and each Subsidiary of
the Company, as applicable;


 


(vi)
Perfection certificate executed by the Company; and


 


(vii)
the Transfer Agent Instruction Letter duly executed by the Company and the Transfer Agent.


 


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


 


(i)
this Agreement duly executed by the Purchaser;


 


(ii)
the Purchaser’s Subscription Amount as to the Closing by wire transfer to the account specified in writing by the Company;


 


(iii)
the Security Agreement, duly executed by each
Purchaser; and


 


(iv)
the Intellectual Property Security Agreement and Subsidiary Guarantee, each duly executed
by each Purchaser, as applicable.


 




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2.4
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 as at the Closing Date of the representations and warranties of each Purchaser contained
herein (unless as of a specific date therein in which case they shall be accurate as of such date);


 


(ii)
all obligations, covenants and agreements of 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 2.3(b) of this Agreement.


 


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


 


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


 


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


 


(iii)
the delivery by the Company of the items set forth in Section 2.3(a) of this Agreement;


 


(iv)
there is no existing Event of Default (as defined in the Notes) and no existing event which, with the passage of time or the giving
of notice, would constitute an Event of Default;


 


(v)
there is no breach of any obligations, covenants and agreements under the Transaction Documents and no existing event which, with
the passage of time or the giving of notice, would constitute a breach under the Transaction Documents;


 


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


 


(vii)
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 prior 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 United States
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 the Purchaser, and without regard to any factors unique to the Purchaser, makes it impracticable
or inadvisable to purchase the Securities at the Closing;


 




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(viii)
the Company meets the current public information
requirements under Rule 144 in respect of the Conversion Shares or Warrant Shares and any other shares of Common Stock issuable
under the Notes or the Warrants;


 


(ix)
the Company files with the Commission any required
reports under Section 13 or 15(d) of the Exchange Act so that it is in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable),
including, without limitation, any reports that the Commission requires the Company to amend and/or re-submit;


 


(x)
any other conditions contained herein or the other Transaction Documents, including, without limitation those set forth in Section
2.3 herein;


 


(xi)
the Company has submitted the Listing of Additional Shares Notification Form with the Nasdaq with respect to the Offering of the
Securities;


 


(xii)
to the Company’s knowledge, neither the Commission nor any state regulatory authority has issued any order preventing or
suspending the use of the Shelf Registration Statement or has instituted or, to the Company’s knowledge, threatened to institute,
any proceedings with respect to such an order; and


 


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 (which
for purposes of this Section means the Company and all of its Subsidiaries) hereby makes
the following representations and warranties to the Purchasers as of the Closing Date:


 


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


 




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


 


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


 


(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, except as set forth on Schedule 3.1(d): (i) conflict with or violate any provision of
the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter
documents; (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien (except Liens in favor of the Purchaser) 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.


 




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(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 Sections 4.3 and 4.14 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 Conversion Shares or the Warrant
Shares for trading thereon in the time and manner required thereby; (iii) the filing of Form D with the Commission and such filings
as are required to be made under applicable state securities laws; (iv) the filing of a Prospectus Supplement, which will take
place on the Closing Date; and (v) any consent, waiver, authorization or notice set forth on Schedule 3.1(e) (collectively,
the “Required Approvals”).


 


(f)
Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents. The Conversion Shares and the Warrant Shares,
when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The
Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Conversion
Shares and Warrant Shares at least equal to 100% of the Required Minimum on the date hereof.


 




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


 


(h)
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof in a timely manner, for the two (2) 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”). As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.


 




    	 	13	 



    	 



    

 


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


 


(j)
Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge
of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties except as set
forth in Schedule 3.1(j), or against or affecting the Company’s current or former officers or directors in their
capacity as such, 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, and 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 that is likely to lead to action that can reasonably be expected to result in a Material Adverse Effect.
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.


 




    	 	14	 



    	 



    

 


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


 


(l)
Compliance. Neither the Company nor any Subsidiary, except as set forth on Schedule 3.1(l): (i) is in default under
or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result
in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it
is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived);
(ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority; or (iii) is or
has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result
in a Material Adverse Effect.


 


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


 


(n)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except as set forth in Schedule 3.1(n) and 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.


 




    	 	15	 



    	 



    

 


(o)
Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights as necessary or required for use in connection with their respective businesses as presently
conducted 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 except as disclosed
in Schedule 3.1(o). The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.


 


(p)
Transactions with Affiliates and Employees. Except as set forth in any of the SEC Reports or in Schedule 3.1(p),
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.


 




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


 


(r)
Certain Fees. Other than as set forth on Schedule 3.1(r), no brokerage or finder’s fees or commissions are
or will be payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchaser
shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees
of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 


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


 


(t)
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.


 




    	 	17	 



    	 



    

 


(u)
Registration Rights. Other than as described in the SEC Reports and pursuant to this Agreement, no Person has any right
to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiaries.


 


(v)
Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. Except as otherwise provided in any of the SEC Reports, the Company has not, in the twelve (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 Company has submitted the Listing of Additional Shares Notification Form with the Nasdaq with
respect to the offering of the Securities. In this regard, the Company represents that the issuance of the Conversion Shares,
the Warrants, and the Warrant Shares issued or issuable upon exercise of the Warrants would not exceed the maximum number of shares
of Common Stock that may be issued under the Nasdaq Listing Rules without obtaining stockholder approval.


 


(w)
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s Articles 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.


 


(x)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents
or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities
of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its
Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The 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.


 




    	 	18	 



    	 



    

 


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


 


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


 


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


 


(bb)
Accountants. The Company’s accounting firm is set forth on Schedule 3.1(bb) of the Disclosure Schedules. To
the knowledge and belief of the Company, such accounting firm is a registered public accounting firm as required by the Exchange
Act.


 


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


 




    	 	19	 



    	 



    

 


(dd)
Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that each Purchaser
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 each Purchaser is not 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 its respective representatives or agents in connection with the Transaction Documents
and the transactions contemplated thereby is merely incidental to such Purchaser’s 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.


 


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


 


(ff)
Stock Option Plans. 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.


 


(gg)
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”).


 


(hh)
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.


 


(ii)
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.


 




    	 	20	 



    	 



    

 


(jj)
Reserved.


 


(kk)
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 (i) has made or filed all United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim.


 


(ll)
Seniority and Indebtedness. The Company on the date hereof, has no Indebtedness except as set forth on Schedule 3.1(ll)
and any other Indebtedness not to exceed the amount of $25,000. As of the Closing Date, except for the senior indebtedness
as set forth in Schedule 3.1(ll), no Indebtedness or other claim against the Company is senior to or pari passu with the
Notes in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness
secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease
obligations (which is senior only as to the property covered thereby).


 


(mm)
Reserved.


 


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


 


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


 




    	 	21	 



    	 



    

 


(pp)
Shell Company Status. The Company is not presently and has not been an issuer
identified as a “Shell Company,” except as set forth in Schedule 3.1(pp).


 


(qq)
Reserved.


 


(rr)
Shelf Registration Statement. The Shelf Registration Statement was prepared by the Company in all material respects in
conformity with the requirements of the Securities Act and the rules and regulations of the Commission under the Securities Act
(the “Securities Act Regulations”) and contains all material statements that are required to be stated therein in
accordance with the Securities Act and the Securities Act Regulations. Except as the context may otherwise require, the Shelf
Registration Statement on file with the Commission at any given time, including any amendments thereto to such time, exhibits
and schedules thereto at such time, documents filed as a part thereof or incorporated pursuant to Item 12 of Form S-3 under the
Securities Act at such time and the documents and information otherwise deemed to be a part thereof or included therein pursuant
to Rule 430B of the Securities Act Regulations. The Shelf Registration Statement was declared effective by the Commission on June
6, 2018 and, to the Company’s knowledge, neither the Commission nor any state regulatory authority has issued any order
preventing or suspending the use of the Shelf Registration Statement or has instituted or, to the Company’s knowledge, threatened
to institute, any proceedings with respect to such an order. The Company has complied with each request (if any) from the Commission
for additional information.


 


(ss)
10b-5. The Shelf Registration Statement and any post-effective amendment thereto, at the time it became effective complied
in all material respects with the requirements of the Securities Act and the Securities Act Regulations. The conditions for use
of Form S-3, set forth in the General Instructions thereto, including, but not limited to, General Instruction I.B.6 and other
conditions related to the offer and sale of the Unrestricted Conversion Shares, have been satisfied and the Company meets the
requirements for use of Form S-3 under the Securities Act and the sale of the Unrestricted Conversion Shares hereunder meets the
requirements or General Instruction I.B.1./I.B.6 of Form S-3. Each preliminary prospectus and the prospectus included in the Shelf
Registration Statement, at the time each was or will be filed with the Commission, complied and will comply in all material respects
with the requirements of the Securities Act and the Securities Act Regulations. Neither the Shelf Registration Statement nor any
amendment thereto, at its effective time, and at the Closing Date contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
The documents incorporated by reference in the Registration Statement and the prospectus included therein, when they became effective
or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and none of such documents
contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Registration Statement and such prospectus, when such documents become
effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and will not contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading.


 




    	 	22	 



    	 



    

 


3.2
Representations and Warranties of the Purchaser. 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. The 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 and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction
Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized
by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of the Purchaser.
Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser
in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against
it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii)
as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii)
insofar as indemnification and contribution provisions may be limited by applicable law.


 


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


 


(c)
Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is, and on
each date on which it converts the Notes or exercise the 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.


 




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


 


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


 


(f)
Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser
has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
the Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting
forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of the Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of the 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. Other than to other Persons party to this Agreement, the Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).


 


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


 




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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, to the Company or to an Affiliate of a Purchaser
or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, at the Company’s
sole expense in 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. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of
a Purchaser under this Agreement.


 


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


 


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


 




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The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of its Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees
or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such
pledge. At the Company’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or transfer of the Securities.


 


(c)
Certificates evidencing the Conversion Shares or the Warrant Shares 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 Conversion Shares or Warrant Shares pursuant to Rule 144; (iii) if such Conversion Shares
or the Warrant Shares are eligible for sale under Rule 144; 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 upon request of a Purchaser and at the Company’s sole expense cause its counsel (or at the Purchaser’s
option, counsel selected by the Purchaser) to issue a legal opinion to the Transfer Agent promptly after any of the events described
in (i)-(iv) in the preceding sentence if required by the Transfer Agent to effect the removal of the legend hereunder (with a
copy to the applicable Purchaser and its broker). If all or any portion of any Note or Warrant
is converted or exercise, respectively, at a time when there is an effective registration statement to cover the resale of the
Conversion Shares or Warrant Shares, respectively, or if such Conversion Shares or Warrant Shares may be sold under Rule 144 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 Conversion Shares or Warrant Shares shall be issued free of
all legends. The Company agrees that following such time as such legend is no longer required under this Section 4.1(c), it will,
no later than two (2) Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate
representing Conversion Shares or the Warrant Shares, as applicable, issued with a restrictive legend (such third (3rd)
Trading Day, the “Legend Removal Date”), instruct the Transfer Agent to deliver or cause to be delivered to
the Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not
make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth
in this Section 4. Certificates for the Conversion Shares or the Warrant Shares subject to legend removal hereunder shall be transmitted
by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust
Company System as directed by the Purchaser.


 


(d)
In addition to the Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, $1,000 per Trading Day for each Trading Day after the Legend Removal Date until such certificate
is delivered without a legend. Nothing herein shall limit the Purchaser’s right to pursue actual damages for the Company’s
failure to deliver certificates representing any Securities as required by the Transaction Documents, and the Purchaser shall
have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.


 




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


 


4.3
Furnishing of Information; Public Information.


 


(a)
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.


 


(b)
At any time during the period commencing from the six (6)-month anniversary of the Closing Date and ending at such time that all
of the Securities 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 shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to the 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 the 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 Purchaser to
transfer the Conversion Shares or Warrant Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant
to this Section 4.3(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 the Purchaser’s right to pursue actual damages for the Public Information Failure, and
the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief.


 




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4.4
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in
a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated
with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing
of such subsequent transaction.


 


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


 


4.6
Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other
Person, that the 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 the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue
of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser.


 


4.7
Material Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents, the Company covenants and agrees that neither it, nor any of
its subsidiaries, nor any other Person acting on its behalf, will provide any Purchaser
or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior
thereto such information is disclosed to the public, or such Purchaser shall have
entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.


 


4.8
Use of Proceeds. The Company shall use the net proceeds as set forth in Schedule 4.8.


 




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4.9
Indemnification of Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold each Purchaser
and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls
the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, managers, 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 Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents
or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by
any stockholder of the Company who is not an Affiliate of the Purchaser Party, with respect to any of the transactions contemplated
by the Transaction Documents (unless such action is based upon a breach of the Purchaser Party’s representations, warranties
or covenants under the Transaction Documents or any agreements or understandings the Purchaser Party may have with any such stockholder
or any violations by such Purchaser Party of state or federal securities laws or any conduct by the Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect
of which indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after
a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion
of counsel, a material conflict on any material issue between the position of the Company and the position of the Purchaser Party,
in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.
The Company will not be liable to any Purchaser Party under this Agreement (x) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (y) to the extent,
but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of
the representations, warranties, covenants or agreements made by the Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification required by this Section 4.9 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 indemnification 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.


 


4.10
Reservation and Listing of Securities and SEC Filings.


 


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


 




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(b)
If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than 100% of
the Required Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s
Articles of Incorporation to increase the number of authorized but unissued shares of Common Stock to at 100% of the Required
Minimum at such time, as soon as possible and in any event not later than the 75th day after such date.


 


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


 


(d)
Promptly after the execution and delivery of this Agreement, the Company will prepare and file with the Commission a final prospectus
supplement to the base prospectus included in the Shelf Registration Statement relating to the Unrestricted Notes and the Unrestricted
Conversion Shares in accordance with the provisions of Rule 430B and Rule 424(b) of the Securities Act Regulations.


 


4.11
Subsequent Equity Sales.


 


(a)
For so long as any of the Notes remain outstanding,
the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its
Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common
Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with,
the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity
securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited
to, an equity line of credit, whereby the Company may issue securities at a future determined price.


 


(b)
The Purchaser shall be entitled to obtain injunctive
relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. Notwithstanding
the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall
be an Exempt Issuance.


 




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4.12
Certain Transactions and Certain Acknowledgements and Obligations of the Company. Each Purchaser, severally and not jointly,
covenants and agrees, so long as such Purchaser holds any Notes, that neither it, nor any Affiliate acting on its behalf or pursuant
to any understanding with it will execute any Short Sales (as such term is defined in Rule 200 of Regulation SHO of the Exchange
Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Company’s
Common Stock) during the period commencing with the execution of this Agreement and ending on the earlier Maturity Date (as defined
in the Notes) of the Notes or the full repayment or conversion of the Notes of such Purchaser; provided that this provision shall
not prohibit any sales made where a corresponding Notice of Conversion or Notice of Exercise, as applicable, is tendered to the
Company and the shares received upon such conversion or exercise are used to close out such sale (a “Prohibited Short
Sale”). Notwithstanding the foregoing, solely with respect to any Purchaser that has acquired securities from the Company
pursuant to a prior securities purchase agreement, such Purchaser shall not be deemed to have consummated any Prohibited Short
Sales at any given time of determination.


 


So
long as any of the Securities covered by the Transaction Documents are outstanding: (a) the Company shall 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 and the Company shall meet the current public information requirements of Rule 144(c)
under the Securities Act as of the end of the period in question, (b) the Company shares of Common Stock must be DWAC Eligible
and not subject to a “DTC chill,”, (c) the Conversion Shares or Warrant Shares, as applicable, shall be deemed “freely
tradeable” shares (for the purposes of this sub-section, “freely tradeable” shares shall mean that such shares
are eligible for resale pursuant to Rule 144
(provided the Company is compliant with its current public information requirements) promulgated by the Commission pursuant to
the Securities Act or such shares are the subject of a then effective registration statement),
(d) the Common Stock is trading on any Trading Market (subject to any volume restrictions set forth in the Notes) and all of the
shares issuable pursuant to the Transaction Documents are listed or quoted for trading on any Trading Market (and the Company
believes, in good faith, that trading of the Common Stock on any Trading Market will continue uninterrupted for the foreseeable
future), (e) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction
that has not been consummated, and (f) the applicable Purchaser is not in possession of any information provided by the Company,
any of its Subsidiaries, or any of their officers, directors, employees, agents or Affiliates, that constitutes, or may constitute,
material non-public information. For the avoidance of doubt, so long as an Event of Default has occurred and is continuing or
the Company is not in compliance with all of its covenants set forth in this paragraph, the Company shall not be entitled to deliver
Common Stock to the Holders under Section 2(g) of the Note and shall make any Monthly Repayment under Section 2(g) of the Note
in cash.


 




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4.13
Right of Participation.


 


For
so long as any of the Notes remain outstanding, upon any issuance by the Company of Common Stock, Common Stock Equivalents or
debt for cash consideration, Indebtedness or a combination of units hereof (a “Subsequent Financing”), the
Purchasers shall have the right to participate in up to an amount of the Subsequent Financing equal to thirty-five percent (35%)
of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided
for in the Subsequent Financing, which participation shall be pro rata to their respective subscription amounts.


 


(b)
At least three (3) Trading Days prior to the
closing of the Subsequent Financing, the Company shall deliver to the Purchaser a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Purchaser if it wants to review the details
of such financing (such additional notice, a “Subsequent Financing Notice”). Upon the request of the Purchaser,
and only upon a request by the Purchaser, 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 the Purchaser. 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)
If a Purchaser desires to participate in such
Subsequent Financing, the Purchaser must provide written notice to the Company that the Purchaser is willing to participate in
the Subsequent Financing, the amount of the Purchaser’s participation, and representing and warranting that the Purchaser
has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.


 


(d)
Each Purchaser 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 Purchaser participating under this Section 4.13 and
(y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers participating
under this Section 4.13. If notifications by a Purchaser 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 its Pro Rata Portion, then the Company
may effect the remaining portion of such Subsequent Financing on the terms and with the other Purchasers set forth in the Subsequent
Financing Notice for any remaining amount.


 


(e)
The Company must provide the Purchaser with a
second Subsequent Financing Notice, and the Purchaser will again have the right of participation set forth above in this Section
4.13, 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.


 


(f)
The Company and each Purchaser agree that if
a Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall
not include any term or provision whereby such Purchaser 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 Purchaser.


 




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(g)
Notwithstanding anything to the contrary in this
Section 4.13 and unless otherwise agreed to by the Purchaser, the Company shall either confirm in writing to each Purchaser 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 the Purchasers will not be in possession
of any material, non-public information, by the tenth (10th) Trading Day following delivery of the Subsequent Financing
Notice. If by such tenth (10th) Trading 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 the Purchasers, such
transaction shall be deemed to have been abandoned and the Purchasers shall not be deemed to be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries.


 


(h)
Notwithstanding the foregoing, this Section 4.13
shall not apply in respect of an Exempt Issuance.


 


4.14
Securities Laws Disclosure; Publicity.
The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press
release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including
the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after
the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any Purchaser 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 filing of the press 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, affiliates, employees or agents, on the one hand, and any of the Purchasers or any of their affiliates, on the other
hand, shall terminate. The Company and the Purchasers shall consult with each other in issuing any other press releases with respect
to the transactions contemplated hereby, and neither the Company nor any of the Purchasers shall issue any such press release
nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of the Purchasers, with respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of the Purchasers, or include the name of the Purchasers in any filing with the Commission
or any regulatory agency or Trading Market, without the prior written consent of each such Purchaser, except: (a) as required
by federal securities law in connection with any registration statement contemplated by this Agreement 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). Notwithstanding anything in any Transaction Document to the contrary,
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 with respect to, or a duty
not to trade on the basis of, such material, non-public information.


 




    	 	33	 



    	 



    

 


4.15
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of the 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 Purchaser
at the First Closing under applicable securities or “Blue Sky” laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of the Purchaser.


 


4.16
Registration Rights.


 


(a)
The Company agrees to use its best efforts, within thirty (30) days after the Closing Date, to file with the Commission the Required
Registration Statement, in accordance with the Registration Rights Side Letter, in order to register the Restricted Notes, the
Restricted Conversion Shares, the Warrant Shares, pursuant to the Securities Act and to have such Required Registration Statement
declared effective as provided in the Registration Rights Side Letter so that the Purchasers shall be able to sell their Restricted
Conversion Shares and Warrant Shares pursuant to a prospectus under the Required Registration Statement.


 


(b)
If, at any time during the period the Notes or Warrants are outstanding, there is not an effective registration statement covering
all of the Conversion Shares and Warrant Shares, and the Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities,
other than a draw down from a shelf registration statement or on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans,
then the Company shall deliver to each Purchaser a written notice of such determination and, if within fifteen (15) days after
the date of the delivery of such notice, any such Purchaser shall so request in writing, the Company shall include in such registration
statement all or any part of such Securities such Holder requests to be registered; provided, however, that the Company shall
not be required to register any Securities pursuant to this Section 4.16 that are eligible for resale pursuant to Rule 144 (without
volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities Act or
that are the subject of a then effective registration statement. The parties acknowledge and agree that in the case of any underwritten
offering, such right to register shall be subject to any underwriter cutback rights. To be free from doubt, the underwriter shall
exercise its cutback rights in the following reverse order: shares of Common Stock issued by the Company shall be the last to
be cutback; shares of Common Stock owned by the Holders shall be second from last to be cutback, and all the other shares of Common
Stock owned by all other investors shall be the first to be cutback.


 




    	 	34	 



    	 



    

 


ARTICLE
V.


MISCELLANEOUS


 


5.1
Termination. This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only
and without any effect whatsoever on the obligations between the Company and the other Purchaser, by written notice to the other
parties, if the Closing has not been consummated on or before April 30, 2020; provided, however, that such termination will not
affect the right of any party to sue for any breach by any other party (or parties).


 


5.2
Fees and Expenses. 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 Notice of Conversion or Notice
of Exercise delivered by the Purchasers), stamp taxes and other taxes and duties levied in connection with the delivery of the
Conversion Shares or Warrant Shares to the Purchasers. Notwithstanding the foregoing, counsel to the Purchasers shall be entitled
to receive out of the proceeds distributed at the Closing its actual attorneys’ fees and due diligence costs not to exceed
$15,000.


 


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


 


5.4
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the earliest of: (i) 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 12:00 p.m.
(New York City time) on a Trading Day; (ii) 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 12:00 p.m. (New York City time) on any Trading Day; (iii) the second (2nd) Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service; or (iv) 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.


 




    	 	35	 



    	 



    

 


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 Purchasers holding at least 50.1% in interest of the Notes
then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided
that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the
consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. 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 proposed amendment
or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the
comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser.
Any amendment effected in accordance with accordance with this Section 5.5 shall be binding upon each Purchaser and holder of
Securities and the Company. No consideration (other
than reimbursement of legal fees) 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 also is offered to all of the parties to the Transaction
Documents, all holders of the Notes or all holders of the Warrants (as the case may be). From the date hereof and while any Notes
or Warrants are outstanding, the Company shall not be permitted to receive any consideration from a Purchaser or a holder of Notes
or Warrants that is not otherwise contemplated by the Transaction Documents in order to, directly or indirectly, induce the Company
or any Subsidiary (i) to treat such Purchaser or holder of Notes or Warrants in a manner that is more favorable than to other
similarly situated Purchasers or holders of Notes or Warrants, as applicable, or (ii) to treat any Purchaser(s) or holder(s) of
Notes or Warrants in a manner that is less favorable than the Purchaser or holder of Notes or Warrants that is paying such consideration;
provided, however, that the determination of whether a Purchaser has been treated more or less favorably than another Purchaser
shall disregard any other securities of the Company purchased or sold by any Purchaser. The Company has not, directly or indirectly,
made any agreements with any Purchasers relating to the terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents.


 


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


 


5.8
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.9.


 




    	 	36	 



    	 



    

 


5.9
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard
to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either
party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.9, the prevailing party in such action, suit or proceeding shall be reimbursed
by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.


 


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.


 




    	 	37	 



    	 



    

 


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 a 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 a conversion or exercise of any Note or Warrant, respectively, such Purchaser shall be required to
return any shares of Common Stock subject to any such rescinded conversion notice concurrently with the return to such Purchaser
of the aggregate exercise price paid to the Company for such shares.


 


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, 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.


 




    	 	38	 



    	 



    

 


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


 


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


 


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]


 




    	 	39	 



    	 



    

 


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.


 




	DIGITAL
    ALLY, INC.	 	Address
    for Notice: 
	 	 	 	9705
    Loiret Blvd
	 	 	 	Lenexa,
    KS 66219
	 	 	 	 
	By:		 	Fax:
                                          913-213-5762                                    

	Name:	Stanton
    E. Ross	 	 
	Title:	CEO,
    President & Chairman	 	 




 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]


 


[Company
Signature Page to DGLY SPA]


 




    	 



    	 



    

 


[PURCHASER
SIGNATURE PAGES TO DIGITAL ALLY, INC. 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:


 


Closing
Principal Amount: $ 


 


Closing
Subscription Amount: $ 


 


EIN
Number: _______________________


 




    	 



    	 



    

 


SCHEDULE
OF PURCHASERS


 


[to
be provided]


 




    	 



    	 



    

 


EXHIBIT
A


 


Form
of Intellectual Property Security Agreement


 


Attached


 




    	 



    	 



    

 


EXHIBIT
B


 


Form
of Registration Rights Side Letter


 


Attached



 






    	 



    	 



    

 


EXHIBIT
C


 


Form
of Restricted Note


 


Attached


 




    	 



    	 



    

 


EXHIBIT
D


 


Form
of Security Agreement


 


Attached


 




    	 



    	 



    

 


EXHIBIT
E


 


Form
of Subsidiary Guaranty


 


Attached


 




    	 



    	 



    

 


EXHIBIT
F


 


Transfer
Agent Instruction Letter


 


Attached


 




    	 



    	 



    

 





EXHIBIT
G


 


Form
of Unrestricted Note


 


Attached


 




    	 



    	 



    

 


EXHIBIT
H


 


Form
of Warrant


 


Attached


 




    	 



    	 



    

 


DISCLOSURE
SCHEDULES


(Security
Purchase Agreement)


 


The
following Schedules relating to Section 3.1 of that certain Securities Purchase Agreement, dated as of April 17, 2020 (the “Agreement”),
are the Disclosure Schedules (the “Disclosure Schedules”) referred to therein by and between Digital Ally,
Inc., a Nevada corporation (the “Company”), and the purchasers identified on the signature pages thereto (including
its successors and assigns, the “Purchasers”). Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement.


 


The
representations and warranties of the Company in the Agreement are made subject to the exceptions and qualifications set forth
herein. These Disclosure Schedules are qualified in their entirety by reference to specific provisions of the Agreement, and are
not intended to constitute, and shall not be construed as constituting, separate representations or warranties of the Company.
The section numbers used herein refer to the Sections in the Agreement. Headings and subheadings have been inserted herein for
convenience of reference only and shall not have the effect of amending or changing the express description hereof as set forth
in the Agreement. The inclusion of any information (including dollar amounts) in any section of these Disclosure Schedules shall
not be deemed to be an admission or acknowledgment by the Company that such information is required to be listed in such section
or is material to or outside the ordinary course of the business of the Company, nor shall such information be deemed to establish
a standard of materiality (and the actual standard of materiality may be higher or lower than the matters disclosed by such information).
In addition, matters reflected in these Disclosure Schedules are not necessarily limited to matters required by the Agreement
to be reflected in these Disclosure Schedules. Any such additional matters are set forth for informational purposes only and do
not necessarily include (and shall not be deemed to include) other matters of a similar nature. The information contained in these
Disclosure Schedules is disclosed solely for purposes of the Agreement, and no information contained herein or therein shall be
deemed to be an admission by any party hereto to any third party of any matter whatsoever (including, without limitation, any
violation of applicable law or breach of contract). Any information disclosed in these Disclosure Schedules under any section
number shall be deemed to be disclosed and incorporated in the Disclosure Schedules under any other section to the extent the
relevance of such information to such other section would be reasonably apparent to a reader of such information.


 




    	 



    	 



    

 


SCHEDULE
3.1 (a)


 


Subsidiaries
of Digital Ally, Inc.


 




    	 



    	 



    

 


SCHEDULE
3.1 (g)


 


Capitalization
of Digital Ally, Inc.


 




    	 



    	 



    

 


SCHEDULE
3.1 (i)


 


Material
Changes, Undisclosed Events, Liabilities or Developments


 




    	 



    	 



    

 


SCHEDULE
3.1(j)


 


Litigation


 




    	 



    	 



    

 


SCHEDULE
3.1(l)


 


Compliance


  




    	 



    	 



    

 


SCHEDULE
3.1(n)


 


Liens
on Assets


 




    	 



    	 



    

 


SCHEDULE
3.1(o)


 


Intellectual
property matters


 




    	 



    	 



    

 


SCHEDULE
3.1(p)


 


Transactions
with Affiliates


 




    	 



    	 



    

 


SCHEDULE
3.1(r)


 


Certain
Fees


 




    	 



    	 



    

 


SCHEDULE
3.1 (bb)


 


Accountants


 




    	 



    	 



    

 


SCHEDULE
3.1 (pp)


 


Shell
Company


 




    	 



    	 



    

 


Schedule
4.8.


 


USE
OF PROCEEDS:


 


$1,500,000
Expenses of the Offering and General Working Capital Purposes


____________


$1,500,000
Total cash proceeds


=========