Exhibit 10.1 


 


SECURITIES PURCHASE
AGREEMENT


THIS SECURITIES
PURCHASE AGREEMENT (the “Agreement”) is made as of the 23rd day of April,
2014 by and between Guided Therapeutics, Inc., a Delaware corporation (the “Company”), and Hanover
Holdings I, LLC, a New York limited liability company (the “Investor”).


WHEREAS,
the Company and the Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506
of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission
(the “Commission”) under the 1933 Act (without limiting any other such exemption which may apply to the
transactions contemplated by this Agreement);


WHEREAS,
the Company has authorized the issuance of senior convertible notes, in the aggregate original principal amount of $3,500,000,
in the form attached hereto as Exhibit A (the “Notes”), which Notes shall be convertible into
shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”), in accordance
with the terms of the Notes;


WHEREAS,
on the date hereof, the Company wishes to issue, and the Investor wishes to receive, in consideration of the execution of this
Agreement, such aggregate number of shares of Common Stock as set forth in column (3) on Schedule I attached hereto (the
“Commitment Shares”);


WHEREAS, Investor
wishes to purchase, and the Company wishes to sell at the Initial Closing (as defined below), upon the terms and conditions stated
in this Agreement, a Note in the aggregate original principal amount as set forth in column (4) on Schedule I hereto (the
“Initial Note”) (and the Common Stock issuable upon conversion thereof, collectively, the “Initial
Conversion Shares”);


 


WHEREAS, subject
to the terms and conditions set forth in this Agreement, the Company may require the Investor to participate in an Additional Closing
(as defined below) for the purchase by the Investor, and the sale by the Company, of a Note in an original principal amount as
set forth in column (5) on Schedule I hereto (the “Additional Note”) (and the Common Stock issuable
upon conversion thereof, collectively, the “Additional Conversion Shares” and, collectively with the
Initial Conversion Shares, the “Conversion Shares”);


 


WHEREAS,
the Notes, together with the Conversion Shares and the Commitment Shares, are referred to herein as the “Securities”
and the offering contemplated hereby is referred to herein as the “Offering”;


WHEREAS,
the parties have agreed that the obligation to repay the Notes shall be an unsecured obligation of the Company; and


WHEREAS,
at the Initial Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto
as Exhibit B (the “Registration Rights Agreement”), pursuant to which the Company has agreed to
provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights




    	1



    	 



    

Agreement), under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities laws.


NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the
premises and the mutual agreements, representations and warranties, provisions and covenants contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:


1. Issuance
of Commitment Shares; Purchase and Sale of Notes.


1.1Issuance
of Commitment Shares. In consideration for the Investor’s execution and delivery of this Agreement, concurrently with
the execution and delivery of this Agreement on the Initial Closing Date (as defined below), the Company shall deliver irrevocable
instructions to its transfer agent (the “Transfer Agent”), substantially in the form of Exhibit C
attached hereto, to issue to the Investor, not later than 4:00 p.m. (New York City time) on the third (3rd) Trading Day (as defined
in the Notes) immediately following the Initial Closing Date, a certificate representing such aggregate number of Commitment Shares
as set forth in column (3) on Schedule I attached hereto in the name of the Investor or its designee (in which case such
designee name shall have been provided to the Company prior to the Closing Date). Such certificate shall be delivered to the Investor
by overnight courier at its address set forth in Section 12.4 hereof. For the avoidance of doubt, all of the Commitment Shares
shall be fully earned as of the Initial Closing Date regardless of whether the Additional Closing (as defined below) shall occur.


1.2Purchase
and Sale of Initial Notes. Subject to the satisfaction (or, where legally permissible, the waiver) of the conditions set forth
in Sections 4.1, the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company on the Initial
Closing Date (as defined below), an Initial Note in the aggregate original principal amount as set forth in column (4) on Schedule
I hereto (the “Initial Closing”).


1.3Purchase
and Sale of Additional Notes. Subject to the satisfaction (or, where legally permissible, the waiver) of the conditions set
forth in Sections 3.2(b) and 4.1 below, the Company shall issue and sell to the Investor, and the Investor shall purchase from
the Company on the Additional Closing Date (as defined below), an Additional Note in the aggregate original principal amount as
set forth in column (5) on Schedule I hereto (the “Additional Closing”).


1.4Form of
Payment.


(a)On the Initial
Closing Date, (i) the Investor shall pay the Initial Purchase Price (as defined below) (less the amounts withheld pursuant to Section
12.12) to the Company for the Initial Note to be issued and sold to the Investor at the Initial Closing, by wire transfer of immediately
available funds in accordance with the Company’s written wire instructions and (ii) immediately following the Company’s
receipt of such amount, the Company shall deliver to the Investor an Initial Note in the aggregate original principal amount as
set forth in column (4) on Schedule I hereto, duly executed on behalf of the Company and registered in the name of the Investor
or its designee.




    	2



    	 



    

(b)On the Additional
Closing Date, (i) the Investor shall pay the Additional Purchase Price (as defined below) (less the amounts withheld pursuant to
Section 12.12) to the Company for the Additional Note to be issued and sold to the Investor at the Additional Closing, by wire
transfer of immediately available funds in accordance with the Company’s written wire instructions and (ii) immediately
following the Company’s receipt of such amounts, the Company shall deliver to the Investor an Additional Note in the aggregate
original principal amount as set forth in column (5) on Schedule I hereto, duly executed on behalf of the Company and registered
in the name of the Investor or its designee.


(c)Rank.
The parties hereto acknowledge that the Initial Note and the Additional Note shall be part of a single series of notes and shall
rank pari passu with each other.


2. Purchase
Price. The purchase price for the Initial Note to be purchased by the Investor (the “Initial Purchase Price”)
shall be the amount as set forth in column (6) on Schedule I hereto. The purchase price for the Additional Note to be purchased
by the Investor (the “Additional Purchase Price”, and together with the Initial Purchase Price, each,
a “Purchase Price”) shall be the amount as set forth in column (7) on Schedule I hereto. As indicated
on Schedule I hereto, the Initial Note will be issued with an original issue discount of approximately 33.33%.


3. Closings.
The Initial Closing and the Additional Closing are each sometimes referred to in this Agreement as a “Closing”.
Each Closing shall occur at the offices of Greenberg Traurig, LLP, MetLife Building, 200 Park Avenue, New York, NY 10166.


3.1Initial
Closing. The date and time of the Initial Closing (the “Initial Closing Date”) shall be 10:00 a.m.
(New York City time), on the first (1st) Trading Day (as defined below) (and including the date hereof if a Trading
Day) on which the conditions to the Initial Closing set forth in Section 4.1 below are satisfied or waived.


3.2Additional
Closing.


(a)Additional
Closing Date. If the Company delivers an Additional Closing Notice (as defined below), the date and time of the Additional
Closing shall be 10:00 a.m. (New York City time), on a date that is no later than the tenth (10th) Trading Day after
the Effective Date (the “Additional Closing Date,” and the Initial Closing Date and the Additional Closing
Date are each sometimes referred to in this Agreement as a “Closing Date”).


(b)Additional
Closing Mechanics. Subject to the satisfaction (or waiver) of the conditions set forth in this Section 3.2(b) and Section 4.2
below, the Company shall have the right to require the Investor to purchase the Additional Note on the Additional Closing Date
by delivering to the Investor on the Effective Date, by facsimile and overnight courier at its address set forth in Section 12.4
hereof, an irrevocable written notice that the Company has exercised its right to require the Investor to purchase the Additional
Note (the “Additional Closing Notice”, and such date, the “Additional Closing Notice Date”).
For the avoidance of doubt, the Company shall not be entitled to effect an Additional Closing if there shall exist an Additional
Note Conditions Failure (as defined below). Notwithstanding anything herein to the contrary, if the Additional Closing does not
occur by September 9, 2014, the Company’s right to effect an Additional Closing hereunder shall automatically terminate.




    	3



    	 



    

4. Closing
Conditions; Certain Covenants.


4.1Conditions
to the Initial Closing.


(a)Conditions
of the Company to the Initial Closing. The obligation of the Company to sell and issue the Initial Note to the Investor at
the Initial Closing is subject to the fulfillment, to the Company’s reasonable satisfaction, prior to or at the Initial Closing,
of each of the following conditions:


(i)Representations
and Warranties. The representations and warranties of the Investor contained in this Agreement (x) that are not qualified by
“materiality” shall have been true and correct in all material respects when made and shall be true and correct in
all material respects as of the Initial Closing Date with the same force and effect as if made on such dates, except to the extent
such representations and warranties are as of another date, in which case, such representations and warranties shall be true and
correct in all material respects as of such other date and (y) that are qualified by “materiality” shall have
been true and correct when made and shall be true and correct as of the Initial Closing Date with the same force and effect as
if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations
and warranties shall be true and correct as of such other date.


(ii)Registration
Rights Agreement. The Investor shall have duly executed and delivered the Registration Rights Agreement to the Company.


(iii)No
Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of or
which would materially modify or delay any of the transactions contemplated by the Transaction Documents.


(b)Conditions
to the Investor to the Initial Closing. The obligation of the Investor to purchase the Initial Note to be issued to the Investor
at the Initial Closing is subject to the satisfaction, or (where legally permissible) the waiver by the Investor, on the Initial
Closing Date, of each of the following conditions:


(i)Representations
and Warranties. The representations and warranties of the Company contained in this Agreement (x) that are not qualified by
“materiality” or “Material Adverse Effect” shall have been true and correct in all material respects when
made and shall be true and correct in all material respects as of the Initial Closing Date with the same force and effect as if
made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations
and warranties shall be true and correct in all material respects as of such other date and (y) that are qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct when made and shall be true and correct as of the Initial
Closing Date with the same force and effect as if made on such dates, except to the extent such representations and warranties
are as of another date, in which case, such representations and warranties shall be true and correct as of such other date.




    	4



    	 



    

(ii)Performance
of the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Registration Rights Agreement to be performed, satisfied or complied with by
the Company at or prior to the Initial Closing Date. The Company shall have delivered to the Investor on the Initial Closing Date
a written certification by an executive officer of the Company to the foregoing substantially in the form attached hereto as Exhibit
D.


(iii)No
Suspension of Trading in or Notice of Delisting of Common Stock. Trading in the Common Stock shall not have been suspended
by the Commission, the Trading Market or the FINRA (except for any suspension of trading of less than fourteen (14) days, which
suspension shall be terminated prior to the Initial Closing Date), the Company shall not have received any final and non-appealable
notice that the listing or quotation of the Common Stock on the Trading Market shall be terminated on a date certain (unless, prior
to such date certain, the Common Stock is listed or quoted on any other Trading Market), trading in securities generally as reported
on the Trading Market shall not have been suspended or limited, nor shall a banking moratorium have been declared either by the
U.S. or New York State authorities (except for any suspension, limitation or moratorium which shall be terminated prior to the
Initial Closing Notice Date), there shall not have been imposed any suspension of electronic trading or settlement services by
the Depository Trust Company (“DTC”) with respect to the Common Stock that is continuing, the Company
shall not have received any notice from DTC to the effect that a suspension of electronic trading or settlement services by DTC
with respect to the Common Stock is being imposed or is contemplated (unless, prior to such suspension, DTC shall have notified
the Company in writing that DTC has determined not to impose any such suspension), nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity or crisis that has had or would reasonably be expected
to have a material adverse change in any U.S. financial, credit or securities market that is continuing.


(iv)Compliance
with Laws. The Company shall have complied with all applicable federal, state and local governmental laws, rules, regulations
and ordinances in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents
(as defined below) to which it is a party and the consummation of the transactions contemplated hereby and thereby, including,
without limitation, the Company shall have obtained all permits and qualifications required by any applicable state securities
or “Blue Sky” laws for the offer and sale of the Securities by the Company to the Investor).


(v)No
Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of or
which would materially modify or delay any of the transactions contemplated by the Transaction Documents.


(vi)No
Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any court or governmental authority shall
have been commenced or threatened, and no inquiry or investigation by any governmental authority shall have been




    	5



    	 



    

commenced or threatened, against
the Company or any Subsidiary, or any of the officers, directors or affiliates of the Company or any Subsidiary, seeking to restrain,
prevent or change the transactions contemplated by the Transaction Documents, or seeking material damages in connection with such
transactions, which if decided unfavorably to the Company, any of its Subsidiaries and/or the Investor, as applicable, could reasonably
be expected to permanently enjoin the transactions contemplated hereby or result in a judgment of at least an aggregate of $300,000
against the Company, any of its Subsidiaries and/or the Investor, as applicable.


(vii)Listing
of Securities. All of the Conversion Shares that may be issued pursuant to the Notes and all of the Commitment Shares shall
have been approved for listing or quotation on the Trading Market as of the Initial Closing Date, subject only to notice of issuance.


(viii)Opinion
of Counsel. On the Initial Closing Date, the Investor shall have received an opinion from outside counsel to the Company, dated
the Initial Closing Date, in the form mutually agreed to by the parties hereto prior to the date hereof.


(ix)Initial
Note. At the Initial Closing, the Company shall have tendered to the Investor the Initial Note.


(x)Registration
Rights Agreement. The Company shall have duly executed and delivered the Registration Rights Agreement to the Investor.


(xi)Current
Public Information. All reports, schedules, registrations, forms, statements, information and other documents required to have
been filed by the Company with the Commission pursuant to the reporting requirements of the 1934 Act, including all material required
to have been filed pursuant to Section 13(a) or 15(d) of the 1934 Act, shall have been filed with the Commission under the 1934
Act.


4.2Conditions
to the Additional Closing.


(a)Conditions
of the Company to the Additional Closing. The obligation of the Company to sell and issue the Additional Note to the Investor
at the Additional Closing is subject to the fulfillment, to the Company’s reasonable satisfaction, prior to or at the Additional
Closing, of each of the following conditions:


(i)Representations
and Warranties. The representations and warranties of the Investor contained in this Agreement (x) that are not qualified by
“materiality” shall have been true and correct in all material respects when made and shall be true and correct in
all material respects as of the Additional Closing Date with the same force and effect as if made on such dates, except to the
extent such representations and warranties are as of another date, in which case, such representations and warranties shall be
true and correct in all material respects as of such other date and (y) that are qualified by “materiality” shall
have been true and correct when made and shall be true and correct as of the Additional Closing Date with the same force and effect
as if made on such dates, except to the extent such representations and warranties are as




    	6



    	 



    

of another date, in which case,
such representations and warranties shall be true and correct as of such other date.


(ii)No
Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of or
which would materially modify or delay any of the transactions contemplated by the Transaction Documents.


(b)Conditions
of the Investor to the Additional Closing. The obligation of the Investor to purchase the Additional Note to be issued to the
Investor at the Additional Closing is subject to the satisfaction, or (where legally permissible) the waiver by the Investor, on
the Additional Closing Date, of each of the following conditions:


(i)Representations
and Warranties. The representations and warranties of the Company contained in this Agreement (x) that are not qualified by
“materiality” or “Material Adverse Effect” shall have been true and correct in all material respects when
made and shall be true and correct in all material respects as of the Additional Closing Notice Date and the Additional Closing
Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true and correct in all material respects as of such
other date and (y) that are qualified by “materiality” or “Material Adverse Effect” shall have been
true and correct when made and shall be true and correct as of the Additional Closing Notice Date and the Additional Closing Date
with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another
date, in which case, such representations and warranties shall be true and correct as of such other date.


(ii)Performance
of the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement, the Initial Note and the Registration Rights Agreement to be performed, satisfied or
complied with by the Company at or prior to the Additional Closing Notice Date and the Additional Closing Date (as applicable).
The Company shall have delivered to the Investor on the Additional Closing Date a written certification by an executive officer
of the Company to the foregoing substantially in the form attached hereto as Exhibit D.


(iii)Registration
Statement Effective. The Initial Registration Statement (as defined in the Registration Rights Agreement) covering the resale
by the Investor of no less than the sum of (x) the number of Commitment Shares issued or issuable to the Investor hereunder, (y)
the number of Initial Conversion Shares issuable upon conversion of (or otherwise pursuant to) the Initial Notes, (z) the number
of Additional Conversion Shares issuable upon conversion of (or otherwise pursuant to) the Additional Notes to be issued at the
Additional Closing, in each case, as of both (A) the Additional Closing Notice Date and (B) the Additional Closing Date (assuming
for such purpose that all such Notes are then outstanding and no limitations on conversion exist in such Notes), shall have been
declared effective under the Securities Act by the




    	7



    	 



    

Commission and shall remain effective,
and the Investor shall be permitted to utilize the Prospectus therein to resell such Conversion Shares.


(iv)No
Material Notices. None of the following events shall have occurred and be continuing: (a) receipt of any request by the Commission
or any other federal or state governmental authority for any additional information relating to the Registration Statement, the
Prospectus (as defined in the Registration Rights Agreement) or any supplement to the Prospectus (each, a “Prospectus
Supplement”), or for any amendment of or supplement to the Registration Statement, the Prospectus, or any Prospectus
Supplement; (b) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement or prohibiting or suspending the use of the Prospectus or any Prospectus Supplement,
or of the suspension of qualification or exemption from qualification of the Securities for offering or sale in any jurisdiction,
or the initiation or contemplated initiation of any proceeding for such purpose; or (c) the occurrence of any event or the existence
of any condition or state of facts, which makes any statement of a material fact made in the Registration Statement, the Prospectus
or any Prospectus Supplement untrue or which requires the making of any additions to or changes to the statements then made in
the Registration Statement, the Prospectus or any Prospectus Supplement in order to state a material fact required by the Securities
Act to be stated therein or necessary in order to make the statements then made therein (in the case of the Prospectus or any Prospectus
Supplement, in light of the circumstances under which they were made) not misleading, or which requires an amendment to the Registration
Statement or a supplement to the Prospectus or any Prospectus Supplement to comply with the Securities Act or any other law (other
than the transactions contemplated by the Additional Closing Notice and the settlement thereof). The Company shall have no knowledge
of any event that could reasonably be expected to have the effect of causing the suspension of the effectiveness of the Registration
Statement or the prohibition or suspension of the use of the Prospectus or any Prospectus Supplement in connection with the resale
of the Registrable Securities by the Investor.


(v)No
Suspension of Trading in or Notice of Delisting of Common Stock. Trading in the Common Stock shall not have been suspended
by the Commission, the Trading Market or the FINRA (except for any suspension of trading of less than fourteen (14) days, which
suspension shall be terminated prior to the Additional Closing Notice Date), the Company shall not have received any final and
non-appealable notice that the listing or quotation of the Common Stock on the Trading Market shall be terminated on a date certain
(unless, prior to such date certain, the Common Stock is listed or quoted on any other Trading Market), trading in securities generally
as reported on the Trading Market shall not have been suspended or limited, nor shall a banking moratorium have been declared either
by the U.S. or New York State authorities (except for any suspension, limitation or moratorium which shall be terminated prior
to the Additional Closing Notice Date), there shall not have been imposed any suspension of electronic trading or settlement services
by DTC with respect to the Common Stock that is continuing, the Company shall not have received any notice from DTC to the effect
that a suspension of electronic trading or settlement services by DTC with respect to the Common Stock is being imposed or is contemplated
(unless, prior to such suspension,




    	8



    	 



    

DTC shall have notified the Company
in writing that DTC has determined not to impose any such suspension), nor shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity or crisis that has had or would reasonably be expected to have a material
adverse change in any U.S. financial, credit or securities market that is continuing.


(vi)Compliance
with Laws. The Company shall have complied with all applicable federal, state and local governmental laws, rules, regulations
and ordinances in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents
to which it is a party and the consummation of the transactions contemplated hereby and thereby, including, without limitation,
the Company shall have obtained all permits and qualifications required by any applicable state securities or “Blue Sky”
laws for the offer and sale of the Securities by the Company to the Investor and the subsequent resale of the Registrable Securities
by the Investor (or shall have the availability of exemptions therefrom).


(vii)No
Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of or
which would materially modify or delay any of the transactions contemplated by the Transaction Documents.


(viii)No
Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any court or governmental authority shall
have been commenced or threatened, and no inquiry or investigation by any governmental authority shall have been commenced or threatened,
against the Company or any Subsidiary, or any of the officers, directors or affiliates of the Company or any Subsidiary, seeking
to restrain, prevent or change the transactions contemplated by the Transaction Documents, or seeking material damages in connection
with such transactions, which if decided unfavorably to the Company, any of its Subsidiaries and/or the Investor, as applicable,
could reasonably be expected to permanently enjoin the transactions contemplated hereby or result in a judgment of at least an
aggregate of $300,000 against the Company, any of its Subsidiaries and/or the Investor, as applicable.


(ix)Listing
of Securities. All of the Conversion Shares that may be issued pursuant to the Notes and all of the Commitment Shares shall
have been approved for listing or quotation on the Trading Market as of the Closing Date, subject only to notice of issuance.


(x)Delivery
of Commitment Shares and Initial Conversion Shares. The Company shall have delivered on a timely basis all of the Commitment
Shares required to be delivered pursuant to this Agreement and all of the Initial Conversion Shares issuable upon any conversion
of the Initial Note by the Investor, as applicable.


(xi)No
Restrictive Legends. If requested by the Investor from and after the Effective Date, the Company shall have either (i) issued
and delivered (or caused to be issued and delivered) to the Investor a certificate representing the Commitment Shares that is free
from all restrictive and other legends or (ii) caused the Company’s transfer




    	9



    	 



    

agent to credit the Investor’s
or its designee’s account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of Common
Stock equal to the number of Commitment Shares represented by the certificate delivered by the Investor to the Company in accordance
with Section 4.4 of this Agreement.


(xii)Opinion
of Counsel. On the Additional Closing Date, the Investor shall have received an opinion from outside counsel to the Company,
dated the Additional Closing Date, in the form mutually agreed to by the parties hereto prior to the date hereof.


(xiii)Additional
Note. At the Additional Closing, the Company shall have tendered to the Investor the Additional Note.


(xiv)Current
Public Information. The Current Report (as defined below) shall have been filed with the Commission as required pursuant to
Section 4.3, and the Initial Press Release and the Additional Press Release (each as defined below) shall have been issued by the
Company in accordance with Section 4.3. All reports, schedules, registrations, forms, statements, information and other documents
required to have been filed by the Company with the Commission pursuant to the reporting requirements of the 1934 Act, including
all material required to have been filed pursuant to Section 13(a) or 15(d) of the 1934 Act, shall have been filed with the Commission
under the 1934 Act.


(xv)No
Additional Note Conditions Failure. No Additional Note Conditions Failure shall exist.


4.3Securities
Law Disclosure; Publicity. The Company shall (a) by 9:00 a.m. (New York City time) on the Trading Day immediately following
the Initial Closing Date, issue a press release in form and substance reasonably acceptable to the Investor disclosing the material
terms of the transactions contemplated hereby (the “Initial Press Release”) and (b) issue a Current Report
on Form 8-K (the “Current Report”) disclosing the material terms of the transactions contemplated hereby,
and including the Transaction Documents as exhibits thereto, within the time required by the 1934 Act. From and after the issuance
of the Initial Press Release, the Company represents to the Investor that the Company shall have publicly disclosed all material,
non-public information delivered to the Investor as of such time by the Company or any of its subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company
shall, on or before 9:00 a.m. (New York City time) on the Trading Day immediately following the Additional Closing Notice Date,
issue a press release in form and substance reasonably acceptable to the Investor disclosing that the Company has elected to deliver
an Additional Closing Notice to the Investor (the “Additional Press Release”). From and after the issuance
of the Additional Press Release, the Company represents to the Investor that the Company shall have publicly disclosed all material,
non-public information delivered to the Investor as of such time by the Company or any of its subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company
shall afford the Investor and its counsel with a reasonable opportunity to review and comment upon, shall consult with the Investor
and its counsel on the form and substance of, and shall give due consideration to all such comments from the Investor or its counsel
on, any press release, Commission filing or any other public disclosure made by or on




    	10



    	 



    

behalf of the Company relating to the
Investor, its purchases hereunder or any aspect of the Transaction Documents or the transactions contemplated thereby, prior to
the issuance, filing or public disclosure thereof, and the Company shall not issue, file or publicly disclose any such information
to which the Investor shall object. For the avoidance of doubt, the Company shall not be required to submit for review any such
disclosure contained in periodic reports filed with the Commission under the Exchange Act if it shall have previously provided
the same disclosure for review in connection with a previous filing.


4.4Legends.
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 (as defined below), to the Company or to an affiliate
of the Investor or in connection with a pledge, the Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities
under the 1933 Act. The Investor understands that the certificate or other instrument representing the Notes and the stock certificates
representing the Conversion Shares and the Commitment Shares, except as set forth below, shall bear any legends as required by
applicable state securities or “Blue Sky” laws in addition to a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock certificates):


[NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B)
AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.


The Company shall
use its reasonable best efforts to cause its transfer agent to remove the legend set forth above and to issue a certificate without
such legend to the holder of the Securities upon which it is stamped, or to issue to such holder by electronic delivery at the
applicable balance account at DTC, unless otherwise required by state securities or “blue sky” laws, at such time as
(i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer,
such holder provides the Company with an opinion of counsel, in a form generally acceptable to the Company’s legal counsel
and the Transfer Agent, to the effect that such sale, assignment or transfer of the Securities may be made




    	11



    	 



    

without registration under the 1933
Act, (ii) if the holding period (as determined under Rule 144) for such Securities is at least six months, but less than one year,
such holder provides the Company and its legal counsel with reasonable assurance in writing that the Securities are being sold,
assigned or transferred pursuant to Rule 144 or Rule 144A or (iii) if the holding period (as determined under Rule 144) for such
Securities is at least one year, such holder provides the Company and its legal counsel with reasonable assurance in writing that
the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A. In furtherance of the foregoing, the Company
agrees that, following the Effective Date or at such time as such legend is not required pursuant to this Section 4.4, the Company
shall, no later than three Trading Days following the delivery by the Investor to the Company or the Transfer Agent of a certificate
representing Commitment Shares and/or Conversion Shares issued with a restrictive legend (such third Trading Day, the “Legend
Removal Date”), either: (A) issue and deliver (or cause to be issued and delivered) to the Investor a certificate
representing such Commitment Shares and/or Conversion Shares, as applicable, that is free from all restrictive and other legends
or (B) cause the Transfer Agent to credit the Investor’s or its designee’s account at DTC through its Deposit/Withdrawal
at Custodian (DWAC) system with a number of shares of Common Stock equal to the number of Commitment Shares and/or Conversion Shares,
as applicable, represented by the certificate so delivered by the Investor. If the Company fails on or prior to the Legend Removal
Date to either (i) issue and deliver (or cause to be issued and delivered) to the Investor a certificate representing the Commitment
Shares and/or the Conversion Shares, as applicable, that is free from all restrictive and other legends or (ii) cause the Transfer
Agent to credit the balance account of the Investor or its designee at DTC through its Deposit/Withdrawal at Custodian (DWAC) system
with a number of shares of Common Stock equal to the number of the Commitment Shares and/or the Conversion Shares, as applicable,
represented by the certificate delivered by the Investor pursuant hereto (a “Delivery Failure”), and
if on or after the Legend Removal Date the Investor purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Investor of shares of Common Stock that the Investor anticipated receiving from the
Company without any restrictive legend, then the Company shall, within three Trading Days after the Investor’s written request,
pay cash to the Investor in an amount equal to the Investor’s total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased, at which point the Company’s obligation to deliver a certificate or credit the
Investor’s or its designee’s account at DTC for such shares of Common Stock shall terminate and such shares shall be
cancelled (the “Buy-In Remedy”). For the avoidance of doubt, with respect to any given Delivery Failure,
(X) the Investor shall be entitled, at the election of the Investor, to recovery either pursuant to this Buy-In Remedy or Section
3(c)(ii) of the Notes, but not both, and (Y) a Delivery Failure shall not constitute an Event of Default other than, if otherwise
applicable, under Section 4(a)(xii) of the Notes.


4.5Stockholder
Approval. The Company shall provide each stockholder entitled to vote at either (x) the next annual meeting of stockholders
of the Company or (y) a special meeting of stockholders of the Company (the “Stockholder Meeting”), which shall
be promptly called and held not later than August 31, 2014 (the “Stockholder Meeting Deadline”), a proxy statement,
substantially in a form which shall have been previously reviewed by Greenberg Traurig LLP; soliciting each such stockholder's
affirmative vote at the Stockholder Meeting for approval of resolutions (“Stockholder Resolutions”) providing
for the Company's increase the authorized shares of Common Stock of the Company from 145 million to at least  195 million
(such affirmative approval being referred to herein as the “Stockholder Approval”, and the date such Stockholder
Approval is obtained, the “Stockholder Approval Date”), and the Company shall use its reasonable best efforts
to solicit its stockholders' approval of such resolutions and to cause the Board of Directors of the Company to recommend to the
stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the
Stockholder Meeting Deadline. If, despite the Company's reasonable best efforts the Stockholder Approval is not obtained on or
prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting to be held semi-annually thereafter
until such Stockholder Approval is obtained.


 






    	12



    	 



    

 


5. Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to the Investors as
of the Initial Closing Date, the Additional Closing Notice Date and the Additional Closing Date (each a “Representation
Date”):


5.1Organization,
Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company is duly qualified to transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect.


5.2Capitalization
and Voting Rights. The authorized capital stock of the Company and the shares thereof issued and outstanding were as set forth
in the Public Reports as of the dates reflected therein. All of the outstanding shares of Common Stock have been duly authorized
and validly issued, and are fully paid and nonassessable. Except as set forth in the Public Reports, this Agreement and the Registration
Rights Agreement, there are no agreements or arrangements under which the Company is obligated to register the sale of any securities
under the Securities Act. Except as set forth in the Public Reports, no shares of Common Stock are entitled to preemptive rights
and there are no outstanding debt securities and no contracts, commitments, understandings, or arrangements by which the Company
is or may become bound to issue additional shares of the capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for,
any shares of capital stock of the Company other than those issued or granted in the ordinary course of business pursuant to the
Company’s equity incentive and/or compensatory plans or arrangements. Except for customary transfer restrictions contained
in agreements entered into by the Company to sell restricted securities or as set forth in the Public Reports, the Company is not
a party to, and it has no knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of
the Company. Except as set forth in the Public Reports, the offer and sale of all capital stock, convertible or exchangeable securities,
rights, warrants or options of the Company issued prior to the applicable Representation Date complied with all applicable federal
and state securities laws, and no stockholder has any right of rescission or damages or any “put” or similar right
with respect thereto that would have a Material Adverse Effect. Except as set forth in the Public Reports, there are no securities
or instruments containing anti-dilution or similar provisions that will be triggered by the Notes, this Agreement or the Registration
Rights Agreement or the consummation of the transactions described herein or therein.




    	13



    	 



    

5.3Authorization;
Enforcement. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Notes, the Registration Rights Agreement (the “Transaction Documents”)
and the performance of all obligations of the Company hereunder and thereunder, and the authorization (or reservation for issuance),
sale and issuance of the Notes, and the Common Stock into which the Notes is convertible or exercisable, have been taken on or
prior to the date hereof. Each of the Transaction Documents has 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.


5.4Valid Issuance
of the Commitment Shares, the Conversion Shares; Reservation of Shares. Each of the Notes has been duly authorized and, when
issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, and free
and clear of all Liens imposed by the Company other than restrictions on transfer under this Agreement and under applicable state
and federal securities laws. The Commitment Shares and the Conversion Shares when issued and delivered in accordance with the terms
of this Agreement and the Notes, as applicable, for the consideration expressed herein and therein, will be duly and validly issued,
fully paid and non-assessable and free and clear of all Liens imposed by the Company other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws. The Company has reserved from its duly authorized capital
stock a sufficient number of shares of Common Stock for issuance of the Conversion Shares as required by Section 8 of the Notes.


5.5Offering.
Subject to the truth and accuracy of the Investor’s representations set forth in Section 6 of this Agreement, the offer and
issuance of the Securities as contemplated by this Agreement are exempt from the registration requirements of the Securities Act
of 1933, as amended (the “1933 Act”), and the qualification or registration requirements of state securities
laws or other applicable blue sky laws. Neither the Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemptions.


5.6Public Reports.
The Company is current in its filing obligations under the 1934 Act, including without limitation as to its filings of Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (collectively, the “Public Reports”).
The Public Reports do not contain any untrue statement of a material fact or omit to state any fact necessary to make any statement
therein not misleading. The financial statements included within the Public Reports for the fiscal year ended December 31, 2013
and for each quarterly period thereafter (the “Financial Statements”) have been prepared in accordance
with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods
indicated and with each other, except that unaudited Financial Statements may not contain all footnote required by generally accepted
accounting principles. The Financial Statements fairly present, in all material respects, the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein, subject in the case of unaudited Financial Statements
to normal year-end audit adjustments.






    	14



    	 



    

 


5.7Compliance
With Laws. The Company has not violated any law or any governmental regulation or requirement which violation has had or would
reasonably be expected to have a Material Adverse Effect on its business and the Company has not received written notice of any
such violation.


5.8Violations.
The consummation of the transactions contemplated by the Transaction Documents and all other documents and instruments required
to be delivered in connection therewith will not result in or constitute any of the following: (a) a violation of any provision
of the certificate of incorporation, bylaws or other governing documents of the Company; (b) a violation of any provisions of any
applicable law or of any writ or decree of any court or governmental instrumentality; (c) a default or an event that, with notice
or lapse of time or both, would be a default, breach, or violation of a lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust, or other agreement, instrument, or arrangement to which the Company is a party
or by which the Company or its property is bound; (d) an event that would permit any party to terminate any agreement or to accelerate
the maturity of any indebtedness or other obligation of the Company; or (e) the creation or imposition of any lien, pledge, option,
security agreement, equity, claim, charge, encumbrance or other restriction or limitation on the capital stock or on any of the
properties or assets of the Company, except, in the case of each of clauses (b), (c), (d) and (e), such as would no reasonably
be expected to result in a Material Adverse Effect.


5.9Consents;
Waivers. No consent, waiver, approval or authority of any nature, or other formal action, by any person, firm or corporation,
or any agency, bureau or department of any government or any subdivision thereof, not already obtained, is required in connection
with the execution and delivery of the Transaction Documents by the Company or the consummation by the Company of the transactions
provided for herein and therein.


5.10Sarbanes-Oxley
Act. Except as disclosed in the Public Reports, the Company is in material 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.


5.11Absence
of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company,
the Common Stock or any of the Company’s officers or directors in their capacities as such, that, if there were an unfavorable
decision, would reasonably be expected to result in a Material Adverse Effect.


5.12Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the Public Reports, except as specifically disclosed in a subsequent Public Report filed prior to the date hereof: (i) there
has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) except as disclosed in the Public Reports, the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables




    	15



    	 



    

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) except as required with respect to preferred stock of the Company outstanding as of the date hereof, the Company
has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to
any officer, director or affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before
the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by
this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected
to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets
or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this
representation is made.


5.13Intellectual
Property. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as
described in the Public Reports as necessary or required for use in connection with their respective businesses and which the failure
to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None
of, and the Company has not received a notice (written or otherwise) that any of, the Intellectual Property Rights reasonably necessary
to the business of the Company 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. The Company has not received, since the date of the latest audited financial
statements included within the Public 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 in all material
respects and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company has 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.


5.14Registration
Rights. Other than the Investor or as set forth in the Public Reports, no person has any right to cause the Company to effect
the registration under the 1933 Act of any securities of the Company.


5.15Disclosure.
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 Investor 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 Investor 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 Investor regarding the Company and its




    	16



    	 



    

Subsidiaries, their respective businesses
and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct in all material
respects 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 the Investor does not make nor has made any representations or warranties with respect to the transactions contemplated hereby
other than those specifically set forth in Section 6 hereof.


5.16No Integrated
Offering. Assuming the accuracy of the Investor’s representations and warranties set forth in Section 6, 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 1933 Act which would require the registration of any
such securities under the 1933 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.


5.17Seniority.
As of the applicable Representation Date, no Indebtedness or other claim against the Company is senior to 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).


5.18Bankruptcy
Status; Indebtedness. The Company has no current intention or expectation to file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one year from the applicable Representation Date. Schedule 5.18 sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness (as defined below) of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $100,000 (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 $100,000 due under leases required to be capitalized
in accordance with GAAP. The Company is not in default with respect to any Indebtedness.


5.19Regulation
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,




    	17



    	 



    

in the case of clauses (ii) and (iii),
compensation paid to Etico Capital (the “Placement Agent”) in connection with the placement of the Securities.


5.20No Disqualification
Events. Neither the Company, nor any of its predecessors, any affiliated issuer, any
director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner
of 20% or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter
(as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each,
an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described
in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person
is subject to a Disqualification Event.


6. Representations
and Warranties of the Investor. The Investor hereby represents, warrants and covenants that:


6.1Authorization.
The Investor has full power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby and has taken all action necessary to authorize the execution and delivery of this Agreement
and the Registration Rights Agreement, the performance of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby.


6.2No Public
Sale or Distribution. The Investor is (i) acquiring the Commitment Shares and the Notes and (ii) upon conversion of the Notes
will acquire the Conversion Shares for its own account, not as a nominee or agent, and not with a view towards, or for resale in
connection with, the public sale or distribution of any part thereof, except pursuant to sales registered or exempted under the
1933 Act. The Investor is acquiring the Securities hereunder in the ordinary course of its business. The Investor does not presently
have any contract, agreement, undertaking, arrangement or understanding, directly or indirectly, with any individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof (a “Person”) to sell, transfer, pledge, assign or otherwise distribute any
of the Securities.


6.3Accredited
Investor Status; Investment Experience. The Investor is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D. The Investor can bear the economic risk of its investment in the Securities, and has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Securities.


6.4Reliance
on Exemptions. The Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility
of the Investor to acquire the Securities.




    	18



    	 



    

6.5Information.
The Investor and its advisors, if any, have been furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities which have been requested by the Investor. The Investor
and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other
due diligence investigations conducted by the Investor or its advisors, if any, or its representatives shall modify, amend or affect
the Investor’s right to rely on the Company’s representations and warranties contained herein. The Investor understands
that its investment in the Securities involves a high degree of risk. The Investor has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. The Investor
is relying solely on its own accounting, legal and tax advisors, and not on any statements of the Company or any of its agents
or representatives, for such accounting, legal and tax advice with respect to its acquisition of the Securities and the transactions
contemplated by this Agreement.


6.6No Governmental
Review. The Investor understands that no United States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.


6.7Validity;
Enforcement; No Conflicts. This Agreement and each Transaction Document to which the Investor is a party have been duly and
validly authorized, executed and delivered on behalf of the Investor and shall constitute the legal, valid and binding obligations
of the Investor enforceable against the Investor in accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. The execution,
delivery and performance by the Investor of this Agreement and each Transaction Document to which the Investor is a party and the
consummation by the Investor of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational
documents of the Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities or “Blue Sky” laws) applicable to the Investor, except in the case
of clause (ii) above, for such conflicts, defaults or rights which would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of the Investor to perform its obligations hereunder.


6.8Organization
and Standing. The Investor is a limited liability company duly organized, validly existing and in good standing under the laws
of the State of New York.


6.9Brokers
or Finders. The Investor represents and warrants, to the best of its knowledge, that no finder, broker, agent, financial advisor
or other intermediary, nor any purchaser representative or any broker-dealer acting as a broker, is entitled to any compensation
in connection with the transactions contemplated by this Agreement or the transactions contemplated hereby.




    	19



    	 



    

6.10Ability
to Perform. There are no actions, suits, proceedings or investigations pending against Investor or Investor’s assets
before any court or governmental agency (nor is there any threat thereof) which would impair in any way Investor’s ability
to enter into and fully perform its commitments and obligations under this Agreement or the transactions contemplated hereby.


7. Use of
Proceeds. The Investor acknowledges that the Company will use the proceeds received from the purchase of the Notes for, among
other things, (i) costs and expenses relating to the sale of the Notes to the Investor and (ii) general working capital purposes.


8. Rule 144
Availability; Public Information. At all times during the period commencing on the six (6) month anniversary of the Initial
Closing Date and ending at such time that all of the Securities can be sold without the requirement to be in compliance with Rule
144(c)(1) under the 1933 Act and otherwise without restriction or limitation pursuant to Rule 144 under the 1933 Act, the Company
shall use its reasonable best efforts to ensure the availability of Rule 144 under the 1933 Act to the Investor with regard to
the Commitment Shares and the Conversion Shares, including compliance with Rule 144(c)(1) under the 1933 Act. If, (i) at any time
during the period commencing from the six (6) month anniversary of the Initial Closing Date and ending on the first anniversary
of the Additional Closing Date, the Company shall fail for any reason to satisfy the current public information requirement under
Rule 144(c) under the 1933 Act (a “Public Information Failure”), or (ii) the Company shall fail to take
such action as is reasonably requested by the Investor to enable the Investor to sell the Commitment Shares and the Conversion
Shares pursuant to Rule 144 under the 1933 Act (including, without limitation, delivering all such legal opinions, consents, certificates,
resolutions and instructions to the Company’s transfer agent as may be reasonably requested from time to time by the Investor
and otherwise fully cooperate with Investor and Investor’s broker to effect such sale of securities pursuant to Rule 144
under the 1933 Act) (a “Process Failure”), then, in either case,
in addition to the Investor’s other available remedies, the Company shall pay to a Investor, in cash, as 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 Purchase Price of the Investor’s Securities on the day of a Public Information Failure
or Process Failure, as applicable, and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days) thereafter
until (a) in the case of a Process Failure, the date such Process Failure is cured, or (b) in the case of a Public Information
Failure, the earlier of (1) the date such Public Information Failure is cured and (b) such time that such public information is
no longer required for the Investor to transfer the Commitment Shares and the Conversion Shares pursuant to Rule 144 under the
1933 Act. The payments to which the Investor shall be entitled pursuant to this Section 8 are referred to herein as “Rule
144 Failure Payments.” Rule 144 Failure Payments shall be paid on the earlier of (i) the last day of
the calendar month during which such Rule 144 Failure Payments are incurred and (ii) the third (3rd) Trading Day after the event
or failure giving rise to the Rule 144 Failure Payments is cured.






    	20



    	 



    

 


9. Indemnification.
In consideration of the Investor’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless the Investor and each holder of any Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, lawsuits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a
party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in any of the Transaction
Documents, (b) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction
Documents or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Company or any Subsidiary) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of any of the Transaction Documents, (ii) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of the Investor or
holder of the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents.
To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section
9 shall be the same as those set forth in Section 6 of the Registration Rights Agreement. Notwithstanding anything to the contrary
in this Section 9, the Company shall not be obligated to pay an Indemnitee any sums otherwise due under this Section 9 if the Company
has already paid the Indemnitiee such sums for the same Indemnified Liabilities under Section 6 of the Registration Rights Agreement.


10.Participation
Rights. During the period commencing on the date hereof and ending 180 calendar days after the date hereof, neither the Company
nor any of its Subsidiaries shall, directly or indirectly, effect any Subsequent Placement (as defined below) unless the Company
shall have first complied with this Section 10.


10.1At least three
(3) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to the Investor a written notice
of its proposal or intention to effect a Subsequent Placement (each such notice, a “Pre-Notice”), which
Pre-Notice shall not contain any information (including, without limitation, material, non-public information) other than: either
(A) (i) a statement that the Company proposes or intends to effect a Subsequent Placement, (ii) a statement that the statement
in clause (i) above does not constitute material, non-public information and (iii) a statement informing the Investor that it is
entitled to receive an Offer Notice (as defined below) with respect to such Subsequent Placement upon its written request or (B)
if the existence of such Subsequent Placement is, as of the date of such Pre-Notice, material, non-public information, a statement
that the Investor is entitled to receive material, non-public information. Upon the written request of the Investor within three
(3) Trading Days after the Company’s delivery to the Investor of such Pre-Notice, and only upon a written request by the
Investor, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver to the Investor an irrevocable
written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”)
of the securities being




    	21



    	 



    

offered (the “Offered Securities”)
in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and
other terms upon which they are to be issued, sold or exchanged, and the aggregate number or amount of the Offered Securities to
be issued, sold or exchanged, (y) identify the Persons (if known and the Company is not otherwise prohibited from disclosing such
identity) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and
sell to or exchange with the Investor in accordance with the terms of the Offer no less than 30% of the Offered Securities.


10.2To accept
an Offer, in whole or in part, the Investor must deliver a written notice to the Company prior to the end of the third (3rd) Business
Day after the Investor’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion
of the Offered Securities that the Investor elects to purchase (in either case, the “Notice of Acceptance”).
Notwithstanding the foregoing, if the Company desires to materially modify or amend the terms and conditions of the Offer prior
to the expiration of the Offer Period, the Company may deliver to the Investor a new Offer Notice and the Offer Period shall expire
on the third (3rd) Business Day after the Investor’s receipt of such new Offer Notice.


10.3The Company
shall have five (5) Business Days from the expiration of the Offer Period above (i) to offer, issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not been given by the Investor (the “Refused
Securities”) pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”),
but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including,
without limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable
to the Company than those set forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement
Agreement, and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the
termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such
Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.


10.4In the event
the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified
in Section 10.3 above), then the Investor may, at its sole option and in its sole discretion, reduce the number or amount of the
Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered
Securities that the Investor elected to purchase pursuant to Section 10.2 above multiplied by a fraction, (i) the numerator of
which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to the Investor pursuant to this Section 10 prior to such reduction) and (ii) the denominator of
which shall be the original amount of the Offered Securities. In the event that the Investor so elects to reduce the number or
amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have again been offered to the Investor in accordance
with Section 10.1 above.




    	22



    	 



    

10.5Upon the closing
of the issuance, sale or exchange of all or less than all of the Refused Securities, the Investor shall acquire from the Company,
and the Company shall issue to the Investor, the number or amount of Offered Securities specified in its Notice of Acceptance.
The purchase by the Investor of any Offered Securities is subject in all cases to the preparation, execution and delivery by the
Company and the Investor of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form and
substance to the Investor and its counsel.


10.6Any Offered
Securities not acquired by a Buyer or other Persons in accordance with this Section 10 may not be issued, sold or exchanged until
they are again offered to the Investor under the procedures specified in this Agreement.


10.7The Company
and the Investor agree that if the Investor elects to participate in the Offer, neither the Subsequent Placement Agreement with
respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provision whereby the Investor shall be required to agree to any restrictions on trading as to any securities
of the Company 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, any agreement previously entered into with the Company or any instrument received from the Company.


10.8Notwithstanding
anything to the contrary in this Section 10 and unless otherwise agreed to by the Investor, the Company shall either confirm in
writing to the Investor that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case, in such a manner such that the Investor will not be in possession
of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice. If
by such fifth (5th) Business Day, no public disclosure regarding a transaction with respect to the Offered Securities
has been made, and no notice regarding the abandonment of such transaction has been received by the Investor, such transaction
shall be deemed to have been abandoned and the Investor shall not be in possession of any material, non-public information with
respect to the Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the Offered
Securities, the Company shall provide the Investor with another Offer Notice and the Investor will again have the right of participation
set forth in this Section 10. The Company shall not be permitted to deliver more than one Offer Notice to the Investor in any sixty
(60) day period, except as expressly contemplated by the last sentence of Section 10.2.


10.9The restrictions
contained in this Section 10 shall not apply in connection with the issuance of any Excluded Securities (as defined below).


10.10For purposes
of this Section 10, the following definitions shall apply:


(a)“Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior
to or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may
be issued to any employee, officer or director for services provided to the Company in their capacity as such.




    	23



    	 



    

(b)“Convertible
Securities” means any capital stock or other security of the Company or any of its Subsidiaries that is at any time
and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock)
or any of its Subsidiaries.


(c)“Excluded
Securities” means (A) shares of Common Stock or standard options to purchase Common Stock to directors, officers
or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below); (B) shares of Common
Stock issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued
pursuant to an Approved Stock Plan that are covered by clause (A) above) issued prior to the date hereof, provided that the conversion
price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (A) above) is not lowered (other than pursuant to its terms as in existence on the date hereof),
none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (A) above) are amended to increase the number of shares issuable thereunder (other than automatically
pursuant to its terms in existence as of the date hereof) and none of the terms or conditions of any such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A)
above) are otherwise materially changed after the date hereof in any manner that adversely affects the Investor; and (C) the Securities.


(d)“Subsequent
Placement” means any, direct or indirect, issuance, offer, sale, grant of any option or right to purchase, or otherwise
disposition of (or announcement of any issuance, offer, sale, grant of any option or right to purchase or other disposition of)
any equity security or any equity-linked or related security (including, without limitation, any “equity security”
(as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities, any debt, any preferred stock
or any purchase rights) of the Company or any of its Subsidiaries, including, without limitation, pursuant to Section 3(a)(9) or
Section 3(a)(10) of the 1933 Act.


11.Restrictions.


11.1Investor Restrictions.
As long as the Investor or any of its affiliates beneficially own any Registrable Securities (except at such times as the Closing
Bid Price (as defined in the Notes) of the Common Stock is less than $0.01), the Investor agrees to comply with the following restrictions:


(a)No Short
Sales. Neither the Investor nor any of its affiliates nor any entity managed or controlled by the Investor (collectively, the
“Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”) shall, directly
or indirectly, engage in any Short Sales involving the Company’s securities. Notwithstanding the foregoing, it is expressly
understood and agreed that nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit
any Restricted Person from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) the Securities;
or (2) selling a number of shares of Common Stock equal to the number of Conversion Shares that such Restricted Person is entitled
to receive under a pending Conversion Notice (as defined in the




    	24



    	 



    

Notes) but has not yet taken possession
of so long as such Restricted Person delivers the Conversion Shares purchased pursuant to such Conversion Notice to the purchaser
thereof; provided, however, such Restricted Person shall not be required to so deliver any such Conversion Shares subject to such
Conversion Notice if the Company fails for any reason to deliver such Conversion Shares to the Investor on the applicable settlement
date upon the terms and subject to the provisions of the Notes.


(b)Volume Restriction.
The Investor shall not sell Conversion Shares on any Trading Day in an amount, in the aggregate, exceeding the greater of (i) $15,000
or (ii) 15% of the composite aggregate dollar trading volume of the Common Stock as reported on Bloomberg, L.P. for such Trading
Day.


(c)Conversion
Notice Restriction. The Investor shall not deliver more than one Conversion Notice (as defined in the Notes) to the Company
in any ten (10) Trading Day period without the prior consent of the Company.


(d)Trading
Activity Report. If the Investor sells any Conversion Shares or Commitment Shares on any Trading Day, the Investor shall provide
a trading activity report to the Company with respect to sales of Conversion Shares and Commitment Shares on such Trading Day,
substantially in the form attached hereto as Exhibit D.


11.2Company Restrictions.


(a)So long as
any Notes remain outstanding, the Company shall not consummate any exchange (i) of any security of the Company or any of its subsidiaries
for any other security of the Company or any of its subsidiaries except to the extent (x) consummated pursuant to an exchange registered
under a registration statement of the Company filed pursuant to the 1933 Act and declared
effective by the Securities and Exchange Commission or (y) such exchange is exempt from registration pursuant to an exemption provided
under the 1933 Act (other than Section 3(a)(10)
of the 1933 Act) or (ii) of any indebtedness or other securities of the Company or any of its subsidiaries relying on the
exemption provided by Section 3(a)(10) of the 1933 Act. Notwithstanding the foregoing, the
Company shall not, directly or indirectly, cooperate with any person to effect any exchange of securities of the Company (whether
pursuant to Section 3(a)(9) or 3(a)(10) of the 1933 Act or otherwise) in connection with a proposed sale of such securities from
an existing holder of such securities to a third party.


(b)So long as
any Notes remain outstanding, the Company shall not, directly or indirectly, without prior written consent of the Investor, (i)
issue or sell any convertible securities either (A) at a conversion, exercise 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 convertible securities, or (B) with a conversion, exercise or exchange price that is subject to being reset on more than
one occasion either (x) at some future date after the initial issuance of such convertible securities or (y) 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
(other than customary adjustments for “weighted average” or “full-ratchet” antidilution), or (ii) enter
into any agreement (including, without limitation, an “equity line of credit” or an “at-the-market offering”)
whereby the Company or any of its subsidiaries may sell securities at a future determined price (in each case, other than customary




    	25



    	 



    

“preemptive” or “participation”
rights or “weighted average” or “full-ratchet” antidilution or in connection with fixed-price ‘rights
offerings” and similar transactions not in violation of clause (i) above and otherwise permitted under Section 11.2(a)).
The Investor shall be entitled to obtain injunctive relief against the Company and its subsidiaries to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.


12.Miscellaneous


12.1Successors
and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties (including transferees of the Securities). Nothing in
this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.


12.2Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Illinois. The Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in Chicago, Illinois, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, 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 brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


12.3Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.


12.4Notices.
All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient;
if not, then on the next Trading Day, (c) five (5) Trading Days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All communications shall be sent to (a) in the case of the Company, to
Guided Therapeutics, Inc., 5835 Peachtree Corners East, Suite D, Norcross, Georgia 30092, Telephone Number (770) 242-8723, Fax:
(770) 242-8639, Attention: Chief Executive Officer, or (b) in the case of the Investor, to Hanover Holdings I, LLC, a New York
limited liability company, c/o Magna Group, 5 Hanover Square, New York, NY 10004, Telephone Number: (347) 491-4240, Fax: (646)
737-9948, Attention: Marc Manuel, with a copy (which shall not constitute notice) to Greenberg Traurig, LLP, The MetLife Building,
200 Park Avenue, New York, New York 10166, Telephone Number (212) 801-9200, Fax: (212) 801-6400, Attention: Anthony J. Marsico,
Esq.






    	26



    	 



    

 


12.5Finder’s
Fees. Except for the fees and expenses payable to the Placement Agent, which shall be paid by the Company, each party represents
that it neither is nor will be obligated for any finders’ fee or commission in connection with this transaction. The Company
shall indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finders’
fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.


12.6Amendments
and Waivers. No provision of this Agreement may be amended other than by a written instrument signed by both parties hereto.
No provision of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of
such waiver is sought. No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercises thereof
or of any other right, power or privilege.


12.7Severability.
If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.


12.8Entire
Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties and no party
shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically
set forth herein or therein.


12.9Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.


12.10Interpretation.
Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular
the plural, the part the whole, (b) references to any gender include all genders, (c) “including” has the inclusive
meaning frequently identified with the phrase “but not limited to” and (d) references to “hereunder” or
“herein” relate to this Agreement.


12.11Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Investor
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




    	27



    	 



    

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.


12.12Fees
and Expenses. Each party shall bear its own fees and expenses related to the transactions contemplated by the Transaction
Documents; provided, however, that (i) $50,000 (less $15,000 heretofore paid by the Company to the Investor) shall be
withheld by the Investor from its applicable Initial Purchase Price at the Initial Closing as a non-accountable and
non-refundable document preparation fee (the “Document Preparation Fee”) in connection with the
preparation, negotiation, execution and delivery of the Transaction Documents and legal due diligence of the Company, and
shall be paid directly to the Investor’s counsel on the Initial Closing Date by wire transfer of immediately available
funds; for the avoidance of doubt, the Document Preparation Fee (and any portion thereof) shall be non-refundable when paid.
The Company shall pay all transfer agent fees (including, without limitation, any fees required for same-day processing of
any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Investor), fees and
expenses of the Placement Agent, stamp taxes and other taxes and duties levied in connection with the delivery of any
Securities to the Investor.


13.Additional
Defined Terms. In addition to the terms defined elsewhere in this Agreement, the Notes, the following terms have the meanings
set forth in this Section 11:


13.1“1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


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


13.3“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 Convertible Security, Option 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.


13.4“Effective
Date” means the date that the Initial Registration Statement (as defined in the Registration Rights Agreement) filed
pursuant to the Registration Rights Agreement has been declared effective by the Commission.


13.5“Additional
Note Conditions” means, as of any given date of determination: (i) all the Conversion Shares may be issued in full
without violating the rules or regulations of the Trading Market on which the Common Stock is then listed or designated for quotation
(as applicable); (ii) no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which
has not been abandoned, terminated or consummated; (iii) the Company shall have no knowledge of any fact that would reasonably
be expected to cause any Registration Statement required to be filed pursuant to the Registration Rights Agreement to not be effective
or the prospectus contained therein to not be available for the resale of all of the Registrable Securities in accordance with
the terms of the Registration Rights Agreement; (iv) the Investor shall not be in possession of any material, non-public information
provided to any of them by the Company, any of its affiliates or any of their




    	28



    	 



    

respective employees, officers, representatives,
agents or the like (other than any material, non-public information that will be disclosed in the Additional 8-K); (v) there shall
not have occurred any suspension of electronic trading or settlement services by the DTC with respect to the Common Stock occurs
and is continuing or any receipt by the Company of any notice from DTC to the effect that a suspension of electronic trading or
settlement services by DTC with respect to the Common Stock is being imposed or is contemplated (unless, prior to such suspension,
DTC shall have notified the Company in writing that DTC has determined not to impose any such suspension); (vi) no Public Information
Failure shall exist and (vi) there shall not have occurred an Event of Default (as defined in the Initial Note) or an event that
with the passage of time or giving of notice would constitute an Event of Default (as defined in the Initial Note).


13.6“Additional
Note Conditions Failure” means that on any day during the period commencing on the Additional Closing Notice Date
through the Additional Closing Date, the Additional Note Conditions have not been satisfied (or waived in writing by the Investor).


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


13.8“Material
Adverse Effect” means (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.


13.9“Registrable
Securities” shall have the meaning set forth in the Registration Rights Agreement.


13.10“Short
Sales” shall mean “short sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934
Act.


13.11“Subsidiary”
shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary
voting power for the election of directors or other persons performing similar functions are at the time owned directly or indirectly
by the Company and/or any of its other Subsidiaries.


13.12“Trading
Day” means any day on which the Common Stock is traded on the Trading Market, provided that “Trading
Day” shall not include any day on which the Common Stock is scheduled to trade on the Trading Market for less than
4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on the Trading Market (or
if the Trading Market does not designate in advance the closing time of trading on the Trading Market, then during the hour ending
at 4:00:00 p.m., New York City time) unless such day is otherwise designated as a Trading Day in writing by the Investor.


13.13“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 OTC Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital
Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, or the




    	29



    	 



    

OTCQX Marketplace or the OTCQB Marketplace
operated by OTC Markets Group Inc. (or any successor to any of the foregoing).


13.14“VWAP”
means the volume weighted average price (the aggregate sales price of all trades of Common Stock during a Trading Day divided by
the total number of shares of Common Stock traded during such Trading Day) of the Common Stock during a Trading Day as reported
by Bloomberg L.P. using the AQR function.


[SIGNATURES ON THE
FOLLOWING PAGE]




    	30



    	 



    

IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed and delivered as of the date provided above.


 


THE COMPANY


 


GUIDED THERAPEUTICS, INC.


 


 


By: /s/ Gene S. Cartwright


Name: Gene S. Cartwright


Title: President and Chief
Executive Officer


 


 




    	31



    	 



    

IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed and delivered as of the date provided above.


 


THE INVESTOR:


 


 


HANOVER HOLDINGS I, LLC, a New York limited liability
company 






By: /s/ Joshua Sason

Name: Joshua Sason

Title: Managing Member


 


 




    	32



    	 



    

Schedule I


 


 


	(1)	(2)	(3)	(4)	(5)	(6)	(7)
	 	 	 	 	 	 	 
	
        Investor
	
        Address
        and Facsimile Number
	
        Aggregate

        Number of

        Commitment

        Shares
	
        Original
        Principal Amount of Initial Notes
	
        Original
        Principal Amount of Additional Notes
	
        Initial

        Purchase Price
	
        Additional

        Purchase Price

	 	 	 	 	 	 	 
	HANOVER HOLDINGS I, LLC	
        

        c/o Magna Group

        5 Hanover Square

        New York, NY 10004

        Tel: (347) 491-4240

        Fax: (646) 737-9948

        Attention: Marc Manuel

         

        with a copy (which shall not constitute notice) to

         

        Greenberg Traurig, LLP

        The MetLife Building

        200 Park Avenue

        New York, New York 10166

        Tel: (212) 801-9200

        Fax: (212) 801-6400

        Attention: Anthony J. Marsico, Esq.
	321,820	$1,500,000	$2,000,000	$1,000,000	$2,000,000