Exhibit 10.1


 


SECURITIES PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of August 14, 2019, between Esports Entertainment Group, Inc., a Nevada corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns,
a “Purchaser” and collectively the “Purchasers”).


 


WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section
5 of the Securities Act contained in Section 4(a)(2) thereof and/or Rule 506(b) thereunder, the Company desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company
as more fully described in this Agreement.


 


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


 


ARTICLE I.


DEFINITIONS


 


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


 


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


 


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


 


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


 


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


 


“Business Day”
means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law or other governmental action to close.


 


“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1(a).


 




     


     


    

  


“Closing Date”
means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto,
and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities to be issued and sold, in each case, have been satisfied or waived, but in no event later
than the second Trading Day following the date hereof.


 


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


 


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


 


“Company Counsel” means Lucosky
Brookman LLP.


 


“Escrow Agent” means Lucosky
Brookman LLP


 


“Escrow Agreement” means the
escrow agreement, in the form of Exhibit C.


 


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


 


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


 


“Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company, in an aggregate
amount not to exceed 10% of shares of Common Stock outstanding at any given time, or pursuant to any stock or option plan duly
adopted for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities issuable pursuant to existing agreements, exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date
of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price
of such securities (other than in connection with stock dividends, stock splits or combinations) or to extend the term of such
securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the directors of
the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself
or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company
and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction
in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business
is investing in securities, (d) subject to Section 4(b) of the Notes, shares of Common Stock in an underwritten public offering
in an amount in excess of $3 million. 






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


 


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


 


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


 


“Intellectual
Property” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto, and all U.S. and foreign patents, patent applications,
and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, brand names, certification marks, trade dress, logos, trade names, domain names, assumed
names and corporate names, together with all colorable imitations thereof, and including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith, (c) all copyrights, and all applications, registrations,
and renewals in connection therewith, (d) all trade secrets under applicable state laws and the common law and know-how (including
formulas, techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (e) all computer software (including source code, object code, diagrams, data
and related documentation), and (f) all copies and tangible embodiments of the foregoing (in whatever form or medium).


 


“Intellectual Property Agreement”
has the meaning set forth in Section 3.1(p).


 


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


 


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


 


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


 


“Notes”
mean the mean the 10% Original Issue Discount Convertible Promissory Notes issued to the Purchasers, in the form of Exhibit
A attached hereto, which bear interest at the rate of 5% per annum.


 


“Note Conversion Price” means
$0.60 per share, subject to adjustment as provided in the Note.


 




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


 


“Pre-Notice” shall have the
meaning ascribed to such term in Section 4.11(a).


 


“Pro Rata Portion” shall have
the meaning ascribed to such term in Section 4.11(d).


 


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


 


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


 


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


 


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


 


“Required Minimum”
means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future
pursuant to the Transaction Documents, including any Shares issuable upon conversion of the Notes and Warrant Shares issuable upon
exercise in full of all Warrants ignoring any exercise limits set forth therein.


 


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


 


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


 


“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(h). “Securities” means the Notes, the Shares, the Warrants
and the Warrant Shares. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.


 


“Shares” means the Common Stock
issuable upon conversion of the Notes.


 


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


 




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


 


“Subsequent Financing”
shall have the meaning ascribed to such term in Section 4.11(a).


 


“Subsequent Financing
Notice” shall have the meaning ascribed to such term in Section 4.11(a).


 


“Subsidiary”
means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of which (A) more than 50% of (i) the outstanding capital
stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of
such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity,
the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control of the
Company.


 


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


 


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


 


“Transaction
Documents” means this Agreement, the Notes, the Warrants, the Escrow Agreement and any other documents or agreements executed
in connection with the transactions contemplated hereunder.


 


“Transfer Agent” means VStock
Transfer LLC, and any successor transfer agent of the Company.


 


“Underlying Shares” means the
Shares and the Warrant Shares.


 


“Variable Rate
Transaction” shall have the meaning ascribed to such term in Section 4.12.




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“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)) (or a similar organization or agency succeeding to its
functions of reporting prices), (b) if no volume weighted average price of the Common Stock is reported for the Trading Market,
the average closing price of the Common Stock during the ten (10) Trading Days preceding such date, or (c) in all other cases,
the fair market value of a share of Common Stock as determined by the Board of Directors of the Company.


 


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


 


“Warrant Exercise Price” means
$0.75 per share.


 


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


 


ARTICLE II.


PURCHASE AND SALE


 


2.1 Closing.


 


(a) On the Closing
Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of
this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase
up to an aggregate of (i) $1,100,000 face value of 10% original issue discount Notes for a total purchase price of$1,000,000, and
(ii) Warrants, which is equal to 100% of the Shares issuable upon conversion of the purchased Notes. Each Purchaser shall deliver
to the Escrow Agent, via wire transfer immediately available funds equal to such Purchaser’s Subscription Amount as set forth
on the signature page hereto executed by such Purchaser, and the Company shall deliver to the Escrow Agent each Purchaser’s
respective Note and a Warrant as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other
items set forth in Section 2.2(b) deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or such other location as the parties shall mutually agree.


 


2.2 Deliveries.


 


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


 


(i) this Agreement
duly executed by the Company;


 




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(ii) an original Note,
convertible at the Note Conversion Price, registered in the name of such Purchaser;


 


(iii) an original Warrant,
exercisable at the Warrant Exercise Price, registered in the name of such Purchaser to purchase up to a number of shares of Common
Stock equal to 100% of such Purchaser’s Shares, subject to adjustment as described therein (such Warrant certificate may
be delivered within two Trading Days of the Closing Date);


 


(iv) the Escrow Agreement
duly executed by the Company; and


 


(v) a reservation letter
executed by the Company’s Transfer Agent and the Company in the form attached as Exhibit D.


 


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


 


(i) this Agreement
duly executed by such Purchaser;


 


(ii) the Escrow Agreement
duly executed by such Purchaser; and


 


(iii) to such Purchaser’s
Subscription Amount by wire transfer to the Escrow Agent. 


 


2.3 Closing Conditions.


 


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


 


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


 


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


 


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


 


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


 




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


 


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


 


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


 


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


 


(v) from the date hereof
to the Closing Date trading in the Common Stock shall not have been suspended by the SEC or the Company’s principal Trading
Market.


 


ARTICLE III.


REPRESENTATIONS AND WARRANTIES


 


3.1 Representations and Warranties of
the Company. The Company hereby makes the following representations and warranties to each Purchaser as of the date hereof:


 


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


 


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


 




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


 


(d) No Conflicts.
Except as set forth in Schedule 3.1(d), the execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions
contemplated hereby and thereby do not and will not (i) subject to the Required Approvals, conflict with or violate any provision
of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) constitute a default (or an event that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights
of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company
or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii)
subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.


 




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(e) Filings, Consents
and Approvals. Except as set forth on Schedule 3.1(e), the Company is not required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) application(s) to each applicable Trading
Market for the listing of the Shares and Warrant Shares for trading thereon in the time and manner required thereby, and (iii)
such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).


 


(f) Issuance of
the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The
Shares, when issued upon conversion of the Notes, and the Warrant Shares, when issued in accordance with the terms of the Warrants,
will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company shall reserve
from its duly authorized capital stock a number of shares of Common Stock issuable pursuant to the Notes and the Warrants equal
to the amount set forth in Section 4.9.


 


(g) Capitalization.
The capitalization of the Company is as set forth in the SEC Reports. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than as set forth on Schedule 3.1(g) other than pursuant to
the exercise of employee stock awards under the Company’s equity incentive plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common
Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any
right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated
by the Transaction Documents. Except as set forth in the SEC Reports, as a result of the purchase and sale of the Securities or
as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for,
or giving any Person any right to subscribe for or acquire, any shares of Common Stock or the capital stock of any Subsidiary,
or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the
Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary
that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which
the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. All of
the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.


 




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(h) SEC Reports;
Financial Statements. With the exception of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2019 and as disclosed on Schedule 3(h), the Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to
file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”). Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”).


 


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


 




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(j) Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation, inquiry except as set forth in Schedule
3.1(j) or other similar proceeding of any federal or state government unit pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the issuance
of the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. The Company has no reason to believe that an Action will be filed against it in the future. Neither the Company
nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former
director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act, and the Company has no reason to
believe it will do so in the future.


 


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


 




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


 


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


 


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


 




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(o) Title to Assets.
Subject to the disclosure set forth on Schedule 3.1(o), the Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material
to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by
the Company and the Subsidiaries, and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves
have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable
leases with which the Company and the Subsidiaries are in compliance.


 


(p) Intellectual Property.


 


(i) Subject to the Existing
Liens, the Company owns or possesses or has the right to use pursuant to a valid and enforceable written license, sublicense, agreement,
or permission all Intellectual Property necessary for the operation of the business of the Company as presently conducted. The
Company has provided the Purchaser a true and complete copy of each such written license, sublicense, agreement or permission.


 


(ii) The Intellectual
Property does not interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any Intellectual Property
rights of third parties, and the Company has no knowledge that facts exist which indicate a likelihood of the foregoing. The Company
has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation,
or conflict (including any claim that the Company must license or refrain from using any Intellectual Property rights of any third
party). To the knowledge of the Company, no third party has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with, any Intellectual Property rights of the Company.


 


(iii) The Company and
the Subsidiaries have no pending patent applications or applications for registration that either entity has made with respect
to any Intellectual Property. Schedule 3.1(p) identifies each license, sublicense, agreement, or other permission that the
Company has granted to any third party with respect to any of such Intellectual Property (together with any exceptions). The Company
has delivered to the Purchaser correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended
to date) (“Intellectual Property Agreements”). Schedule 3.1(p) also identifies each registered and unregistered
trademark, service mark, trade name, corporate name, URLs or Internet domain name used by the Company in connection with its business
and which is not licensed from a third party. With respect to each item of Intellectual Property required to be identified in Schedule
3.1(p):


 


(A) The Company owns
and possesses all right, title, and interest in and to the item, free and clear of any Lien, license, or other restriction or limitation
regarding use or disclosure;


 


(B) The item is not
subject to any outstanding injunction, judgment, order, decree, ruling, or charge;


 




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(C) No Action, claim,
or demand is pending or, to the knowledge of the Company, is threatened that challenges the legality, validity, enforceability,
use, or ownership by the Company; and


 


(D) The Company has
not agreed to indemnify any Person for or against any interference, infringement, misappropriation, or other conflict with respect
to the item.


 


(iv) Schedule 3.1(p)(iv)
identifies each item of Intellectual Property that any third party owns and that the Company uses pursuant to license, sublicense,
agreement, or permission, excluding off-the-shelf software purchased or licensed by the Company. The Company has delivered to the
Purchaser correct and complete copies of all such licenses, sublicenses, agreements, and permissions (each as amended to date)
(each, a “Licensed Intellectual Property Agreement”). With respect to each Licensed Intellectual Property Agreement:


 


(A) the Licensed Intellectual
Property Agreement is legal, valid, binding, enforceable, and in full force and effect;


 


(B) No party to the
Licensed Intellectual Property Agreement is in breach or default, and no event has occurred that with notice or lapse of time would
constitute a breach or default or permit termination, modification, or acceleration thereunder, which as to any such breach, default
or event could have a Material Adverse Effect on the Company;


 


(C) No party to such
Licensed Intellectual Property Agreement has repudiated any provision thereof;


 


(D) Except as set forth
in such Licensed Intellectual Property Agreement, the Company has not received written or verbal notice or otherwise has knowledge
that the underlying item of Intellectual Property is subject to any outstanding injunction, judgment, order, decree, ruling, or
charge; and


 


(E) Except as set forth
on Schedule 3.1(p)(iv), the Company has not granted any sublicense or similar right with respect to the license, sublicense,
agreement, or permission.


 


(v) The Company has
complied with and is presently in compliance with all foreign, federal, state, local, governmental (including, but not limited
to, the Federal Trade Commission and State Attorneys General), administrative, or regulatory laws, regulations, guidelines, and
rules applicable to any personal identifiable information.




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(vi) Each Person who
participated in the creation, conception, invention or development of the Intellectual Property currently used in the business
of the Company (each, a “Developer”) which is not licensed from third parties has executed one or more agreements containing
industry standard confidentiality, work for hire and assignment provisions, whereby the Developer has assigned to the Company all
copyrights, patent rights, Intellectual Property rights and other rights in the Intellectual Property, including all rights in
the Intellectual Property that existed prior to the assignment of rights by such Person to the Company. The Company has provided
to the Purchaser copies of any such agreements and assignments from each such Developer (collectively, the “Developer Agreements”).


 


(vii) Each Developer
has signed a perpetual non-disclosure agreement with the Company. The Company has provided, or will provide prior to Closing, to
the Purchaser copies any such non-disclosure agreements from each such Person, if any.


 


(q) Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock award agreements under any equity incentive
plan of the Company.


 


(s) Sarbanes-Oxley;
Internal Accounting Controls. Except as disclosed in the SEC Reports, the Company and the Subsidiaries are in compliance with
any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all
applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof and as of the Closing
Date. The Company and the Subsidiaries maintain a system of internal accounting controls as set forth in the SEC Reports. The Company’s
certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries
as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined
in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries.


 




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(t) Certain Fees.
Other than as set forth on Schedule 3.1(t), no brokerage or finder’s fees or commissions are or will be payable by
the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank
or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 


(u) Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be
an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The
Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.


 


(v) Registration
Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act
of any securities of the Company or any Subsidiary except as disclosed on Schedule 3.1(v).


 


(w) Listing and Maintenance
Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken
no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration.
The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements
of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be,
in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer
through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees
to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.


 


(x) Application of
Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws
of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company
fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result
of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.


 




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(y) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed
in the SEC Reports. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made,
not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement do
not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.
The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2 hereof.


 


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


 


(aa) Solvency.
The SEC Reports and Schedule 3.1(aa) set forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $10,000 (other than trade
accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations
in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business; and (z) the present value of any lease payments in excess of $10,000 due under leases required
to be capitalized in accordance with GAAP. Except as set forth on Schedule 3.1(aa), neither the Company nor any Subsidiary
is in default with respect to any Indebtedness.


 




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(bb) Tax Status.
Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all
taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim.


 


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


 


(dd) Accountants.
The Company’s accounting firm is set forth in the SEC Reports. To the knowledge and belief of the Company, such accounting
firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) has expressed its opinion with respect
to the financial statements included in the Company’s Annual Report for the fiscal year ending June 30, 2018.


 


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


 




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(ff) Acknowledgement
Regarding Purchaser’s Trading Activity. Notwithstanding anything in this Agreement or elsewhere to the contrary (except for
Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked
by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the
Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified
term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short
Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties
in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short”
position in the Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) one
or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including,
without limitation, during the periods that the value of the Warrant Shares deliverable with respect to Securities are being determined,
and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at
and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities
do not constitute a breach of any of the Transaction Documents.


 


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


 


(hh) Private Placement.
Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the
Securities Act is required for the offer and sale of the Notes, the Shares upon conversion thereof, the Warrants or the Warrant
Shares issuable upon exercise thereof by the Company to the Purchasers as contemplated hereby


 


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


 


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


 




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(kk) Office of Foreign
Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”).


 


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


 


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


 


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


 


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


 


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


 




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


 


(c) Purchaser Status.
At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, an accredited investor within the
meaning of Rule 501 under the Securities Act. No Purchaser is subject to any of the “Bad Actor” disqualifications described
in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3).


 


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


 


(e) Access to Information.
Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules
thereto) and the SEC Reports and has been afforded, subject to Regulation FD, (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering
of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its
financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser
acknowledges and agrees that neither the Company nor anyone else has provided such Purchaser with any information or advice with
respect to the Securities nor is such information or advice necessary or desired.


 




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


 


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


 




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ARTICLE IV.


OTHER AGREEMENTS OF THE PARTIES


 


4.1 Removal of Legends.


 


(a) The Shares, the
Warrants and Warrant Shares may only be disposed of in compliance with state and federal securities laws. In connection with any
transfer of Warrants or Warrant Shares other than pursuant to an effective registration statement or Rule 144, to the Company or
to an Affiliate of a Purchaser, the Company may require the transferor, provided that the Company shall pay the transferor’s
cost thereof, to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Shares, Warrants or Warrant Shares under the Securities Act.


 


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


 


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


 


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


 




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(c) Certificates evidencing
the Shares and the Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a registration statement covering the resale of such securities is effective under the Securities Act, (ii) following any sale
of such Shares or Warrant Shares pursuant to Rule 144, (iii) if such Shares or Warrant Shares are eligible for sale under Rule
144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as
to such Shares or Warrant Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required under
applicable requirements of the Securities Act (including Section 4(a)(1), judicial interpretations and pronouncements issued by
the staff of the SEC) (the “Effective Date”). The Company shall, at its expense, cause its counsel to issue a legal
opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the
legend hereunder. If all or any portion of a Note is converted or a Warrant is exercised at a time when there is an effective registration
statement to cover the resale of the Shares or the Warrant Shares, or if such Shares or Warrant Shares may be sold under Rule 144
and the Company is then in compliance with the current public information required under Rule 144, or if the Shares or Warrant
Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information
required under Rule 144 as to such Shares or Warrant Shares and without volume or manner-of-sale restrictions or if such legend
is not otherwise required under applicable requirements of the Securities Act (including Section 4(a)(1), judicial interpretations
and pronouncements issued by the staff of the SEC) then such Shares or Warrant Shares shall be issued or reissued free of all legends.
The Company agrees that following the effective date of any registration statement or at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than two (2) Trading Days following the delivery by a Purchaser to the Company
or the Transfer Agent of a certificate representing restricted Shares or Warrant Shares, as applicable, issued with a restrictive
legend (such second Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate
representing such Shares or Warrant Shares that is free from all restrictive and other legends. The Company may not make any notation
on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.1.
Certificates for Shares or Warrant Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company system as directed by
such Purchaser.


 


(d) In addition to
such Purchaser’s other available remedies, (i) the Company shall pay to a Purchaser, in cash, as partial liquidated damages
and not as a penalty, for each $1,000 of the principal amount of the Notes being converted or the value of the Warrant Shares for
which a Warrant is being exercised (based on the Warrant Exercise Price), $10 per Trading Day for each Trading Day after the Legend
Removal Date (increasing to $20 per Trading Day after the fifth (5th ) Trading Day) until such certificate is delivered
without a legend. In no event shall liquidated damages for any one transaction exceed $1,000 for the first ten (10) Trading Days.
Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates
representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, and
(ii) if after the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of shares of Common Stock, or a sale
of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock that such Purchaser anticipated
receiving from the Company without any restrictive legend, then, the Company shall pay to such Purchaser, in cash, an amount equal
to the excess of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses,
if any) for the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses, if any)
(the “Buy-In Price”) over the product of (A) such number of Shares or Warrant Shares that the Company was required
to deliver to such Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale price of the Common Stock on
any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company of the applicable Shares
or Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this Section 4.1(d).


 




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(e) In the event a
Purchaser shall request delivery of unlegended shares as described in this Section 4.1 and the Company is required to deliver such
unlegended shares, (i) it shall pay all fees and expenses associated with or required by the legend removal and/or transfer including
but not limited to legal fees, transfer agent fees and overnight delivery charges and taxes, if any, imposed by any applicable
government upon the issuance of Common Stock,; and (ii) the Company may not refuse to deliver unlegended shares based on any claim
that such Purchaser or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations
under the Transaction Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on
notice, restraining and or enjoining delivery of such unlegended shares shall have been sought and obtained by the Company and
the Company has posted a surety bond for the benefit of such Purchaser in the amount of the greater of (i) 15% of the amount of
the aggregate purchase price of the Shares and Warrant Shares which is subject to the injunction or temporary restraining order,
or (ii) the VWAP of the Common Stock on the Trading Day before the issue date of the injunction multiplied by the number of unlegended
shares to be subject to the injunction, which bond shall remain in effect until the completion of the litigation of the dispute
and the proceeds of which shall be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.


 


4.2 Furnishing of Information.


 


Upon filing of the
Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2019, and until the earliest of the time that (i)
no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to undertake its best efforts to timely file
(or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be file by the Company
after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the
Exchange Act.


 


4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2(a)(1) of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such subsequent transaction.


 




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4.4 Securities Laws
Disclosure; Publicity. The Company shall, by 5:30 p.m. (New York City time) no later than the fourth trading date following
the date of execution hereof, file a Current Report on Form 8-K disclosing the material terms of this Agreement, including the
Transaction Documents as exhibits thereto, with the SEC within the time required by the Exchange Act. From and after the filing
of the Form 8-K as provided in the preceding sentence, the Company represents to the Purchasers that it shall have publicly disclosed
all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents.
In addition, effective upon the issuance of such Form 8-K, the Company acknowledges and agrees that any and all confidentiality
or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate. The Company and each Purchaser shall consult with each other in issuing any press releases
with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the SEC
or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal
securities law in connection with the filing of final Transaction Documents with the SEC and (b) to the extent such disclosure
is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such
disclosure permitted under this clause (b).


 


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


 




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4.6 Non-Public Information.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, which shall
be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting on its behalf
will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto such Purchaser shall have consented to the receipt of such information and
agreed with the Company to keep such information confidential. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers
any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees
that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, not to trade on the basis of, such material, non-public information, provided
that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document
or any other communications made by the Company, or information provided, to the Purchaser constitutes, or contains, material,
non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice or other material
information with the SEC pursuant to a Current Report on Form 8-K. The Company understands and confirms that each Purchaser shall
be relying on the foregoing covenant in effecting transactions in securities of the Company. In addition to any other remedies
provided by this Agreement or other Transaction Documents, if the Company provides any material, non- public information to the
Purchasers without their prior written consent, and it fails to immediately (no later than that Business Day) file a Form 8-K disclosing
this material, non- public information, it shall pay the Purchasers as partial liquidated damages and not as a penalty a sum equal
to $1,000 per day for each $100,000 of each Purchaser’s Subscription Amount beginning with the day the information is disclosed
to the Purchaser and ending and including the day the Form 8-K disclosing this information is filed.


 


4.7 Use of Proceeds.
The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes, and shall not use
such proceeds: (a) for the satisfaction of any other portion of the Company’s debt (other than payment of trade payables
in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Common Stock or Common
Stock Equivalents, (c) for the settlement of any outstanding litigation, (d) in violation of FCPA or OFAC regulations, or to lend
money, give credit, or make advances to any officers, directors, employees or affiliates of the Company or (e) for the purchase
of real estate.




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4.8 Indemnification
of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless
from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (including local counsel,
if retained) that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents, (b) any action
instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under
the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations
by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross
negligence, willful misconduct or malfeasance) or (c) any untrue or alleged untrue statement of a material fact contained in any
registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading. If any action shall be brought against any Purchaser Party in respect of which indemnity
may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel (in addition to local
counsel, if retained). The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser
Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to
the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach
of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The Purchaser Parties shall have the right to settle any action against any of them by the payment of money
provided that they cannot agree to any equitable relief and the Company, its officers, directors and Affiliates receive unconditional
releases in customary form. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any
liabilities the Company may be subject to pursuant to law.


 




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4.9 Reservation
of Common Stock. The Company shall reserve and keep available at all times in favor of the Purchasers on a pro rata basis based
on each Purchaser’s Subscription Amount, free of preemptive rights, a number of shares of Common Stock equal to three times
the number of shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants (subject to adjustment
for stock splits and dividends, combinations and similar events).


 


The Company shall
not enter into any agreement or file any amendment to its Articles of Incorporation (including the filing of a Certificate of Designation)
which conflicts with this Section 4.9 while the Notes and Warrants remain outstanding.


 


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


 


4.11 [Intentionally
Omitted]


 


4.12 Subsequent Equity Sales.


 


(a) From the date hereof
until 30 days after the Closing Date neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce
the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents, except for Exempt Issuances.


 




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(b) From the date hereof
until the later of (i) such time as 80% of the Warrants are no longer outstanding or (ii) such time as the Notes have been paid
in full, the Company will not, without the consent of the Purchasers, enter into any Equity Line of Credit or similar agreement,
nor issue nor agree to issue any common stock, floating or Variable Priced Equity Linked Instruments nor any of the foregoing or
equity with price reset rights (subject to adjustment for stock splits, distributions, dividends, recapitalizations and the like)
(collectively, the “Variable Rate Transaction”). For purposes hereof, “Equity Line of Credit” shall include
any transaction involving a written agreement between the Company and an investor or underwriter whereby the Company has the right
to “put” its securities to the investor or underwriter over an agreed period of time and at an agreed price or price
formula, and “Variable Priced Equity Linked Instruments” shall include: (A) any debt or equity securities which are
convertible into, exercisable or exchangeable for, or carry the right to receive additional shares of Common Stock either (1) at
any conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations
for Common Stock at any time after the initial issuance of such debt or equity security, or (2) with a fixed conversion, exercise
or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt or equity
security due to a change in the market price of the Company’s Common Stock since date of initial issuance, and (B) any amortizing
convertible security which amortizes prior to its maturity date, where the Company is required or has the option to (or any investor
in such transaction has the option to require the Company to) make such amortization payments in shares of Common Stock which are
valued at a price that is based upon and/or varies with the trading prices of or quotations for Common Stock at any time after
the initial issuance of such debt or equity security (whether or not such payments in stock are subject to certain equity conditions).
Notwithstanding the foregoing, the Company shall not be prohibited from engaging in any Variable Rate Transaction in connection
with any offering of securities described in clause (e) of the Exempt Issuance definition.


 


(c) Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance. The Company shall provide each Purchaser with
notice of any such issuance or sale in the manner for disclosure of Subsequent Financings set forth in Section 4.11.


 


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


 




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


 


4.15 Capital Changes.
Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split or reclassification
of the Common Stock without the prior written consent of the Purchasers holding a majority in interest of the outstanding principal
balance of the Notes unless such stock split is necessary for purposes of having the Company’s common stock listed on the
NYSE American Exchange or the Nasdaq Capital Markets.


 


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


 


4.17 DTC Program.
For so long as any Warrants are outstanding, the Company will employ as the transfer agent for the Common Stock and Warrant Shares
a participant in the Depository Trust Company Automated Securities Transfer Program and cause the Common Stock to be transferable
pursuant to such program.


 




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4.18 Maintenance
of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its business, in good
working order and condition, ordinary wear and tear excepted.


 


4.19 Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises
in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might
reasonably have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.


 


4.20 No Registration
of Securities. While the Notes are outstanding, the Company will not file any registration statements, on Form S-8 or otherwise,
to register sales of Common Stock, including shares underlying any derivative securities, unless such registration statement is
with respect to an offering in which the Company receives gross proceeds of $5,000,000 or more.


 


ARTICLE V.


MISCELLANEOUS


 


5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties.


 


5.2 Fees and Expenses.
Except as expressly set forth below and in the Transaction Documents to the contrary, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and
any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Purchasers.


 


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


 




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5.4 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto
at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on
the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices
and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant
to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries,
the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K.


 


5.5 Amendments;
Waivers. Except as provided in the last sentence of this Section 5.5, no provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers who
purchased at least a majority in interest of the Amendment based on the initial Subscription Amounts hereunder or, in the case
of a waiver, by the party against whom enforcement of any such waived provision is sought; provided, that if any amendment,
modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately
impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default
or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately,
materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations
of the other Purchasers shall require the prior written consent of such adversely affected Purchaser, Any amendment effected in
accordance with accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.
In order to amend the definition of Exempt Issuance, the written consent of the Company and each Purchaser must be obtained.


 


5.6 Reserved.


 


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


 


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


 




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5.9 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth
in Section 4.8 and this Section 5.9. Notwithstanding the foregoing, Joseph Gunnar & Co., LLC shall be deemed a third party
beneficiary of the representations and warranties of the Company as contained in Section 3.1 of this Agreement and shall have the
right to enforce such provisions directly to the extent it may deem such enforcement necessary or advisable to protect its rights.


 


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


 


5.11 Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.


 




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5.12 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.


 


5.13 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.


 


5.14 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission
of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such
rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for
such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant
(including, issuance of a replacement warrant certificate evidencing such restored right).


 


5.15 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction without requiring the posting of any bond.


 




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5.16 Payment Set
Aside. To the extent the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or
are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.


 


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


 


5.19 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.


 


5.20 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.


 




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5.21 WAIVER OF JURY
TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY
AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVE FOREVER TRIAL BY JURY.


 


5.23 Non-Circumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, including any
Certificates of Designation, or Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement,
dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Agreement, and will at all times in good faith carry out all of the provision of this Agreement and take
all action as may be required to protect the rights of all holders of the Securities. Without limiting the generality of the foregoing
or any other provision of this Agreement or the other Transaction Documents, the Company (a) shall not increase the par value of
any shares of Common Stock receivable upon conversion of the Note or exercise of the Warrants above the Note Conversion Price,
or Warrant Exercise Price, as applicable, then in effect and (b) shall take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Shares upon the conversion of the Note and
Warrant Shares upon exercise of the Warrants. Notwithstanding anything herein to the contrary, if after 180 days from the original
issuance date, a holder is not permitted to convert the Note or exercise the Warrants, in full, for any reason, the Company shall
use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consent or approvals as necessary
to permit such conversion or exercise.


 


(Signature Pages Follow)


 




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


 


	Esports Entertainment Group, Inc.	 	Address for Notice:
	 	 	 
	
        By:___________________________

        Name: Grant Johnson

        Title: Chief Executive Officer

         

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

         

        Lucosky Brookman LLP

        101 Wood Avenue South, Fifth Floor

        Iselin, NJ 08830

        Attn: Joseph M. Lucosky
	 	
        170 Pater House, Psaila Street

        Birkirkara, Malta, BKR 9077

        Email:
        grant@esportsentertainmentgroup.com



 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 




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PURCHASER SIGNATURE PAGES TO
GMBL SECURITIES PURCHASE AGREEMENT


 


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


 


Name of Purchaser:


 


Signature of Authorized Signatory of
Purchaser:


 


Name of Authorized Signatory:


 


Title of Authorized Signatory:


 


Email Address of Authorized Signatory:


 


Facsimile Number of Authorized Signatory:


 


Address for Notice to Purchaser:


 


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


 


Subscription Amount: $


 


Warrant Shares:


 


Additional Subscription Amount: $


 


Additional Warrant Shares:


 


EIN Number:


 




    40 


     


    

  


EXHIBIT A


Form of Note


 




    41 


     


    

  


EXHIBIT B


Form of Warrant


 




    42 


     


    

  


EXHIBIT C


Form of Escrow Agreement


 




    43 


     


    

  


EXHIBIT D


Form of Reserve Letter


 




    44