EXECUTION
COPY


 


SECURITIES
PURCHASE AGREEMENT


 


This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of August 19, 2019, is by and among Toughbuilt
Industries, Inc., a Nevada corporation with offices located at 25371 Commercentre Drive, #200, Lake
Forest, CA 92630 (the “Company”), and each of the investors listed on the Schedule of Buyers attached
hereto (individually, a “Buyer” and collectively, the “Buyers”).


 


RECITALS


 


A.
The Company and each Buyer is 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(b) of
Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the 1933 Act.


 


B.
The Company has authorized two new series’ of convertible notes with an aggregate principal amount of $11.5 million as follows:
(i) a new series of senior convertible notes of the Company, in the aggregate original principal amount of $6.72 million, substantially
in the form attached hereto as Exhibit A-1 (the “Series A Notes”), which Series A Notes shall
be convertible into shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant to the terms of the
Series A Notes, including, without limitation, upon conversion of any principal, interest, late charges or additional amount or
otherwise thereunder, collectively, the “Series A Conversion Shares”), in accordance with the terms of the
Series A Notes; and (ii) a new series of senior secured convertible notes of the Company, in the aggregate original principal
amount of $4.78 million, substantially in the form attached hereto as Exhibit A-2 (the “Series B Notes”,
and together with the Series A Notes, the “Notes”), which Series B Notes shall be convertible into shares of
Common Stock (as defined below) (the shares of Common Stock issuable pursuant to the terms of the Series B Notes, including, without
limitation, upon conversion of any principal, interest, late charges or additional amount or otherwise thereunder, collectively,
the “Series B Conversion Shares”, and together with the Series A Conversion Shares, the “Conversion
Shares”), in accordance with the terms of the Series B Notes.


 


C.
Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) a Series
A Note in the aggregate original principal amount set forth opposite such Buyer’s name in column (3) on the Schedule of
Buyers, (ii) a Series B Note in the aggregate original principal amount set forth opposite such Buyer’s name in column (4)
on the Schedule of Buyers, and (iii) a warrant to initially acquire up to that aggregate number of additional shares of Common
Stock set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers, substantially in the form attached hereto
as Exhibit B (the “Warrants”) (as exercised, collectively, the “Warrant Shares”).


 




    	 



    	 



    

 


D.
At the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
C (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 Agreement), under the 1933
Act and the rules and regulations promulgated thereunder, and applicable state securities laws.


 


E.
The Notes, the Conversion Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”


 


F.
Concurrently herewith the Company and each Buyer, separately, have entered into a Note Securities Purchase Agreement in the form
attached hereto as Exhibit D (each as amended, modified, supplemented, extended, renewed, restated or replaced from
time to time, collectively, the “Note Purchase Agreements”) pursuant to which the Company shall acquire a secured
promissory note issued by the applicable Buyer (each, an “Investor Note”, and collectively, the “Investor
Notes”) as payment of the Series B Purchase Price (as defined below) hereunder.


 


G.
The Notes will rank senior to all outstanding and future indebtedness of the Company, and its Subsidiaries (as defined below)
the Notes will be secured by a first priority perfected security interest in all of the existing and future assets of the Company
and its direct and indirect Subsidiaries, including a pledge of all of the capital stock of each of the Subsidiaries, as evidenced
by (i) a security agreement in the form attached hereto as Exhibit E (the “Security Agreement”),
(ii) account control agreements with respect to certain accounts described in the Note and the Security Agreement, in form and
substance acceptable to each Buyer, duly executed by the Company and each depositary bank (each, an “Controlled Account
Bank”) in which each such account is maintained (the “Controlled Account Agreements”, and together
with the Security Agreement, the Perfection Certificate (as defined below) and the other security documents and agreements entered
into in connection with this Agreement and each of such other documents and agreements, as each may be amended or modified from
time to time, collectively, the “Security Documents”), and (iii) a guaranty executed by each Subsidiary of
the Company, in the form attached hereto as Exhibit F (collectively, the “Guaranties”) pursuant
to which each of them guarantees the obligations of the Company under the Transaction Documents (as defined below).


 


H.
Concurrently herewith, the Company and each Buyer, separately, are entering into that certain Master Netting Agreement, in substantially
the form attached hereto as Exhibit G (the “Master Netting Agreement”), to provide further clarification
of their rights (but not, in the case of each such Buyer only, its obligation) to Net (as defined below) certain Obligations (as
defined in the Master Netting Agreement) arising under and across this Agreement, the Investor Note, the Series B Notes and the
Note Purchase Agreement (collectively, the “Underlying Agreements”) and to treat the Master Netting Agreement,
this Agreement and the other Underlying Agreements as a single agreement for the purposes set forth herein and to treat this Agreement
and the Note Purchase Agreement each as a “securities contract” (11 U.S.C. § 741) or other similar agreements.


 




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AGREEMENT


 


NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:


 


1.
PURCHASE AND SALE OF NOTES AND WARRANTS.


 


(a)
Purchase of Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7
below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the
Company on the Closing Date (as defined below) (a) a Series A Note in the original principal amount as is set forth opposite such
Buyer’s name in column (3) on the Schedule of Buyers, (b) a Series B Note in the aggregate original principal amount as
is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers and (c) Warrants to initially acquire up
to that aggregate number of Warrant Shares as is set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers.


 


(b)
Closing. The closing (the “Closing”) of the purchase of the Notes and the Warrants by the Buyers shall
occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178. The date and time of the Closing (the
“Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions
to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the
Company and each Buyer). As used herein “Business Day” means any day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required by law to remain closed.


 


(c)
Purchase Price. The aggregate purchase price for the Notes and Warrants to be purchased by each Buyer (the “Purchase
Price”) shall be (i) the aggregate amount as set forth opposite such Buyer’s name in column (6) on the Schedule
of Buyers, consisting of (A) a payment in cash of such aggregate amount as set forth opposite such Buyer’s name in column
(7) on the Schedule of Buyers (the “Series A Cash Purchase Price”) (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(g)) to the Company for the Series A Notes and the Warrants to be issued and sold to such Buyer
at the Closing, by wire transfer of immediately available funds in accordance with the Flow of Funds Letter (as defined below)
and (B) the aggregate amount as set forth opposite such Buyer’s name in column (8) on the Schedule of Buyers (the “Series
B Purchase Price”) for the Series B Notes to be satisfied, in full, by the issuance by such Buyer of an Investor Note
pursuant to the Note Purchase Agreement in the aggregate original principal amount equal to the Series B Purchase Price. In addition,
at the Closing, an authorized person of such Buyer shall certify in a written certificate in the form attached hereto as Exhibit
H (the “Investor Collateral Certificate”) that as of the Closing Date the bank account described on
Schedule I to such Investor Note, which secures such Investor Note in accordance therewith, contains at least the Series B Purchase
Price of Eligible Assets (as defined in the Investor Note) as of the Closing Date. For the avoidance of doubt, each Buyer shall
pay, in the aggregate, approximately $869.57 for each $1,000 of principal amount of Notes and related Warrants to be purchased
by such Buyer at the Closing. Each Buyer and the Company agree that the Notes and the Warrants constitute an “investment
unit” for purposes of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”).
The Buyers and the Company mutually agree that the allocation of the issue price of such investment unit between the Notes and
the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall be an aggregate
amount as mutually agreed by the Company and the Required Holders, and neither the Buyers nor the Company shall take any position
inconsistent with such allocation in any tax return or in any judicial or administrative proceeding in respect of taxes.


 




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(d)
Form of Payment. On the Closing Date, (i) each Buyer shall (x) pay its respective Series A Cash Purchase Price (less, in
the case of any Buyer, the amounts withheld pursuant to Section 4(g)) to the Company for the Series A Notes and the Warrants to
be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Flow of
Funds Letter (as defined below) and (y) in accordance with the instructions of the Company in the Flow of Funds Letter, maintain
physical possession of a duly executed Investor Note of such Buyer, in such original principal amount as is set forth across from
such Buyer’s name in column (7) of the Schedule of Buyers, issued pursuant to the Note Purchase Agreement of such Buyer,
both as payment for, and as Collateral (as defined in such Buyer’s Series B Note) securing, such Buyer’s Series B
Note to be issued and sold to such Buyer at the Closing and (ii) the Company shall deliver to each Buyer (A) a Series A Note in
the aggregate original principal amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers,
and (B) a Series B Note in the aggregate original principal amount as is set forth opposite such Buyer’s name in column
(4) on the Schedule of Buyers and (C) a Warrant pursuant to which such Buyer shall have the right to initially acquire up to such
aggregate number of Warrant Shares as is set forth opposite such Buyer’s name in column (5) of the Schedule of Buyers, in
each case, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.


 


(e)
Securities Contract; Netting Safe Harbor. The Company hereby acknowledges and agrees that the rights and obligations of
each Buyer under the Note Purchase Agreement of such Buyer, under the Investor Note of such Buyer, under the Series B Note to
be issued hereunder to such Buyer and the rights and obligations of the Company hereunder, under each such Investor Note, under
each such Series B Note and under each such Note Purchase Agreement, respectively, arise in a single integrated transaction and
constitute related and interdependent obligations within such transaction. The Company and each Buyer, severally, hereby acknowledge
and agree that this Agreement and the Note Purchase Agreement each are a “securities contract” as defined in 11 U.S.C.
§ 741 and that each such Buyer shall have all rights in respect of the Master Netting Agreement, this Agreement and the other
Underlying Agreements as are set forth in 11 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including, without limitation,
all rights of credit, deduction, setoff, offset, recoupment, and netting (each, a “Net”, and collectively,
“Netting”) as are available under the Master Netting Agreement, this Agreement and the other Underlying Agreements,
and all Netting provisions of the Master Netting Agreement, each Series B Note and each Investor Note, including without limitation
the provisions set forth in Section 7 of each Investor Note, are hereby incorporated in this Agreement and made a part hereof
as if such provisions were set forth herein.


 




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2.
BUYER’S REPRESENTATIONS AND WARRANTIES.


 


Each
Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof
and as of the Closing Date:


 


(a)
Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated
by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and
thereunder.


 


(b)
No Public Sale or Distribution. Such Buyer (i) is acquiring its Notes and Warrants, (ii) upon conversion of its Notes will
acquire the Conversion Shares issuable upon conversion thereof, and (iii) upon exercise of its Warrants (other than pursuant to
a Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise thereof, in each case,
for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in
violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however,
by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have any agreement
or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities
laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity (as defined
below) or any department or agency thereof.


 


(c)
Accredited Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D.


 


(d)
Reliance on Exemptions. Such Buyer 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 such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of such Buyer to acquire the Securities.


 


(e)
Information. Such Buyer 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 that have been requested by such
Buyer. Such Buyer 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 such Buyer or its advisors, if any, or its representatives shall modify,
amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such
Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer 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.


 




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(f)
No Governmental Review. Such Buyer 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.


 


(g)
Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and Section 4(h)
hereof: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company,
to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption
from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned
or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule
144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of
Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or
the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii)
neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder. 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 and
such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting
a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the
Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation,
this Section 2(g).


 


(h)
Validity; Enforcement. This Transaction Documents (as defined below) to which such Buyer is a party, in each case, have
been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding
obligations of such Buyer enforceable against such Buyer 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.


 


(i)
No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement
and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of such Buyer, 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 such Buyer is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses
(ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.


 




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(j)
Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.


 


3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.


 


The
Company represents and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:


 


(a)
Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority
to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each
of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material
Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial
or otherwise) or prospects of the Company or any Subsidiary (as defined below), individually or taken as a whole, (ii) the transactions
contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into in
connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of
their respective obligations under any of the Transaction Documents, in any material respect (as defined below). Other than the
Persons (as defined below) set forth on Schedule 3(a), the Company has no Subsidiaries. “Subsidiaries” means
any Person in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or
similar interest of such Person or (II) controls or operates all or any part of the business, operations or administration of
such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.”


 


(b)
Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations
under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof.
Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents
to which it is a party. The execution and delivery of this Agreement and the other Transaction Documents by the Company and its
Subsidiaries, and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Notes and the reservation for issuance and issuance of the Conversion Shares issuable
upon conversion of the Notes and the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares
issuable upon exercise of the Warrants) have been duly authorized by the Company’s board of directors and each of its Subsidiaries’
board of directors or other governing body, as applicable, and (other than the filing with the SEC of one or more Registration
Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings
as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company, its
Subsidiaries, their respective boards of directors or their shareholders or other governing body. This Agreement has been, and
the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company,
and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with
its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities
law. Prior to the Closing, the Transaction Documents to which each Subsidiary is a party will be duly executed and delivered by
each such Subsidiary, and shall constitute the legal, valid and binding obligations of each such Subsidiary, enforceable against
each such Subsidiary in accordance with their respective terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution
may be limited by federal or state securities law. “Transaction Documents” means, collectively, this Agreement,
the Notes, the Warrants, the Guaranties, the Security Documents, the Note Purchase Agreements, the Master Netting Agreement, the
Registration Rights Agreement, the Investor Note, the Voting Agreements (as defined below), the Leak-Out Agreements (as defined
below), the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and instruments entered
into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be
amended from time to time.


 




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(c)
Issuance of Securities. The issuance of the Notes and the Warrants are duly authorized and upon issuance in accordance
with the terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all preemptive
or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security
interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing,
the Company shall have reserved from its duly authorized capital stock not less than 200% of the sum of (i) the maximum number
of Conversion Shares issuable upon conversion of the Notes (assuming for purposes hereof that (x) the Notes are convertible at
the Alternate Conversion Price (as defined in the Notes) as of the Closing Date, (y) interest on the Notes shall accrue through
Maturity Date (as defined in the Notes) and will be converted in shares of Common Stock at a conversion price equal to the Alternate
Conversion Price assuming an Alternate Conversion Date (as defined in the Note) as of the Closing Date and (z) any such conversion
shall not take into account any limitations on the conversion of the Notes set forth in the Notes), and (ii) the maximum number
of Warrant Shares initially issuable upon exercise of the Warrants (without taking into account any limitations on the exercise
of the Warrants set forth therein). Upon issuance or conversion in accordance with the Notes or exercise in accordance with the
Warrants (as the case may be), the Conversion Shares and the Warrant Shares, respectively, when issued, will be validly issued,
fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and
warranties of the Buyers in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration
under the 1933 Act.


 


(d)
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries
and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes, the Warrants, the Conversion Shares and the Warrant Shares and the reservation for issuance
of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of the Articles of Incorporation (as defined
below) (including, without limitation, any certificate of designation contained therein), Bylaws (as defined below), certificate
of formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company or any
of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or
give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules and regulations
of the Nasdaq Capital Market (the “Principal Market”) and including all applicable foreign, federal and state
laws, rules and regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company
or any of its Subsidiaries is bound or affected.


 


(e)
Consents. Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or
make any filing or registration with (other than the filing with the SEC of one or more Registration Statements in accordance
with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings as may be required by
any state securities agencies), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any
other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction
Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations
which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or
effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances
which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or
filings contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market
and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock
in the foreseeable future. “Governmental Entity” means any nation, state, county, city, town, village, district,
or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or
quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any
court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of
the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or
any of the foregoing.


 




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(f)
Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor
or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents
in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such
Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s and each Subsidiary’s
decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by
the Company, each Subsidiary and their respective representatives.


 


(g)
No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates,
nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment
of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by
any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby, including, without limitation,
placement agent fees payable to Maxim Group LLC, as placement agent (the “Placement Agent”) in connection with
the sale of the Securities, which are intended to be on the amount of proceeds to the Company at Closing, as opposed to the face
amount of the Investor Notes. The fees and expenses of the Placement Agent to be paid by the Company or any of its Subsidiaries
are as set forth on Schedule 3(g) attached hereto. The Company shall pay, and hold each Buyer harmless against, any liability,
loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection
with any such claim. The Company acknowledges that it has engaged the Placement Agent in connection with the sale of the Securities.
Other than the Placement Agent, neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent
in connection with the offer or sale of the Securities.


 


(h)
No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on 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 require registration of the issuance of any of the Securities under the 1933 Act, whether through integration
with prior offerings or otherwise, or caused this offering of the Securities to require approval of shareholders of the Company
for purposes of the 1933 Act or under any applicable shareholder approval provisions, including, without limitation, under the
rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or
designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take
any action or steps that would require registration of the issuance of any of the Securities under the 1933 Act (other than pursuant
to the Registration Rights Agreement) or cause the offering of any of the Securities to be integrated with other offerings of
securities of the Company.


 




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(i)
Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares and Warrant Shares will
increase in certain circumstances. The Company further acknowledges that its obligation to issue the Conversion Shares pursuant
to the terms of the Notes in accordance with this Agreement and the Notes and the Warrant Shares upon exercise of the Warrants
in accordance with this Agreement, the Notes and the Warrants is, in each case, absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other shareholders of the Company.


 


(j)
Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition, interested shareholder, business combination, poison
pill (including, without limitation, any distribution under a rights agreement), shareholder rights plan or other similar anti-takeover
provision under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the
Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any
shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or
a change in control of the Company or any of its Subsidiaries.


 


(k)
SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all
reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to
the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits and appendices
included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter
referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyers or their
respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As
of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied
in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect
thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in
the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based
upon facts and circumstances known by the Company on the date hereof and there are no loss contingencies that are required to
be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided
for by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company to any
of the Buyers which is not included in the SEC Documents (including, without limitation, information referred to in Section 2(e)
of this Agreement or in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance
under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements
(including, without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included
in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or circumstances
which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials
Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent
accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for
the Company to amend or restate any of the Financial Statements.


 




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(l)
Absence of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in
a Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities,
properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its
Subsidiaries. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither
the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate,
outside of the ordinary course of business or (iii) made any capital expenditures, individually or in the aggregate, outside of
the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant
to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the
Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company and its
Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent”
means, (i) with respect to the Company and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the
Company’s and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’
total Indebtedness (as defined below), (B) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company and its Subsidiaries intend
to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (ii) with respect
to the Company and each Subsidiary, individually, (A) the present fair saleable value of the Company’s or such Subsidiary’s
(as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (B) the Company or such
Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured or (C) the Company or such Subsidiary (as the case may be) intends to
incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. Neither the
Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business
or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small
capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.


 




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(m)
No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has
occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of
their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial
or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement
on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly
announced, (ii) could have a material adverse effect on any Buyer’s investment hereunder or (iii) could have a Material
Adverse Effect.


 


(n)
Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of
or in default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding
series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of
formation, memorandum of association, articles of association, Articles of Incorporation or certificate of incorporation or bylaws,
respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually
or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation
of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that
could reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During
the two years prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market,
(ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received
no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock
from the Principal Market. The Company and each of its Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess
such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and
neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding
upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably
be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries,
any acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have not had and would not
reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.


 




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(o)
Foreign Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee,
nor any other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”)
have violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given,
promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official
capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually
and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate
knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Government Official, for the purpose of:


 


(i)
(A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official
to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government
Official to influence or affect any act or decision of any Governmental Entity, or


 


(ii)
assisting the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company
or its Subsidiaries.


 


(p)
Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.


 


(q)
Transactions With Affiliates. No current or former employee, partner, director, officer or shareholder (direct or indirect)
of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate of any thereof, or any
relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party
to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for
the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such director,
officer or shareholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees,
officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation,
firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except
for a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on
or quoted through an Eligible Market (as defined in the Notes)), nor does any such Person receive income from any source other
than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue
to the Company or its Subsidiaries. No employee, officer, shareholder or director of the Company or any of its Subsidiaries or
member of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or
any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for
payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii)
for other standard employee benefits made generally available to all employees or executives (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of the Company).


 




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(r)
Equity Capitalization. 


 


(i)
Definitions:


 


(A)
“Common Stock” means (x) the Company’s shares of common stock, $0.0001 par value per share, and (y) any
capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such
common stock.


 


(B)
“Preferred Stock” means (x) the Company’s blank check preferred stock, $0.0001 par value per share, the
terms of which may be designated by the board of directors of the Company in a certificate of designations and (y) any capital
stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred
stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).


 


(ii)
Authorized and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of
(x) 100,000,000 shares of Common Stock, of which, 25,663,763 are issued and outstanding and [    ] shares are reserved for issuance
pursuant to Convertible Securities (as defined below) (other than the Notes and the Warrants) exercisable or exchangeable for,
or convertible into, shares of Common Stock and (y) (A) 5,000,000 shares of undesignated Preferred Stock, none of which are issued
and outstanding, (B) 0 shares of Series A Preferred Stock, none of which are issued and outstanding, (C) 0 hares of Series B
Preferred Stock, none of which are issued and outstanding, and (D) 4,268shares of Series C Preferred Stock, 4,268 of which are
issued and outstanding, . No shares of Common Stock are held in the treasury of the Company.


 


(iii)
Valid Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Schedule 3(r)(iii) sets forth the number of shares
of Common Stock that are (A) reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Notes
and the Warrants) and (B) that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule
405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s
issued and outstanding Common Stock are “affiliates” without conceding that any such Persons are “affiliates”
for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the Company’s knowledge, no Person
owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on the assumption that
all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised
or converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”)
contained therein without conceding that such identified Person is a 10% shareholder for purposes of federal securities laws).


 




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(iv)
Existing Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s
shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted
by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares,
interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements
by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or
capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or
any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the
Registration Rights Agreement); (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries;
(E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance
of the Securities; and (F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement.


 


(v)
Organizational Documents. The Company has furnished to the Buyers true, correct and complete copies of the Company’s
Articles of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms
of all Convertible Securities and the material rights of the holders thereof in respect thereto.


 






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(s)
Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed on Schedule
3(r), has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) has any financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries;
(iv) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness,
except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or
(v) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment
of the Company’s officers, has or is expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
have any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which,
individually or in the aggregate, do not or could not have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed
as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance
with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all
reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations
evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds
of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which,
in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness,
and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will
be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.


 




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(t)
Litigation. There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market,
any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its
Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, except
as set forth in Schedule 3(t). No director, officer or employee of the Company or any of its subsidiaries has willfully
violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing,
there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving
the Company, any of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The
SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company
under the 1933 Act or the 1934 Act. After reasonable inquiry of its employees, the Company is not aware of any fact which might
result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Neither the Company
nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental
Entity.


 


(u)
Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance
coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.


 






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(v)
Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or
employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No
executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of its
Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary
or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No executive officer or other
key employee of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or other key employee
(as the case may be) does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where
failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.


 


(w)
Title.


 


(i)
Real Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property,
facilities or other interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”)
owned by the Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject
to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for
(a) Liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries
are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.


 


(ii)
Fixtures and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold
interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances
that are used by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”).
The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which
they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient
for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior
to the Closing. Each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except
for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto.


 




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(x)
Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications
and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses
as now conducted and presently proposed to be conducted. Each of patents owned by the Company or any of its Subsidiaries is listed
on Schedule 3(x)(i). Except as set forth in Schedule 3(x)(ii), none of the Company’s Intellectual Property Rights have expired
or terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within three years
from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries
of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge
of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual
Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise
to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.


 


(y)
Environmental Laws. (i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as
defined below), (B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal,
state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans
or regulations issued, entered, promulgated or approved thereunder.


 




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(ii)
No Hazardous Materials:


 


(A)
have been disposed of or otherwise released from any Real Property of the Company or any of its Subsidiaries in violation of any
Environmental Laws; or


 


(B)
are present on, over, beneath, in or upon a Real Property or any portion thereof in quantities that would constitute a violation
of any Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates
any Environmental Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.


 


(iii)
Neither the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed
of or otherwise located on any Real Property any Hazardous Materials, including, without limitation, such substances as asbestos
and polychlorinated biphenyls.


 


(iv)
None of the Real Property are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related
Liens.


 


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


 


(aa)
Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income
and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid
all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as to qualify
as a passive foreign investment company, as defined in Section 1297 of the Code. The net operating loss carryforwards (“NOLs”)
for United States federal income tax purposes of the consolidated group of which the Company is the common parent, if any, shall
not be adversely effected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an “ownership
change” within the meaning of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.


 




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(bb)
Internal Accounting and Disclosure Controls. The Company and each of its Subsidiaries maintains internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles, including that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that
it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and its principal financial officer or officers,
as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of its Subsidiaries has received
any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness
or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.


 


(cc)
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any
of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in
its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.


 


(dd)
Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment
company,” an affiliate of an “investment company,” a company controlled by an “investment company”
or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as amended.


 


(ee)
Acknowledgement Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following
the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none
of the Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or
any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including, without limitation, purchasing
or selling, long and/or short) any securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative”
transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short” position in
the Common Stock which was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction
Documents; (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty
in any “derivative” transaction; and (iv) each Buyer may rely on the Company’s obligation to timely deliver
shares of Common Stock upon conversion, exercise or exchange, as applicable, of the Securities as and when required pursuant to
the Transaction Documents for purposes of effecting trading in the Common Stock of the Company. The Company further understands
and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to
the Press Release (as defined below) one or more Buyers may engage in hedging and/or trading activities (including, without limitation,
the location and/or reservation and/or “pay-for-hold” arrangements of borrowable shares of Common Stock) at various
times during the period that the Securities are outstanding, including, without limitation, during the periods that the value
and/or number of the Warrant Shares or Conversion Shares, as applicable, deliverable with respect to the Securities are being
determined and such hedging and/or trading activities (including, without limitation, the location and/or reservation and/or “pay-for-hold”
arrangement of borrowable shares of Common Stock), if any, can reduce the value of the existing shareholders’ equity interest
in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants
or any other Transaction Document or any of the documents executed in connection herewith or therewith and waives the right to
make any claims against the Investor resulting from such hedging and/or trading activities in the shares of Common Stock.


 




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(ff)
Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person
acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company or any of its Subsidiaries 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 (other
than the Placement Agent), (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect
to any securities of the Company or any of its Subsidiaries.


 


(gg)
U.S. Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long
as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning
of Section 897 of the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.


 


(hh)
Registration Eligibility. The Company is eligible to register the Registrable Securities (as defined in the Registration
Rights Agreement) for resale by the Buyers using Form [S-3] promulgated under the 1933 Act.


 


(ii)
Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required
to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or
will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied
with.


 


(jj)
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of
1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%)
or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 




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(kk)
Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).


 


(ll)
Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the
best of the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors,
employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise
with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized
any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a
kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive
public office except for personal political contributions not involving the direct or indirect use of funds of the Company or
any of its Subsidiaries.


 


(mm)
Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation,
the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including,
but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations
contained in 31 CFR, Subtitle B, Chapter V.


 


(nn)
Management. Except as set forth in Schedule 3(nn) hereto, during the past five year period, no current or former
officer or director or, to the knowledge of the Company, no current ten percent (10%) or greater shareholder of the Company or
any of its Subsidiaries has been the subject of:


 


(i)
a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal
agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years
before the filing of such petition or such appointment, or any corporation or business association of which such person was an
executive officer at or within two years before the time of the filing of such petition or such appointment;


 


(ii)
a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do
not relate to driving while intoxicated or driving under the influence);


 


(iii)
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining any such person from, or otherwise limiting, the following activities:


 


(1)
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in
or continuing any conduct or practice in connection with such activity;


 




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(2)
Engaging in any particular type of business practice; or


 


(3)
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation
of securities laws or commodities laws;


 


(iv)
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise
limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph,
or to be associated with persons engaged in any such activity;


 


(v)
a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities
law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or


 


(vi)
a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or
vacated.


 


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


 


(pp)
No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed
by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the
Company’s ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to
the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC.
Based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or
any part thereof.


 




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(qq)
No Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under
the 1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer,
any director, executive officer, other officer of the Company participating in the offering 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” and, together, “Issuer Covered Persons”) is subject
to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 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. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided
thereunder.


 


(rr)
Other Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will
be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of
any Regulation D Securities.


 


(ss)
No Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the Transaction Documents.


 


(tt)
Public Utility Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.


 


(uu)
Federal Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility”
under the Federal Power Act, as amended.


 


(vv)
Ranking of Notes. Other than Permitted Indebtedness (as defined in the Notes) secured by Permitted Liens (as defined in
the Notes), if any, no Indebtedness of the Company, at the Closing, will be senior to, or pari passu with, the Notes in
right of payment, whether with respect to payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise.


 






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(ww)
Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers
or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public
information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing
representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company
and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished
by or on behalf of the Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of
the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction
Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so
provided and will 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 the light of the circumstances under which they were made, not misleading. Each press release
issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at
the time of release 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 the light of the circumstances under which they are made, not misleading.
No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which,
under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company
but which has not been so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf
of the Company or any of its Subsidiaries and made available to you have been prepared in good faith based upon reasonable assumptions
and represented, at the time each such financial projection or forecast was delivered to each Buyer, the Company’s best
estimate of future financial performance (it being recognized that such financial projections or forecasts are not to be viewed
as facts and that the actual results during the period or periods covered by any such financial projections or forecasts may differ
from the projected or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.


 








4.
COVENANTS.


 


(a)
Best Efforts. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to
be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of
the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.


 


(b)
Form D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and
to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities
for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of
the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action
so taken to the Buyers on or prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement,
the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable
securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky”
laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and
the like relating to the offering and sale of the Securities to the Buyers.


 






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(c)
Reporting Status. Until the date on which the Buyers shall have sold all of the Registrable Securities (the “Reporting
Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and
the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would no longer require or otherwise permit such termination. From the time Form S-3 is available
to the Company for the registration of the Registrable Securities, the Company shall take all actions necessary to maintain its
eligibility to register the Registrable Securities for resale by the Buyers on Form S-3.


 


(d)
Use of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes, but
not, directly or indirectly, for (i) except as set forth on Schedule 4(d), the satisfaction of any indebtedness of the Company
or any of its Subsidiaries, (ii) the redemption or repurchase of any securities of the Company or any of its Subsidiaries, or
(iii) the settlement of any outstanding litigation.


 


(e)
Financial Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights
Agreement) during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the
public through the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports
on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, shareholders’
equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with
the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the
same day as the release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries and (iii)
unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or given
to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders.


 


(f)
Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the
Registrable Securities upon each national securities exchange and automated quotation system, if any, upon which the Common Stock
is then listed or designated for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such
listing or designation for quotation (as the case may be) of all Registrable Securities from time to time issuable under the terms
of the Transaction Documents on such national securities exchange or automated quotation system. The Company shall maintain the
Common Stock’s listing or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange,
the NYSE American, the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible Market”).
Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting
or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying
its obligations under this Section 4(f).


 




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(g)
Fees. The Company shall reimburse the lead Buyer for all costs and expenses incurred by it or its affiliates in connection
with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents (including,
without limitation, as applicable, all reasonable legal fees of outside counsel and disbursements of Kelley Drye & Warren
LLP, counsel to the lead Buyer, any other reasonable fees and expenses in connection with the structuring, documentation, negotiation
and closing of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection
therewith) (the “Transaction Expenses”) and shall be withheld by the lead Buyer from its Purchase Price at
the Closing, less $35,000 previously paid by the Company to the lead Buyer; provided, that the Company shall promptly reimburse
Kelley Drye & Warren LLP on demand for all Transaction Expenses not so reimbursed through such withholding at the Closing.
The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, Controlled Account
Bank fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions (other than for Persons engaged by any
Buyer) relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees or commissions
payable to the Placement Agent, who is the Company’s sole placement agent in connection with the transactions contemplated
by this Agreement). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any
such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the Buyers.


 


(h)
Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and
agrees that the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment
of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any
notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including,
without limitation, Section 2(g) hereof; provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company
hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with
a pledge of the Securities to such pledgee by a Buyer.


 


(i)
Disclosure of Transactions and Other Material Information.


 


(i)
Disclosure of Transaction. The Company shall, on or before 9:30 a.m., New York time, on the first (1st) Business
Day after the date of this Agreement, issue a press release (the “Press Release”) reasonably acceptable to
the Buyers disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or before 9:30
a.m., New York time, on the first (1st) Business Day after the date of this Agreement, the Company shall file a Current
Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (and
all schedules to this Agreement), the form of Notes, the form of Investor Note, the form of the Warrants, the form of Guaranties,
the form of Security Documents, the form of the Registration Rights Agreement, the form of Master Netting Agreement, the form
of Voting Agreement, the form of Leak-Out Agreement and the form of Note Purchase Agreement) (including all attachments, the “8-K
Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information
(if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon
the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under
any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.


 




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(ii)
Limitations on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its
and their respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information
regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such
Buyer (which may be granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing
covenants, including, without limitation, Section 4(o) of this Agreement, or any of the covenants or agreements contained in any
other Transaction Document, by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees
and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein
or in the Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval
by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer
shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees,
affiliates, shareholders or agents, for any such disclosure. To the extent that the Company delivers any material, non-public
information to a Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have
any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject
to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval
of any Buyer, to make the Press Release and any press release or other public disclosure with respect to such transactions (i)
in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations
(provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release
or other public disclosure prior to its release). Without the prior written consent of the applicable Buyer (which may be granted
or withheld in such Buyer’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates
to not) disclose the name of such Buyer in any filing, announcement, release or otherwise. Notwithstanding anything contained
in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges
and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive
and binding agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer may bind
any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any
material, non-public information regarding the Company or any of its Subsidiaries.


 




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(iii)
Other Confidential Information. Disclosure Failures; Disclosure Delay Payments. In addition to other remedies set forth
in this Section 4(i), and without limiting anything set forth in any other Transaction Document, at any time after the Closing
Date if the Company, any of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides any
Buyer with material non-public information relating to the Company or any of its Subsidiaries (each, the “Confidential
Information”), the Company shall, on or prior to the applicable Required Disclosure Date (as defined below), publicly
disclose such Confidential Information on a Current Report on Form 8-K or otherwise (each, a “Disclosure”).
From and after such Disclosure, the Company shall have disclosed all Confidential Information provided to such Buyer by the Company
or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. In addition, effective upon such Disclosure, the Company acknowledges and agrees that
any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the
Buyers or any of their affiliates, on the other hand, shall terminate. In the event that the Company fails to effect such Disclosure
on or prior to the Required Disclosure Date and such Buyer shall have possessed Confidential Information for at least ten (10)
consecutive Trading Days (each, a “Disclosure Failure”), then, as partial relief for the damages to such Buyer
by reason of any such delay in, or reduction of, its ability to buy or sell shares of Common Stock after such Required Disclosure
Date (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to such
Buyer an amount in cash equal to the greater of (I) two percent (2%) of the aggregate principal of Notes purchased by such Buyer
hereunder and (II) the applicable Disclosure Restitution Amount, on each of the following dates (each, a “Disclosure
Delay Payment Date”): (i) on the date of such Disclosure Failure and (ii) on every thirty (30) day anniversary such
Disclosure Failure until the earlier of (x) the date such Disclosure Failure is cured and (y) such time as all such non-public
information provided to such Buyer shall cease to be Confidential Information (as evidenced by a certificate, duly executed by
an authorized officer of the Company to the foregoing effect) (such earlier date, as applicable, a “Disclosure Cure Date”).
Following the initial Disclosure Delay Payment for any particular Disclosure Failure, without limiting the foregoing, if a Disclosure
Cure Date occurs prior to any thirty (30) day anniversary of such Disclosure Failure, then such Disclosure Delay Payment (prorated
for such partial month) shall be made on the second (2nd) Business Day after such Disclosure Cure Date. The payments to which
a Buyer shall be entitled pursuant to this Section 4(l)(iii) are referred to herein as “Disclosure Delay Payments.”
In the event the Company fails to make Disclosure Delay Payments in a timely manner in accordance with the foregoing, such Disclosure
Delay Payments shall bear interest at the rate of two percent (2%) per month (prorated for partial months) until paid in full.


 




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(iv)
For the purpose of this Agreement the following definitions shall apply:


 


(1)
“Disclosure Failure Market Price” means, as of any Disclosure Delay Payment Date, the price computed as the
quotient of (I) the sum of the five (5) highest VWAPs (as defined in the Warrants) of the Common Stock during the applicable Disclosure
Restitution Period (as defined below), divided by (II) five (5) (such period, the “Disclosure Failure Measuring Period”).
All such determinations to be appropriately adjusted for any share dividend, share split, share combination, reclassification
or similar transaction that proportionately decreases or increases the Common Stock during such Disclosure Failure Measuring Period.


 


(2)
“Disclosure Restitution Amount” means, as of any Disclosure Delay Payment Date, the product of (x) difference
of (I) the Disclosure Failure Market Price less (II) the lowest purchase price, per share of Common Stock, of any Common Stock
issued or issuable to such Buyer pursuant to this Agreement or any other Transaction Documents, multiplied by (y) 40% of the aggregate
daily dollar trading volume (as reported on Bloomberg (as defined in the Warrants)) of the Common Stock on the Principal Market
for each Trading Day (as defined in the Warrants) either (1) with respect to the initial Disclosure Delay Payment Date, during
the period commencing on the applicable Required Disclosure Date through and including the Trading Day immediately prior to the
initial Disclosure Delay Payment Date or (2) with respect to each other Disclosure Delay Payment Date, during the period commencing
the immediately preceding Disclosure Delay Payment Date through and including the Trading Day immediately prior to such applicable
Disclosure Delay Payment Date (such applicable period, the “Disclosure Restitution Period”).


 


(3)
“Required Disclosure Date” means (x) if such Buyer authorized the delivery of such Confidential Information,
either (I) if the Company and such Buyer have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure
of such Confidential Information, such agreed upon date or (II) otherwise, the seventh (7th) calendar day after the
date such Buyer first received any Confidential Information or (y) if such Buyer did not authorize the delivery of such Confidential
Information, the first (1st) Business Day after such Buyer’s receipt of such Confidential Information.


 


(j)
Additional Registration Statements. Until the Applicable Date (as defined below) and at any time thereafter while any Registration
Statement is not effective or the prospectus contained therein is not available for use or any Current Public Information Failure
(as defined in the Registration Rights Agreement) exists, the Company shall not file a registration statement or an offering statement
under the 1933 Act relating to securities that are not the Registrable Securities (other than a registration statement on Form
S-8 or such supplements or amendments to registration statements that are outstanding and have been declared effective by the
SEC as of the date hereof (solely to the extent necessary to keep such registration statements effective and available and not
with respect to any Subsequent Placement)). “Applicable Date” means the later of (A) the Stockholder Approval
Date and (B) the earlier of (x) the first date on which the resale by the Buyers of all the Registrable Securities required to
be filed on the initial Registration Statement (as defined in the Registration Rights Agreement) pursuant to the Registration
Rights Agreement is declared effective by the SEC (and each prospectus contained therein is available for use on such date) or
(y) the first date on which all of the Registrable Securities are eligible to be resold by the Buyers pursuant to Rule 144 (or,
if a Current Public Information Failure has occurred and is continuing, such later date after which the Company has cured such
Current Public Information Failure).


 






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(k)
Additional Issuance of Securities. So long as any Buyer beneficially owns any Securities, the Company will not, without
the prior written consent of the Required Holders, issue any Notes (other than to the Buyers as contemplated hereby) and the Company
shall not issue any other securities that would cause a breach or default under the Notes or the Warrants. The Company agrees
that for the period commencing on the date hereof and ending on the date immediately following the later of (x) February 1, 2020
and (y) the 90th Trading Day after the Applicable Date (provided that such period shall be extended by the number of
calendar days during such period and any extension thereof contemplated by this proviso on which any Registration Statement is
not effective or any prospectus contained therein is not available for use or any Current Public Information Failure exists) (the
“Restricted Period”), neither the Company nor any of its Subsidiaries shall directly or indirectly issue, offer,
sell, grant any option or right to purchase, or otherwise dispose of (or announce 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 (as defined below), any debt, any preferred stock or any purchase rights) (any such issuance, offer, sale, grant, disposition
or announcement (whether occurring during the Restricted Period or at any time thereafter) is referred to as a “Subsequent
Placement”). Notwithstanding the foregoing, this Section 4(k) shall not apply in respect of the issuance of (i) 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), provided that (1) all such issuances (taking into account the shares
of Common Stock issuable upon exercise of such options) after the date hereof pursuant to this clause (i) do not, in the aggregate,
exceed more than either (x) with respect to Michael Panosian and Josh Keeler, not to exceed 15% of the Common Stock issued and
outstanding immediately prior to the date hereof, in the aggregate or (y) with respect to any other employee, officer or director
of the Company, not to exceed 5% of the Common Stock issued and outstanding immediately prior to the date hereof, in the aggregate
and (2) the exercise price of any such options is not lowered, none of such options are amended to increase the number of shares
issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that
adversely affects any of the Buyers; (ii) 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 (i)
above) issued prior to the date hereof, provided that the conversion, exercise or other method of issuance (as the case may be)
of any such Convertible Security is made solely pursuant to the conversion, exercise or other method of issuance (as the case
may be) provisions of such Convertible Security that were in effect on the date immediately prior to the date of this Agreement,
the conversion, exercise or issuance 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 (i) above) is not lowered, 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 (i) above) are amended to increase the number of shares issuable thereunder 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 (i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (iii)
the Conversion Shares, and (iv) the Warrant Shares (each of the foregoing in clauses (i) through (iv), collectively the “Excluded
Securities”). “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. “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.


 






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(l)
Reservation of Shares. So long as any of the Notes or Warrants remain outstanding, the Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, no less than 200% of (i) the maximum number of shares
of Common Stock issuable upon conversion of all the Notes then outstanding (assuming for purposes hereof that (x) the Notes are
convertible at the Alternate Conversion Price assuming an Alternate Conversion Date as of the applicable date of determination,
(y) interest on the Notes shall accrue through the Maturity Date and will be converted in shares of Common Stock at a conversion
price equal to the Alternate Conversion Price assuming an Alternate Conversion Date as of the applicable date of determination
and (z) any such conversion shall not take into account any limitations on the conversion of the Notes set forth in the Notes),
and (ii) the maximum number of Warrant Shares issuable upon exercise of all the Warrants then outstanding (without regard to any
limitations on the exercise of the Warrants set forth therein) (collectively, the “Required Reserve Amount”);
provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 4(l) be reduced other than
proportionally in connection with any conversion, exercise and/or redemption, as applicable of Notes and Warrants. If at any time
the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount,
the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to authorize additional shares to meet the Company’s obligations
pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, obtain shareholder approval
of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in
the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve
Amount.


 


(m)
Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance
or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually
or in the aggregate, in a Material Adverse Effect.


 


(n)
Variable Securities. . So long as any Notes remain outstanding, the Company and each Subsidiary shall be prohibited from
effecting or entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction. “Variable
Rate Transaction” means a transaction in which the Company or any Subsidiary (i) issues or sells 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 at some future date after the initial issuance of
such Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock or (ii) enters into any agreement (including, without limitation, an equity
line of credit or an “at-the-market” offering) whereby the Company or any Subsidiary may sell securities at a future
determined price (other than standard and customary “preemptive” or “participation” rights). Each Buyer
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.


 






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(o)
Participation Right. At any time on or prior to the third anniversary of the Closing Date, neither the Company nor any
of its Subsidiaries shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied
with this Section 4(o). The Company acknowledges and agrees that the right set forth in this Section 4(o) is a right granted by
the Company, separately, to each Buyer.


 


(i)
At least three (3) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer
a written notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including,
without limitation, material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes
or contains material, non-public information, a statement asking whether the Investor is willing to accept material non-public
information or (B) if the proposed Offer Notice does not constitute or contain material, non-public information, (x) a statement
that the Company proposes or intends to effect a Subsequent Placement, (y) a statement that the statement in clause (x) above
does not constitute material, non-public information and (z) a statement informing such Buyer that it is entitled to receive an
Offer Notice (as defined below) with respect to such Subsequent Placement upon its written request. Upon the written request of
a Buyer within three (3) Trading Days after the Company’s delivery to such Buyer of such Pre-Notice, and only upon a written
request by such Buyer, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver to such Buyer
an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange
(the “Offer”) of the securities being offered (the “Offered Securities”) in a Subsequent
Placement, which Offer Notice shall (A) identify and describe the Offered Securities, (B) describe the price and other terms upon
which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged,
(C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged
and (D) offer to issue and sell to or exchange with such Buyer in accordance with the terms of the Offer such Buyer’s pro
rata portion of 50% of the Offered Securities, provided that the number of Offered Securities which such Buyer shall have the
right to subscribe for under this Section 4(o) shall be (x) based on such Buyer’s pro rata portion of the aggregate original
principal amount of the Notes purchased hereunder by all Buyers (the “Basic Amount”), and (y) with respect
to each Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic
Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than
their Basic Amounts (the “Undersubscription Amount”), which process shall be repeated until each Buyer shall
have an opportunity to subscribe for any remaining Undersubscription Amount.


 






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(ii)
To accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the third
(3rd) Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth
the portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all
of its Basic Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice
of Acceptance”). If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts,
then each Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition
to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the
“Available Undersubscription Amount”), each Buyer who has subscribed for any Undersubscription Amount shall
be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to
the extent it deems reasonably necessary. Notwithstanding the foregoing, if the Company desires to modify or amend the terms and
conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to each Buyer a new Offer Notice
and the Offer Period shall expire on the third (3rd) Business Day after such Buyer’s receipt of such new Offer Notice.


 


(iii)
The Company shall have three (3) Business Days from the expiration of the Offer Period above (A) 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 a Buyer (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 (B) to publicly announce (x) the execution of such Subsequent Placement
Agreement, and (y) either (I) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (II)
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.


 


(iv)
In 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 4(o)(iii) above), then each Buyer may, at its sole option and in its sole discretion, withdraw
its Notice of Acceptance or 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 such Buyer elected to purchase pursuant
to Section 4(o)(ii) 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 Buyers pursuant
to this Section 4(o) prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities.
In the event that any Buyer 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 Buyers in accordance with Section 4(o)(i) above.


 






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(v)
Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire
from the Company, and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice
of Acceptance, as reduced pursuant to Section 4(o)(iv) above if such Buyer has so elected, upon the terms and conditions specified
in the Offer. The purchase by such Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery
by the Company and such Buyer of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in
form and substance to such Buyer and its counsel.


 


(vi)
Any Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(o) may not be issued, sold or
exchanged until they are again offered to such Buyer under the procedures specified in this Agreement.


 


(vii)
The Company and each Buyer agree that if any Buyer elects to participate in the Offer, (x) 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 such Buyer shall be required to agree to any restrictions on
trading as to any securities of the Company or be designed, in the reasonable opinion of the Buyer, to circumvent the Company’s
obligations pursuant to the provisions of this Section 4(o) 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, and (y) any registration rights set forth in such Subsequent Placement Documents shall be
similar in all material respects to the registration rights contained in the Registration Rights Agreement.


 


(viii)
Notwithstanding anything to the contrary in this Section 4(o) and unless otherwise agreed to by such Buyer, the Company shall
either confirm in writing to such Buyer 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 such Buyer 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 such Buyer,
such transaction shall be deemed to have been abandoned and such Buyer 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 such Buyer with another Offer Notice and such Buyer will again have
the right of participation set forth in this Section 4(o). The Company shall not be permitted to conduct such Subsequent Placement
nor deliver more than one such Offer Notice to such Buyer in any sixty (60) day period, except as expressly contemplated by the
last sentence of Section 4(o)(ii).


 






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(ix)
The restrictions contained in this Section 4(o) shall not apply in connection with the issuance of any Excluded Securities. The
Company shall not circumvent the provisions of this Section 4(o) by providing terms or conditions to one Buyer that are not provided
to all.


 


(p)
Dilutive Issuances. For so long as any Notes or Warrants remain outstanding, the Company shall not, in any manner, enter
into or affect any Dilutive Issuance (as defined in the Notes) if the effect of such Dilutive Issuance is to cause the Company
to be required to issue upon conversion of any Notes or exercise of any Warrant any shares of Common Stock in excess of that number
of shares of Common Stock which the Company may issue upon conversion of the Notes and exercise of the Warrants without breaching
the Company’s obligations under the rules or regulations of the Principal Market.





 


(q)
Passive Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct
their respective businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign
investment company within the meaning of Section 1297 of the Code.


 


(r)
Restriction on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly or
indirectly, redeem, or declare or pay any cash dividend or distribution on or repurchase, any securities of the Company without
the prior express written consent of the Buyers.


 


(s)
Corporate Existence. So long as any Buyer beneficially owns any Notes or Warrants, the Company shall not be party to any
Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Notes and the Warrants.


 


(t)
Stock Splits. Until the Notes and all notes issued pursuant to the terms thereof are no longer outstanding, the Company
shall not effect any stock combination, reverse stock split or other similar transaction (or make any public announcement or disclosure
with respect to any of the foregoing) without the prior written consent of the Required Holders (as defined below) (other than
one reverse stock split to regain compliance with the listing maintenance requirements of the Principal Market).


 


(u)
Conversion and Exercise Procedures. Each of the form of Exercise Notice (as defined in the Warrants) included in the Warrants
and the form of Conversion Notice (as defined in the Notes) included in the Notes set forth the totality of the procedures required
of the Buyers in order to exercise the Warrants or convert the Notes. Except as provided in Section 5(d), no additional legal
opinion, other information or instructions shall be required of the Buyers to exercise their Warrants or convert their Notes.
The Company shall honor exercises of the Warrants and conversions of the Notes and shall deliver the Conversion Shares and Warrant
Shares in accordance with the terms, conditions and time periods set forth in the Notes and Warrants.


 






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(v)
Collateral Agent. Each Buyer hereby (i) appoints Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B, as
the collateral agent hereunder and under the other Security Documents (in such capacity, the “Collateral Agent”),
and (ii) authorizes the Collateral Agent (and its officers, directors, employees and agents) to take such action on such Buyer’s
behalf in accordance with the terms hereof and thereof. The Collateral Agent shall not have, by reason hereof or any of the other
Security Documents, a fiduciary relationship in respect of any Buyer. Neither the Collateral Agent nor any of its officers, directors,
employees or agents shall have any liability to any Buyer for any action taken or omitted to be taken in connection hereof or
any other Security Document, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all
of its officers, directors, employees and agents (collectively, the “Collateral Agent Indemnitees”) from and
against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including,
without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Collateral Agent Indemnitee, whether
direct, indirect or consequential, arising from or in connection with the performance by such Collateral Agent Indemnitee of the
duties and obligations of Collateral Agent pursuant hereto or any of the Security Documents. The Collateral Agent shall not be
required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the Required Holders, and such instructions shall be
binding upon all holders of Notes; provided, however, that the Collateral Agent shall not be required to take any action which,
in the opinion of the Collateral Agent, exposes the Collateral Agent to liability or which is contrary to this Agreement or any
other Transaction Document or applicable law. The Collateral Agent shall be entitled to rely upon any written notices, statements,
certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the
other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.


 


(w)
Successor Collateral Agent.


 


(i)
The Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Transaction
Documents at any time by giving at least ten (10) Business Days’ prior written notice to the Company and each holder of
Notes. Such resignation shall take effect upon the acceptance by a successor Collateral Agent of appointment pursuant to clauses
(ii) and (iii) below or as otherwise provided below. If at any time the Collateral Agent (together with its affiliates) beneficially
owns less than $100,000 in aggregate principal amount of Notes, the Required Holders may, by written consent, remove the Collateral
Agent from all its functions and duties hereunder and under the other Transaction Documents.


 


(ii)
Upon any such notice of resignation or removal, the Required Holders shall appoint a successor collateral agent. Upon the acceptance
of any appointment as Collateral Agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the collateral agent, and the Collateral Agent shall
be discharged from its duties and obligations under this Agreement and the other Transaction Documents. After the Collateral Agent’s
resignation or removal hereunder as the collateral agent, the provisions of this Section 4(w) shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Transaction
Documents.


 






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(iii)
If a successor collateral agent shall not have been so appointed within ten (10) Business Days of receipt of a written notice
of resignation or removal, the Collateral Agent shall then appoint a successor collateral agent who shall serve as the Collateral
Agent until such time, if any, as the Required Holders appoint a successor collateral agent as provided above.


 


(iv)
In the event that a successor Collateral Agent is appointed pursuant to the provisions of this Section 4(w) that is not a Buyer
or an affiliate of any Buyer (or the Required Holders or the Collateral Agent (or its successor), as applicable, notify the Company
that they or it wants to appoint such a successor Collateral Agent pursuant to the terms of this Section 4(w)), the Company and
each Subsidiary thereof covenants and agrees to promptly take all actions reasonably requested by the Required Holders or the
Collateral Agent (or its successor), as applicable, from time to time, to secure a successor Collateral Agent satisfactory to
the requesting part(y)(ies), in their sole discretion, including, without limitation, by paying all reasonable and customary fees
and expenses of such successor Collateral Agent, by having the Company and each Subsidiary thereof agree to indemnify any successor
Collateral Agent pursuant to reasonable and customary terms and by each of the Company and each Subsidiary thereof executing a
collateral agency agreement or similar agreement and/or any amendment to the Security Documents reasonably requested or required
by the successor Collateral Agent.


 


(x)
Regulation M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the
distribution of the Securities contemplated hereby.


 


(y)
General Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any
person acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means
of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or
radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.


 


(z)
Integration. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person
acting on behalf of the Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which
would require the registration of the Securities under the 1933 Act or require shareholder approval under the rules and regulations
of the Principal Market and the Company will take all action that is appropriate or necessary to assure that its offerings of
other securities will not be integrated for purposes of the 1933 Act or the rules and regulations of the Principal Market, with
the issuance of Securities contemplated hereby.


 


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


 






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(bb)
Subsidiary Guarantee. For so long as any Notes remain outstanding, upon any entity becoming a Subsidiary of the Company,
the Company shall cause each such Subsidiary to become party to the Guaranty by executing a joinder to the Guaranty reasonably
satisfactory in form and substance to the Required Holders.


 


(cc)
Shareholder Approval. The Company shall provide each shareholder entitled to vote at a special meeting of shareholders of
the Company (the “Shareholder Meeting”), which shall be promptly called and held not later than February 19,
2020 (the “Shareholder Meeting Deadline”), a proxy statement, in a form reasonably acceptable to the Buyers
and Kelley Drye & Warren LLP, at the expense of the Company, with the Company obligated to reimburse the expenses of Kelley
Drye & Warren LLP incurred in connection therewith in an amount not exceed $5,000, soliciting each such shareholder’s
affirmative vote at the Shareholder Meeting for approval of resolutions (“Shareholder Resolutions”) providing
for the approval of the issuance of all of the Securities in compliance with the rules and regulations of the Principal Market
(without regard to any limitations on conversion or exercise, as applicable, with respect thereto) (the “Shareholder
Approval” and the date the Shareholder Approval has been obtained, the “Shareholder Approval Date”),
and the Company shall use its reasonable best efforts to solicit its shareholders’ approval of such resolutions and to cause
the Board of Directors of the Company to recommend to the shareholders that they approve such resolutions. The Company shall be
obligated to seek to obtain the Shareholder Approval by the Shareholder Meeting Deadline. If, despite the Company’s reasonable
best efforts the Shareholder Approval is not obtained on or prior to the Shareholder Meeting Deadline, the Company shall cause
an additional Shareholder Meeting to be held on or prior to May 15, 2020. If, despite the Company’s reasonable best efforts
the Shareholder Approval is not obtained after such subsequent shareholder meetings, the Company shall cause an additional Shareholder
Meeting to be held semi-annually thereafter until such Shareholder Approval is obtained.


 


(dd)
Closing Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or
cause to be delivered, to each Buyer and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents,
Securities and any other document required to be delivered to any party pursuant to Section 7 hereof or otherwise.


 


(ee)
No Waiver of Voting Agreements or Leak-Out Agreements. The Company shall not amend, waive, or modify the Voting Agreements
or the Leak-Out Agreements without the written approval of the Required Holders pursuant to Section 9(e).


 


5.
REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.


 


(a)
Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company
as it may designate by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall
record the name and address of the Person in whose name the Notes and the Warrants have been issued (including the name and address
of each transferee), the principal amount of the Notes held by such Person, the number of Conversion Shares issuable pursuant
to the terms of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company
shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.


 






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(b)
Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent
transfer agent (as applicable, the “Transfer Agent”) in a form acceptable to each of the Buyers (the “Irrevocable
Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance accounts at The Depository
Trust Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Conversion
Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the
Notes or the exercise of the Warrants (as the case may be). The Company represents and warrants that no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to
Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the Securities
shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this
Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance
with Section 2(g), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates
or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to
effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Conversion Shares or Warrant
Shares sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the transfer
agent shall issue such shares to such Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance
with Section 5(d) below. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm
to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b)
will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section
5(b), that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other
security being required. The Company shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer
Agent Instructions to the Company’s transfer agent on each Effective Date (as defined in the Registration Rights Agreement).
Any fees (with respect to the transfer agent, counsel to the Company or otherwise) associated with the issuance of such opinion
or the removal of any legends on any of the Securities shall be borne by the Company.


 


(c)
Legends. Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares
and the Warrant Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities
laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any
state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of
such stock certificates):


 






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[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
[EXERCISABLE] 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.


 


(d)
Removal of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section
5(c) above or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of
such Securities is effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the
transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under
Rule 144 (provided that a Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment
or transfer under Rule 144 which shall not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment
or other transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such
Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without
registration under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements
of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If
a legend is not required pursuant to the foregoing, the Company shall no later than two (2) Trading Days (or such earlier date
as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the
date such Buyer delivers such legended certificate representing such Securities to the Company) following the delivery by a Buyer
to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed
or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer,
if applicable), together with any other deliveries from such Buyer as may be required above in this Section 5(d), as directed
by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities
Transfer Program and such Securities are Conversion Shares or Warrant Shares, credit the aggregate number of shares of Common
Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such
Securities that is free from all restrictive and other legends, registered in the name of such Buyer or its designee (the date
by which such credit is so required to be made to the balance account of such Buyer’s or such Buyer’s designee with
DTC or such certificate is required to be delivered to such Buyer pursuant to the foregoing is referred to herein as the “Required
Delivery Date”, and the date such shares of Common Stock are actually delivered without restrictive legend to such Buyer
or such Buyer’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible
for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect
to any Securities in accordance herewith.


 






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(e)
Failure to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, to issue and deliver (or cause
to be delivered) to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, a certificate for the number of Conversion Shares or Warrant Shares (as
the case may be) to which such Buyer is entitled and register such Conversion Shares or Warrant Shares (as the case may be) on
the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program,
to credit the balance account of such Buyer or such Buyer’s designee with DTC for such number of Conversion Shares or Warrant
Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above or (II) if the Registration
Statement covering the resale of the Conversion Shares or Warrant Shares (as the case may be) submitted for legend removal by
such Buyer pursuant to Section 5(d) above (the “Unavailable Shares”) is not available for the resale of such
Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights
Agreement (x) so notify such Buyer and (y) deliver the Conversion Shares or Warrant Shares, as applicable, electronically without
any restrictive legend by crediting such aggregate number of Conversion Shares or Warrant Shares (as the case may be) submitted
for legend removal by such Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s balance account
with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter
referred as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery
Failure”), then, in addition to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer
on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum
of the number of shares of Common Stock not issued to such Buyer on or prior to the Required Delivery Date and to which such Buyer
is entitled, and (B) any trading price of the Common Stock selected by such Buyer in writing as in effect at any time during the
period beginning on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares or Warrant Shares
(as the case may be) and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to the Required
Delivery Date either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the
Company shall fail to issue and deliver a certificate to a Buyer and register such shares of Common Stock on the Company’s
share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit the balance
account of such Buyer or such Buyer’s designee with DTC for the number of shares of Common Stock to which such Buyer submitted
for legend removal by such Buyer pursuant to Section 5(d) above or (II) a Notice Failure occurs, and if on or after such Trading
Day such Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale
by such Buyer of shares of Common Stock submitted for legend removal by such Buyer pursuant to Section 5(d) above that such Buyer
is entitled to receive from the Company (a “Buy-In”), then the Company shall, within two (2) Trading Days after
such Buyer’s request and in such Buyer’s discretion, either (i) pay cash to such Buyer in an amount equal to such
Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any, for the shares of
Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s obligation to so deliver
such certificate or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly
honor its obligation to so deliver to such Buyer a certificate or certificates or credit the balance account of such Buyer or
such Buyer’s designee with DTC representing such number of shares of Common Stock that would have been so delivered if the
Company timely complied with its obligations hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares of Conversion Shares or Warrant Shares (as the case may be) that
the Company was required to deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price
(as defined in the Warrants) of the Common Stock on any Trading Day during the period commencing on the date of the delivery by
such Buyer to the Company of the applicable Conversion Shares or Warrant Shares (as the case may be) and ending on the date of
such delivery and payment under this clause (ii). Nothing shall limit such Buyer’s right to pursue any other remedies available
to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically
deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary,
with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to the applicable Buyer the
extent the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure and/or Delivery Failure,
as applicable, pursuant to the analogous sections of the Note or Warrant, as applicable, held by such Buyer.


 






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(f)
FAST Compliance. While any Warrants remain outstanding, the Company shall maintain a transfer agent that participates in
the DTC Fast Automated Securities Transfer Program.


 


6.
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.


 


(a)
The obligation of the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for
the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with
prior written notice thereof: 


 


(i)
Such Buyer shall have duly executed and delivered to the Company an Investor Collateral Certificate and, at the Company’s
direction, an Investor Note to the Collateral Agent in such original principal amount as is set forth across from such Buyer’s
name in column (7) of the Schedule of Buyers.


 


(ii)
Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.


 


(iii)
Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(g)) for the Note and the related Warrants being purchased by such Buyer at the Closing by wire
transfer of immediately available funds in accordance with the Flow of Funds Letter.


 






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(iv)
Each Buyer shall have duly executed and delivered to the Company a leak-out agreement in the form of Exhibit I hereof
(each, a “Leak-Out Agreement”), each by and between the Company and each such Buyer.


 


(v)
The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by such Buyer at or prior to the Closing Date.


 


7.
CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.


 


(a)
The obligation of each Buyer hereunder to purchase its Note and its related Warrants at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s
sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice
thereof: 


 


(i)
The Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction
Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer (A) a Series A Note in such
original principal amount as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers, (B) a Series
B Note in the aggregate original principal amount as is set forth opposite such Buyer’s name in column (4) on the Schedule
of Buyers and (C) a Warrants initially exercisable for such aggregate number of Warrant Shares as is set forth across from such
Buyer’s name in column (5) of the Schedule of Buyers, in each case, as being purchased by such Buyer at the Closing pursuant
to this Agreement.


 


(ii)
Such Buyer shall have received the opinion of Jolie Kahn. Esq., the Company’s counsel, dated as of the Closing Date, in
the form acceptable to such Buyer.


 


(iii)
The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to
such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.


 


(iv)
The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each
of its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office)
of such jurisdiction of formation as of a date within ten (10) days of the Closing Date.


 


(v)
The Company shall have delivered to such Buyer a certificate evidencing the Company’s and each Subsidiary’s qualification
as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which
the Company and each Subsidiary conducts business and is required to so qualify, as of a date within ten (10) days of the Closing
Date.


 






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(vi)
The Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Nevada Secretary
of State within ten (10) days of the Closing Date.


 


(vii)
Each Subsidiary shall have delivered to such Buyer a certified copy of its Articles of Incorporation (or such equivalent organizational
document) as certified by the Secretary of State (or comparable office) of such Subsidiary’s jurisdiction of incorporation
within ten (10) days of the Closing Date.


 


(viii)
The Company and each Subsidiary shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed
by the Secretary of the Company and each Subsidiary and dated as of the Closing Date, as to (i) the resolutions consistent with
Section 3(b) as adopted by the Company’s and each Subsidiary’s board of directors in a form reasonably acceptable
to such Buyer, (ii) the Articles of Incorporation of the Company and the organizational documents of each Subsidiary and (iii)
the Bylaws of the Company and the bylaws of each Subsidiary, each as in effect at the Closing.


 


(ix)
Each and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects
with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company,
dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer
in the form acceptable to such Buyer.


 


(x)
The Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares
of Common Stock outstanding on the Closing Date immediately prior to the Closing.


 


(xi)
The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have
been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension
by the SEC or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal
Market or (II) by falling below the minimum maintenance requirements of the Principal Market.


 


(xii)
The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the
sale of the Securities, including without limitation, those required by the Principal Market, if any.


 


(xiii)
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.


 






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(xiv)
Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or
result in a Material Adverse Effect.


 


(xv)
The Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the Conversion
Shares and the Warrant Shares.


 


(xvi)
In accordance with the terms of the Security Documents, the Company shall have delivered to the Collateral Agent (A) original
certificates (I) representing the Subsidiaries’ shares of capital stock to the extent such subsidiary is a corporation or
otherwise has certificated equity and (II) representing all other equity interests and all promissory notes required to be pledged
thereunder, in each case, accompanied by undated stock powers and allonges executed in blank and other proper instruments of transfer
and (B) appropriate financing statements on Form UCC-1 to be duly filed in such office or offices as may be necessary or, in the
opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by each Security Document
(the “Perfection Certificate”).


 


(xvii)
The Company shall have directed each Buyer to deliver such Buyer’s Investor Note to the Collateral Agent and the Collateral
Agent shall have physical possession of each Investor Note at the Closing.


 


(xviii)
Within two (2) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to each Buyer and
the Collateral Agent (A) certified copies of requests for copies of information on Form UCC-11, listing all effective financing
statements which name as debtor the Company or any of its Subsidiaries and which are filed in such office or offices as may be
necessary or, in the opinion of the Collateral Agent or the Buyers, desirable to perfect the security interests purported to be
created by the Security Agreement, together with copies of such financing statements, none of which, except as otherwise agreed
in writing by the Collateral Agent, shall cover any of the Collateral (as defined in the Security Agreement), and the results
of searches for any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed
to in writing by the Collateral Agent and the Buyers, shall not show any such Liens; and (B) a perfection certificate, duly completed
and executed by the Company and each of its Subsidiaries, in form and substance satisfactory to the Buyers.


 


(xix)
The Collateral Agent shall have received the Security Agreement, duly executed by the Company and each of its Subsidiaries, together
with the original stock certificates representing all of the equity interests and all promissory notes required to be pledged
thereunder, accompanied by undated stock powers and allonges executed in blank and other proper instruments of transfer.


 


(xx)
With respect to the Intellectual Property Rights, if any, of the Company or any of its Subsidiaries, the Company and/or such Subsidiaries,
as applicable, shall have duly executed and delivered to such Buyer each Assignment For Security for the Intellectual Property
Rights of the Company and its Subsidiaries, in the form attached as Exhibit A to the Security Agreement.


 






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(xxi)
Each Controlled Account Bank (as defined in the Notes) and the Collateral Agent shall have duly executed and delivered to such
Buyer a Controlled Account Agreement (as defined in the Notes) with respect to each account of the Company or any of its Subsidiaries
held at such Controlled Account Bank.


 


(xxii)
The Company shall have duly executed and delivered to such Buyer the Leak-Out Agreements.


 


(xxiii)
The Company shall have duly executed and delivered to such Buyer the voting agreement in the form of Exhibit J hereof
(the “Voting Agreement”), by and between the Company and the stockholders named on schedule 7(a)(xxiii) attached
hereto (the “Stockholders”) and the Stockholders shall have duly executed and delivered to such Buyer the Voting
Agreements.


 


(xxiv)
Such Buyer shall have received a letter on the letterhead of the Company (the “Flow of Funds Letter”) (x) duly
executed by the Chief Executive Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions
of the Company and (y) directing each Buyer (or its designee) to maintain physical possession of a duly executed Investor Note
of such Buyer, in such original principal amount as is set forth across from such Buyer’s name in column (7) of the Schedule
of Buyers, issued pursuant to the Note Purchase Agreement of such Buyer, both as payment for, and as Collateral (as defined in
such Buyer’s Series B Note) securing, such Buyer’s Series B Note to be issued and sold to such Buyer at the Closing.


 


(xxv)
The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating
to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.


 


8.
TERMINATION.


 


In
the event that the Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such
Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the
close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate
this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this
Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment
of the sale and purchase of the Notes and the Warrants shall be applicable only to such Buyer providing such written notice, provided
further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the
expenses described in Section 4(g) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability
for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction
Documents.


 






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9.
MISCELLANEOUS.


 


(a)
Governing 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 New York, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby,
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. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment
or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.


 


(b)
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document
format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original
thereof.


 


(c)
Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.


 


(d)
Severability; Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined
to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid
or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity
or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this
Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject
matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any
other Transaction Document (and without implication that the following is required or applicable), it is the intention of the
parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable
to or received by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would be
characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly,
if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally
judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed
to have been made by mutual mistake of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been
adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited
by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of
such Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually
paid to such Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses
or other amounts required to be paid to or received by such Buyer under any of the Transaction Documents or related thereto are
held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law,
such amounts shall be pro-rated over the period of time to which they relate.


 






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(e)
Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto
and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the
Buyers, the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any
transactions by any Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein,
and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the
Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in the Company
or (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights
of or benefits to any Buyer or any other Person, in any agreement entered into prior to the date hereof between or among the Company
and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries
prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically
set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and the Required Holders (as defined below), and any amendment
to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers
and holders of Securities, as applicable; provided that no such amendment shall be effective to the extent that it (A) applies
to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without
such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion); and provided
further that the provisions of Sections 4(v) and 4(w) above cannot be amended or waived without the additional prior written approval
of the Collateral Agent or its successor. No waiver shall be effective unless it is in writing and signed by an authorized representative
of the waiving party, provided that the Required Holders may waive any provision of this Agreement, and any waiver of any provision
of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities,
as applicable, provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders
of the Securities then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability
on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion).
No consideration (other than reimbursement of legal fees) shall be offered or paid to any Person to amend or consent to a waiver
or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the
parties to the Transaction Documents, all holders of the Notes or all holders of the Warrants (as the case may be). From the date
hereof and while any Notes or Warrants are outstanding, the Company shall not be permitted to receive any consideration from a
Buyer or a holder of Notes or Warrants that is not otherwise contemplated by the Transaction Documents in order to, directly or
indirectly, induce the Company or any Subsidiary (i) to treat such Buyer or holder of Notes or Warrants in a manner that is more
favorable than to other similarly situated Buyers or holders of Notes or Warrants, as applicable, or (ii) to treat any Buyer(s)
or holder(s) of Notes or Warrants in a manner that is less favorable than the Buyer or holder of Notes or Warrants that is paying
such consideration; provided, however, that the determination of whether a Buyer has been treated more or less favorably than
another Buyer shall disregard any securities of the Company purchased or sold by any Buyer. The Company has not, directly or indirectly,
made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents
except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth
in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company,
any Subsidiary or otherwise. As a material inducement for each Buyer to enter into this Agreement, the Company expressly acknowledges
and agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its
representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception
to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document and
(y) unless a provision of this Agreement or any other Transaction Document is expressly preceded by the phrase “except as
disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect such Buyer’s right to
rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties
contained in this Agreement or any other Transaction Document. “Required Holders” means (I) prior to the Closing
Date, Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B (“Alto”) and (II) on or after the Closing
Date, (x) if Alto holds any Securities as of such time (or with respect to any waiver or amendment of Section 4(o), whether or
not Alto holds any Securities as of such time), Alto or (y) otherwise, holders of a majority of the Registrable Securities as
of such time (excluding any Registrable Securities held by the Company or any of its Subsidiaries as of such time) issued or issuable
hereunder or pursuant to the Notes and/or the Warrants.


 






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(f)
Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on
file by the sending party) or electronic mail (provided that such sent email is kept on file (whether electronically or otherwise)
by the sending party and the sending party does not receive an automatically generated message from the recipient’s email
server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight
courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses,
facsimile numbers and e-mail addresses for such communications shall be:


 


The
Company:


 


Toughbuilt
Industries, Inc.


25371
Commercentre Drive, #200


Lake
Forest, CA 92630


Telephone:
949-424-8005

Facsimile: 800-604-3259

Attention: Chief Executive Officer

E-Mail: michael@toughbuilt.com


 


With
a copy (for informational purposes only) to:


 


Jolie
Kahn, Esq.


12
East 49th Street, 11th floor


New
York, NY 10017


Facsimile:
(866_) 705-3071

Attention: Jolie Kahn, Esq.

E-Mail: joliekahnlaw@sbcglobal.net


 






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If
to the Transfer Agent:


 


VStock
Transfer, LLC

18 Lafayette Pl, Woodmere 


NY
11598

Telephone: (212) 828-8436

Facsimile: 646-536-3179

Attention: Ariel Luna

E-Mail: ariel@vstocktransfer.com


 


If
to a Buyer, to its address or e-mail address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives
as set forth on the Schedule of Buyers,


 


with
a copy (for informational purposes only) to:


 


Kelley
Drye & Warren LLP

101 Park Avenue

New York, NY 10178

Telephone: (212) 808-7540

Facsimile: (212) 808-7897

Attention: Michael A. Adelstein, Esq.

E-mail: madelstein@kelleydrye.com


 


or
to such other address, e-mail address and/or facsimile number and/or to the attention of such other Person as the recipient party
has specified by written notice given to each other party five (5) days prior to the effectiveness of such change, provided that
Kelley Drye & Warren LLP shall only be provided copies of notices sent to the lead Buyer. Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the sender’s facsimile machine or e-mail containing the time, date, recipient facsimile number and, with respect to each
facsimile transmission, an image of the first page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with
clause (i), (ii) or (iii) above, respectively.


 


(g)
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of any of the Notes and Warrants. The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the Required Holders, including, without limitation,
by way of a Fundamental Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the
Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may
assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of the
Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.


 


(h)
No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than
the Indemnitees referred to in Section 9(k).


 






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(i)
Survival. The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants hereunder.


 


(j)
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.


 


(k)
Indemnification. In consideration of each Buyer’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 each Buyer and each holder of any Securities and all of their shareholders,
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, suits,
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 attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out
of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary
in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary
contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding 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)
or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement
of any of the Transaction Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly,
with the proceeds of the issuance of the Securities, (C) any disclosure properly made by such Buyer pursuant to Section 4(i),
or (D) the status of such Buyer or holder of the Securities either as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest
or otherwise in any action or proceeding for injunctive or other equitable relief). 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(k) shall be the same as those set forth in Section
6 of the Registration Rights Agreement.


 


(l)
Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall
limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted
for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect
to the Common Stock after the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance
of doubt, nothing contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with
respect to the borrowing of, “pay for hold” or any other arrangement to secure or otherwise obtain borrow, identification
of the availability of, and/or securing of, securities of the Company in order for such Buyer (or its broker or other financial
representative) to effect short sales or similar transactions in the future.


 






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(m)
Remedies. Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities,
shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any
Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise
all other rights granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to perform,
observe, or discharge any or all of its or such Subsidiary’s (as the case may be) obligations under the Transaction Documents,
any remedy at law would inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to specific
performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction
in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided
in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under
this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other
injunctive relief).


 


(n)
Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the
Company or any Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the
case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.


 


(o)
Payment Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant
to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy
law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation
or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment
had not been made or such enforcement or setoff had not occurred. Unless otherwise expressly indicated, all dollar amounts referred
to in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and
all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated
in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on
the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into
U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant
date of calculation.


 






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(p)
Judgment Currency.


 


(i)
If for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter
in this Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:


 


(1)
the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on such date: or


 


(2)
the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date
as of which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment
Conversion Date”).


 


(ii)
If in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in
the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.


 


(iii)
Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this Agreement or any other Transaction Document.


 


(q)
Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents
are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance
of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or
create a presumption that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert
any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters,
and the Company acknowledges that the Buyers are not acting in concert or as a group, and the Company shall not assert any such
claim, with respect to such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer
to purchase Securities pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each
Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder
and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the
Securities or enforcing its rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently
participated with the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of
its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary
for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate
the purchase and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision
of any Buyer, and was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested
to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other
Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries
and the Buyers collectively and not between and among the Buyers.


 


[signature
pages follow]


 




    	55



    	 



    

 


IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed
as of the date first written above.


 


	 	COMPANY:
	 	 
	 	TOUGHBUILT
    INDUSTRIES, INC.
	 	 	 
	 	By:	                 
	 	Name:	 
	 	Title:	 







 




    	 



    	 



    

 


IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed
as of the date first written above.


 


	 	BUYER:
	 	 
	 	Alto
    Opportunity Master Fund, SPC - Segregated Master Portfolio B
	 	 	 
	 	By:	                    
	 	Name:	 
	 	Title:	 







 



    	 



    	 



    

 


IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed
as of the date first written above.


 





	 	BUYER:
	 	 
	 	[OTHER
    BUYERS]
	 	 
	 	By:	        
	 	Title:	 
	 	Name:	 







 




    	 



    	 



    

 


SCHEDULE
OF BUYERS


 





	(1)	 	(2)	 	 	(3)	 	 	 	(4)	 	 	 	(5)	 	 	 	(6)	 	 	 	(7)	 	 	 	(8)	 	 	(9)
	Buyer	 	Address and Email Address	 	 	Original Principal Amount of 

Series A
 Notes
	 	 	 	Original Principal Amount of
 Series B
 Notes
	 	 	 	Aggregate
 Number of
 Warrant Shares
	 	 	 	Purchase Price
	 	 	 	Aggregate
 Cash
 Wire
 Amount
	 	 	 	Original Principal Amount of Investor Notes
	 	 	Legal Representative’s
 Address and Facsimile Number
	Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B	 	c/o Ayrton Capital LLC 
222 Broadway, 19th Floor 
New York, NY 10038 
Attention Waqas Khatri
 Marian Freidin 
E-mail: wk@ayrtonllc.com 
mfreidin@ayrtonllc.com	 	$	6,720,000	 	 	$	4,780,000	 	 	 	5,750,000	 	 	$	9,780,000	 	 	$	5,000,000	 	 	$	4,780,000	 	 	Kelley Drye & Warren LLP 
101 Park Avenue 
New York, NY 10178 
Telephone: (212) 808-7540 
Facsimile: (212) 808-7897 
Attention: Michael A. Adelstein, Esq.