Exhibit 10.1


 


SECURITIES
PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of October 24, 2014, between Lakeland Industries, Inc., a Delaware
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 Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 promulgated 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 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 4.6.


 


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


 


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


 


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


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which 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.


 


“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, in each case, have been satisfied or waived.


 


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


 




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“Common
Stock” means the common stock of the Company, par value $0.01 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 any Subsidiary 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 Moomjian, Waite & Coleman, LLP, with offices located at 100 Jericho Quadrangle, Suite 208, Jericho,
New York 11753.


 


“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.


 


“EGS”
means Ellenoff Grossman & Schole LLP, with offices located at 1345 Avenue of the Americas, New York, New York 10105-0302.


 


“Environmental
Laws” means all Laws, now or hereafter in effect and as amended, relating to the Environment, health, safety, natural
resources or Hazardous Materials, including CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. §§
1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Clean Air Act, 42 U.S.C. §§
7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011
et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; and the Federal Food, Drug
and Cosmetic Act, 21 U.S.C. §§ 301 et seq.


 


“Effective
Date” means the earliest of the date that (a) the Registration Statement has been declared effective by the Commission,
(b) all of the Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company
to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions
or (c) following the one year anniversary of the Closing Date provided that a holder of Shares is not an Affiliate of the Company,
all of the Shares may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume
or manner-of-sale restrictions and Company counsel has delivered to such holders a standing written unqualified opinion that resales
may then be made by such holders of the Shares pursuant to such exemption which opinion shall be in form and substance reasonably
acceptable to such holders.


 


“Escrow
Agent” means Alerus Financial, N.A., a North Dakota chartered bank, with offices at 222 South Ninth Street, Suite 3800,
Minneapolis, Minnesota 55402.


 


“Escrow
Agreement” means the escrow agreement entered into prior to the date hereof, by and among the Company, the Escrow Agent
and the Placement Agent pursuant to which the Purchasers shall deposit Subscription Amounts with the Escrow Agent to be applied
to the transactions contemplated hereunder.


 




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“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
pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors
or a majority of the members of a committee of non-employee directors established for such purpose, (b) shares of Common Stock
issued to LKL as “payment-in-kind” in lieu of cash interest otherwise due and payable on amounts outstanding under
the LKL Note for periods up to the Closing Date, (c) securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement (other than the LKL Notes), 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, and (d) securities issued pursuant to acquisitions or strategic transactions approved by a majority of
the disinterested 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.


 


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


 


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


 


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


 


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


 


“Hazardous
Materials” means (i) petroleum and petroleum products, radioactive materials, asbestos-containing materials, urea formaldehyde
foam insulation, transformers or other equipment that contain polychlorinated biphenyls and radon gas and (ii) any other chemicals,
materials or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,”
“hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic
substances,” “toxic pollutants,” “contaminants” or “pollutants,” or words of similar
import, under any applicable Environmental Law.


 


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


 


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




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


 


“LKL”
means LKL Investments, LLC.


 


“LKL
Facility” means the Loan and Security Agreement, dated June 28, 2013, by and among the Company, Lakeland Protective Wear
Inc. and LKL.


 


“LKL
Note” means, collectively, (i) the term loan promissory note issued to LKL on June 28, 2013 pursuant to the LKL Facility
and (ii) any additional notes issued by the Company as “payment-in-kind” in lieu of cash interest otherwise due and
owing under the LKL Note.


 


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


 


“Per
Share Purchase Price” shall be equal to $10.00.


 


“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.


 


“Pharmaceutical
Product” shall have the meaning ascribed to such term in Section 3.1(kk).


 


“Placement
Agent” means Craig-Hallum Capital Group LLC.


 


“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.


 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers,
in the form of Exhibit A attached hereto.


 


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale or other disposition by the Purchasers or their transferees of the Shares.


 


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


 


“Required
Purchasers” means (i) prior to Closing (A) each Purchaser which, together with its Affiliates, has a Subscription Amount
of at least $2 million and (B) the Purchasers (including the Purchasers in clause (A)) who, together with their Affiliates, have
agreed to purchase a majority of the Shares to be sold hereunder and (ii) from and after the Closing (Y) each Purchaser which,
together with its Affiliates, has a Subscription Amount of at least $2 million (so long as such Purchaser and its Affiliates continue
to hold at least 50,000 Shares (subject to adjustment for reverse and forward stock splits and the like) and (Z) the Purchasers
(including the Purchasers in clause (Y)) beneficially owning (calculated in accordance with Rule 13d-3 under the Exchange Act)
a majority of the Shares then held by all the Purchasers.


 




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


 


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


 


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


 


“Securities”
means the Shares.


 


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


 


“Shares”
means the shares of Common Stock purchased by each Purchaser pursuant to this Agreement.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act and all types
of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on
a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares 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.


 


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


 


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


 


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


 




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“Transaction
Documents” means this Agreement, the Registration Rights Agreement, all exhibits and schedules thereto and hereto and
any other documents or agreements executed in connection with the transactions contemplated hereunder.


 


“Transfer
Agent” means Registrar & Trust Company, the current transfer agent of the Company, with a mailing address of 10 Commerce
Drive, Cranford, New Jersey 07016-3572 and a facsimile number of (908) 497-2314 and any successor transfer agent of the Company.


 


“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b).


 


“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)), (b)  if the Common Stock is quoted on the OTC
Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board, (c) if the Common Stock is quoted on any market maintained by OTC Markets Inc., the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on such market, or (d) in all other cases, the fair market
value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Required Purchasers and
reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.


 


ARTICLE II.

PURCHASE AND SALE


 


2.1           Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, up to an aggregate of $11,2000,000 of Shares. Each Purchaser shall deliver to the Escrow Agent, via wire transfer
or a certified check, 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 each Purchaser its respective Shares, 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 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 EGS or such other location as the parties shall mutually agree.


 


2.2           Deliveries.


 


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


 


(i)          this
Agreement duly executed by the Company;


 




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(ii)         a
legal opinion of Company Counsel, substantially in the form of Exhibit B attached hereto;


 


(iii)        a
certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase
Price, registered in the name of such Purchaser; and


 


(iv)        the
Registration Rights Agreement duly executed by the Company.


 


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


 


(i)          this
Agreement duly executed by such Purchaser;


 


(ii)         to
the Escrow Agent, such Purchaser’s Subscription Amount by wire transfer to the account specified in the Escrow Agreement;
and


 


(iii)        the
Registration Rights Agreement duly executed by such Purchaser.


 


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 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)        to
the extent applicable, 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:


 


(i)          The
representations and warranties made by the Company in this Agreement qualified as to materiality shall be true and correct at all
times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct as of such earlier date, and, the representations
and warranties made by the Company in this Agreement not qualified as to materiality shall be true and correct in all material
respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks
as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such
earlier date;


 




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(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)        The
Company shall have filed with the Nasdaq Stock Market a Notification Form: Listing of Additional Shares for the listing of the
Shares on the Nasdaq Global Select Market (the “Listing Notice”), a copy of which shall have been provided to
the Purchasers;


 


(v)         No
judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have
been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents;


 


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


 


(vii)       Simultaneously
with the Closing the Company shall (i) irrevocably pay in full out of the proceeds of this offering all amounts due and owing under
the LKL Facility including, without limitation, the payment in full of all interest, principal, premium, if any, and other amounts
outstanding under the LKL Note, (ii) terminate the LKL Facility effective as of the Closing, including the cancellation of the
LKL Note, and (iii) provide to the Purchasers reasonable evidence of (i) and (ii);


 


(viii)      The
Company shall have delivered a certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in subsections (i), (ii), (v),
(vii), (x) and (xi) of this Section 2.3(b);


 


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


 




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


 


(xi)         from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the
Closing.


 


ARTICLE III.

REPRESENTATIONS AND WARRANTIES


 


3.1           Representations
and Warranties of the Company. The Company hereby represents and warrants to each Purchaser that:


 


(a)          Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). Except as set forth in Schedule
3.1(a), the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free
and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. Other than as
listed on Schedule 3.1(a), neither the Company nor any of its Subsidiaries owns, directly or indirectly, capital stock or
other equity interests of any other Person.


 


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


 


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


 




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(e)          Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.5 of this Agreement, (ii) the filing with the Commission of one or more Registration
Statements in accordance with the requirements of the Registration Rights Agreement, (iii) the filing of the Listing Notice which
will be accomplished prior to Closing, and (iv) the filing of Form D with the Commission and 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 other
than restrictions on transfer arising pursuant to applicable securities laws. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement.


 


(g)          Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the
number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company
has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the
exercise of employee stock options under the Company’s stock option 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 on Schedule 3.1(g) as a result of the purchase and sale of the Securities, there
are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to,
or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe
for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale
of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the
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. 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 or others is required for the issuance and sale of the Securities. Except
as described in the SEC Reports in respect of the LKL Facility, 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. 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 one year 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, filed prior
to the date hereof being collectively referred to herein as the “SEC Reports”) on a timely basis or has received
a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act.
The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.


 


(i)          Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) except for a change
in the auditors as set forth in the SEC Reports, the Company has not changed its independent registered accounting firm or 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 stock option plans.
The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred
or exists, or is reasonably expected to occur or exist, with respect to the Company or its Subsidiaries or their respective businesses,
properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities
laws at the time this representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior
to the date of this Agreement.


 




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(j)          Litigation.
Except as set forth in the footnotes to the financial statements of the Company appearing in its Form 10-K for the fiscal year
ended January 31, 2014 and subsequently filed Form 10-Qs, there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director
or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending
or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.


 


(k)          Labor
Relations. Except as set forth in Note 16 to the financial statements in the Company’s Quarterly Report on Form 10-Q
for the quarter ended July 31, 2014, no labor dispute exists or, to the knowledge of the Company, is imminent with respect to any
of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no
executive officer of the Company or any Subsidiary is, or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract
or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer
does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company
and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 




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(l)          Compliance.
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)          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 own, lease and operate their properties and assets or conduct their
respective businesses as described in the SEC Reports (the “Company Permits”), except where the failure to possess
such permits could not reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or modification of any Company Permit. All Company Permits are
valid and in full force and effect, except where the failure to be in full force and effect could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. The Company is, and each of its Subsidiaries is, in compliance with
the terms and requirements of such Company Permits, except where the failure to be in compliance could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.


 


(n)          Environment.


 


(i)          The
Company and its Subsidiaries have been and are in compliance with all applicable Environmental Laws in all material respects, including,
but not limited to, possessing all permits and other governmental authorizations required for their operations under applicable
Environmental Laws;


 


(ii)         There
is no pending or, to the knowledge of the Company, threatened Action pursuant to any Environmental Law against the Company or any
of its Subsidiaries. To the Company’s knowledge, neither the Company nor any of its Subsidiaries has received written notice
from any person, including but not limited to any governmental authority, alleging that the Company or any of its Subsidiaries
has been or is in violation of any applicable Environmental Law or otherwise may be liable under any applicable Environmental Law,
which violation or liability is unresolved. Neither the Company nor any of its Subsidiaries is a party or subject to any material
order of a Governmental Authority pursuant to Environmental Law;


 




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(iii)        With
respect to real property that is currently owned, leased or operated by the Company or any of its Subsidiaries, or was formerly
owned, leased or operated by the Company or any of its Subsidiaries, to the Company’s Knowledge, (i) there have been no releases,
spills or discharges of Hazardous Materials on or underneath, or migrating to or from any of such real property, and (ii) there
is no storage or disposal of Hazardous Materials at any such real property, that in either case would reasonably be expected to
result in an obligation to remediate such environmental condition pursuant to applicable Environmental Law in effect as of the
Closing Date or result in liability pursuant to applicable Environmental Law in effect as of the Closing Date with respect to remediation
conducted by other Persons;


 


(iv)        The
Company and its Subsidiaries have not, either expressly or by operation of law, assumed, undertaken, or provided an indemnity with
respect to any material liability (contingent or otherwise) or material investigatory, remedial or corrective obligation of any
other Person relating to Environmental Laws.


 


(o)          Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except 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, (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 and (iii) Liens as set forth on Schedule 3.1(o) attached
hereto. 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. The Company and the Subsidiaries own, or have valid and enforceable rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights as are necessary or required to conduct their respective businesses as described in the SEC
Reports (collectively, the “Intellectual Property Rights”). The Intellectual Property Rights are currently in
compliance with all legal requirements (including timely filings, proofs, prosecution, disclosures and payments of fees) and are
valid, subsisting and enforceable and no loss of any of the material Intellectual Property Rights of the Company or any Subsidiary
is reasonably foreseeable (except for patents upon the expiration of their statutory term). None of the Intellectual Property Rights
is now involved in, or has been involved in within the past three (3) years, any cancellation, Action, opposition proceeding, or
other dispute, litigation or proceeding, and, to the Company’s knowledge, no such action is threatened.  No patent contained
in the Intellectual Property Rights is now involved in any interference, reissue, re-examination or opposition proceeding and no
such patent has been misused. Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of,
the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned
within two (2) years of the date of this Agreement. To the knowledge of the Company, the Company and its Subsidiaries have not
infringed, misappropriated or otherwise impaired or conflicted with, and the conduct of the Company’s and its Subsidiaries’
businesses as currently conducted does not infringe, misappropriate or otherwise impair or conflict with (collectively, “Infringe”)
any intellectual property or other rights of any third party. To the knowledge of the Company, the Intellectual Property Rights
are not being Infringed by any third party. There is no litigation, claim or order that was either made within the past three (3)
years or is presently pending or outstanding or, to the knowledge of the Company, threatened or imminent, that alleges that the
conduct of the respective businesses of the Company or of any of its Subsidiaries Infringes any intellectual property rights of
a third party, or that seeks to limit or challenge or that concerns the ownership, use, patentability, registrability, validity
or enforceability of any Intellectual Property Rights and the Company’s and its Subsidiaries’ use of any Intellectual
Property Rights. The Company and its Subsidiaries have taken all actions reasonably necessary to maintain, protect, and enforce
all material Intellectual Property Rights, including the secrecy, confidentiality and value of trade secrets and other confidential
information. All non-administrative employees, consultants and independent contractors of the Company or any Subsidiary who have
had access to confidential information of the Company or any Subsidiary and/or who have been involved in, or have contributed to,
the creation or development of any Intellectual Property Rights have executed a written agreement to maintain the confidentiality
of such confidential information and to assign to the Company or such Subsidiary all Intellectual Property Rights created or developed
by such Person in the course of such Person’s employment or other engagement with the Company and has executed appropriate
agreements that are substantially consistent with the Company’s standard forms thereof.


 




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(q)          Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business without a significant increase in cost.


 


(r)          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 option agreements under any stock option plan
of the Company.


 




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(s)          Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date, except to the extent that the
disclosure of a material weakness in Item 4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 31,
2014 (the “Controls Disclosure”) may be deemed to be a violation thereof. Except as described in the Controls
Disclosure, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences. Except as described in the Controls Disclosure, the Company has established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company, including the Subsidiaries, is made known to the certifying officers
by others within those entities, particularly during the period in which the Company’s most recently filed periodic report
under the Exchange Act, as the case may be, is being prepared. Except as set forth in the SEC Reports, the Company has established
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP. The Company's certifying officers have evaluated the effectiveness of the Company's disclosure controls and procedures
and the Company’s internal control over financial reporting (collectively, “internal controls”) as of the end
of the period covered by the most recently filed 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 such internal controls based on their evaluations as of the Evaluation Date. Since the Evaluation Date,
there have been no significant changes in the Company's internal controls or, to the Company's Knowledge, in other factors that
could significantly affect the Company's internal controls.


 


(t)          Certain
Fees. Except for compensation payable to the Placement Agent as described in 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.


 




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(u)          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 Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.


 


(v)         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.


 


(w)          Registration
Rights. Other than LKL (which rights are set forth on Schedule 6(b) of the Registration Rights Agreement) and each of the Purchasers,
no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company
or any Subsidiary.


 


(x)          Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. 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.


 


(y)          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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(z)          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. 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 taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other
than those specifically set forth in Section 3.2 hereof.


 


(aa)         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 (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated. 


 


(bb)         Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry
on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(bb)
sets 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 $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether
or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;
and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance
with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.


 




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(cc)         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 or as set forth in the SEC Reports, 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.


 


(dd)         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.


 


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


 


(ff)         Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(ff) of the Disclosure Schedules. Such accounting firm:
(i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the
financial statements to be included in the Company’s Annual Report for the fiscal year ending January 31, 2015.


 




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


 


(hh)         
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.


 


(ii)         Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except
for Sections 3.2(g) and 4.15 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, may presently 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,
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.


 




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


 


(kk)         FDA.
As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged,
labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical
Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed
by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse Effect. There is no pending, completed or, to the Company's knowledge,
threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint,
or investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received
any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket
clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing
of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall,
suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any
Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries,
(iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent
decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have
a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the FDA.  The Company has not been informed by the
FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed,
produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product
being developed or proposed to be developed by the Company.


 


(ll)         Form
S-3 Eligibility. The Company is eligible to register the resale of the Securities for resale by the Purchaser on Form S-3 promulgated
under the Securities Act.


 




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


 


(nn)         OFAC.
Neither the Company nor any Subsidiary nor, to the knowledge of the Company, any director, officer, agent, employee, Affiliate
or Person acting on behalf 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”); and the Company will not directly or indirectly
use the proceeds of the sale of the Securities, or lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other Person or entity, towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other
country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to any U.S. sanctions
administered by OFAC.


 


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


 


(pp)         No
Disqualification Events.  With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 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 (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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(qq)         Other
Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale
of any Regulation D Securities.


 


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


 


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 the power, corporate, partnership, limited liability
company or other, to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser
of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of 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.


 


(b)          Own
Account. 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 the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. Nothing contained herein shall be deemed a representation or warranty by such
Purchaser to hold the Securities for any period of time.


 




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(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” as defined in Rule 501under the Securities Act.


 


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


 


(f)          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 (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 Shares and the merits and risks of investing in the Shares; (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 Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with
any information or advice with respect to the Securities nor is such information or advice necessary or desired.  Neither
the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities and
the Placement Agent and any Affiliates may have acquired non-public information with respect to the Company which such Purchaser
agrees need not be provided to it. In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent
nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.


 




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(g)          Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly
or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, 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, 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). Each Purchaser
acknowledges that the representations, warranties and covenants contained in this Section 3.2(g) are being made for the benefit
of the Purchaser as well as the Company and that each of the other Purchasers shall have an independent right to assert any claims
against such Purchaser arising out of any breach or violation of the provisions of this Section 3.2(g).


 


(h)          Residency.
If the Purchaser is a resident of the U.S., such Purchaser is organized under the laws of the state set forth beneath such Purchaser’s
name on the signature page attached hereto, and its principal place of operations is in the state set forth beneath such Purchaser’s
name on the signature page attached hereto.


 


(i)          No
Investment, Tax or Legal Advice. Such Purchaser understands that nothing in the SEC Reports, this Agreement, or any other materials
presented to the Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax, or investment advice.
Each Purchaser has consulted such legal, tax and investment advisor as it, in its sole discretion, has deemed necessary or appropriate
in connection with its purchase of Shares.


 


(j)          Limited
Ownership. The purchase of the Shares issuable to such Purchaser at the Closing will not result in such Purchaser (individually
or together with any other person or entity with whom such Purchaser has identified, or will have identified, itself as part of
a “group” in a public filing made with the Commission involving the Company’s securities) acquiring, or obtaining
the right to acquire, in excess of 4.999% of the outstanding shares of Common Stock or voting power of the Company on a post-transaction
basis that assumes that the Closing shall have occurred. Such Purchaser does not presently intend to, along or together with others,
make a public filing with the Commission to disclose that it has (or that it together with such other persons or entities have)
acquired, or obtained the right to acquire, as a result of the Closing (when added to any other securities of the Company that
it or they then own or have the right to acquire), in excess of 4.999% of the outstanding shares of Common Stock or the voting
power of the Company on a post-transaction basis that assumes that the Closing shall have occurred. In this connection, without
limitation, the Purchaser or any Affiliate of the Purchaser will not be required, by itself or as part of a “group”,
to file a Schedule 13G or Schedule 13D as a result of the purchase of Shares by the Purchaser pursuant hereto. Notwithstanding
anything herein to the contrary, such Purchaser may indicate on its signature page hereto that its ownership will exceed such limitations
set forth hereunder, provided that in no event shall such Purchaser exceed 9.999% of the outstanding shares of Common Stock or
voting power of the Company on a post-transaction basis that assumes that the Closing shall have occurred. In this connection,
without limitation, the Purchaser or any Affiliate of the Purchaser will not be required, by itself or as part of a group,
to report the beneficial ownership of 10% or more of the outstanding shares of Common Stock on a Schedule 13G or Schedule 13D as
a result of the purchase of Shares by the Purchaser pursuant hereto.


 




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The Company acknowledges
and agrees that the representations contained in 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.


 


ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1           Transfer
Restrictions.


 


(a)          The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act.


 


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


 


THIS SECURITY HAS NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (B) RULE 144 UNDER THE SECURITIES ACT, OR (C) AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 




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The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged
or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further,
no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement,
the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights
Agreement) thereunder.


 


(c)          Certificates
evidencing the Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), (i) while a registration
statement (including the Registration Statement) covering the resale or other disposition of such security is effective under the
Securities Act, (ii) following any sale or other disposition of such Shares pursuant to Rule 144 or (iii) if such 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 and without volume or manner-of-sale restrictions. Upon the earlier of (i) registration for resale
pursuant to the Registration Rights Agreement or (ii) the Shares becoming freely tradable by a non-affiliate pursuant to Rule 144
the Company shall (A) deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall reissue a certificate
representing shares of Common Stock without legends upon receipt by such Transfer Agent of the legended certificates for such shares,
together with either (1) a customary representation by the Purchaser that Rule 144 applies to the shares of Common Stock represented
thereby or (2) a statement by the Purchaser that such Purchaser has sold the shares of Common Stock represented thereby in accordance
with the Plan of Distribution contained in the Registration Statement, and (B) cause its counsel to deliver to the Transfer Agent
one or more blanket opinions to the effect that the removal of such legends in such circumstances may be effected under the Securities
Act. From and after the earlier of such dates, upon a Purchaser’s written request, the Company shall promptly cause certificates
evidencing the Purchaser’s Securities to be replaced with certificates which do not bear such restrictive legends. When the
Company is required to cause an unlegended certificate to replace a previously issued legended certificate, if: (1) the unlegended
certificate is not delivered to an Purchaser within three (3) Business Days of submission by that Purchaser of a legended certificate
and supporting documentation to the Transfer Agent as provided above and (2) prior to the time such unlegended certificate is received
by the Purchaser, the Purchaser, or any third party on behalf of such Purchaser or for the Purchaser’s account, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Purchaser of shares
represented by such certificate (a “Buy-In”), then the Company shall pay in cash to the Purchaser (for costs
incurred either directly by such Purchaser or on behalf of a third party) the amount by which the total purchase price paid for
Common Stock as a result of the Buy-In (including brokerage commissions, if any) exceeds the proceeds received by such Purchaser
as a result of the sale to which such Buy-In relates. The Purchaser shall provide the Company written notice indicating the amounts
payable to the Purchaser in respect of the Buy-In and accompanied with reasonable documentation of the calculation of such amount.
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. Unless otherwise requested by a Purchaser, certificates for Securities subject to legend
removal hereunder shall be transmitted by the Transfer Agent to such Purchaser by crediting the account of such Purchaser’s
prime broker with the Depository Trust Company System as directed by such Purchaser.


 




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(d)          Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance
with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.


 


4.2           Furnishing
of Information. If the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof,
the Company agrees to cause the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 60th
calendar day following the date hereof. Until the time that no Purchaser owns Securities, the Company covenants to use commercially
reasonable efforts to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to use
commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period)
all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange Act.


 


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 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.



 




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4.4           Subsequent
Registrations. Other than a Registration Statement pursuant to the Registration Rights Agreement, prior to the first to occur
of (a) the Effective Date of a Registration Statement resulting in all Registrable Securities (as defined in the Registration Rights
Agreement) being registered for resale pursuant to one or more effective Registration Statements or (b) such time as all Registrable
Securities may be sold by the Purchasers without volume restrictions pursuant to Rule 144, the Company may not file any registration
statement (other than on Form S-4 or Form S-8) with the Commission with respect to any securities of the Company.


 


4.5           Securities
Laws Disclosure; Publicity. The Company shall (a) by 9:30 a.m. (New York City time) on the Trading Day immediately following
the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current
Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the
Exchange Act. From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly
disclosed all material terms and conditions of the transactions contemplated by the Transaction Documents. The Company and each
Purchaser shall consult with each other in issuing any other 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 the Required
Purchasers, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except
if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice
of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any
Purchaser, or include the name of any Purchaser in any filing with the Commission 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 (i) any registration
statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction Documents with the Commission
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).


 


4.6           Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that 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.


 


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


 




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4.8           Use
of Proceeds. Except as set forth on Schedule 4.8 attached hereto, the Company shall use the net proceeds from the sale
of the Securities hereunder (i) to satisfy the condition to Closing specified in Section 2.3(b)(viii) (which shall be deemed to
survive the Closing as a continuing covenant of the Company and (ii) for working capital purposes and shall not use such proceeds:
(a) for the satisfaction of any portion of the Company’s other Indebtedness (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 or (d) in violation of FCPA or OFAC regulations.


 


4.9           [RESERVED]


 


4.10         Reservation
of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available
at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company
to issue Shares pursuant to this Agreement. 


 


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


 


4.12         [RESERVED]


 


4.13         Subsequent
Equity Sales.


 


(a)          From
the date hereof until thirty (30) days after the Effective 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.


 




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(b)          From
the date hereof until the twelve (12) month anniversary of the Effective Date, the Company shall be prohibited from effecting or
entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents
(or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means
a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares
of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market
for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company
may issue securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company
to preclude any such issuance, which remedy shall be in addition to any right to collect damages.


 


(c)          Notwithstanding
the foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall
be an Exempt Issuance.


 


4.14         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 this Agreement unless the same consideration
is also offered to all of the parties to this Agreement. 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.


 


4.15         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 4.5.  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 4.5, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Transaction Documents and 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 4.5, (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 4.5 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.5.  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.


 




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4.16         Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.


 


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


 


4.18         Limited
Ownership Continuation. For so long as a Purchaser holds Shares, such Purchaser, severally and not jointly with the other Purchasers,
covenants and agrees that it will not, without the prior written consent of the Company, acquire shares of Common Stock or Common
Stock Equivalents outside of this Agreement to the extent that, after such purchase, such Purchaser (together with such Purchaser’s
Affiliates, and any other person or entity acting as a group together with such Purchaser or any of such Purchaser’s Affiliates)
would beneficially own in excess of 4.999% of the issued and outstanding Common Stock (or 9.999% if indicated on the signature
pages attached hereto). Beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder.


 


4.19         Removal
of Liens. Promptly following the Closing, the Company will take all actions reasonably necessary to terminate any pledge, lien,
security interest or other encumbrance on any assets of the Company or any Subsidiary in favor of LKL or otherwise securing the
obligations of the Company and its Subsidiaries under LKL Facility, including, without limitation, filing termination statements
on Form UCC-3 where applicable.


 




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ARTICLE V.

MISCELLANEOUS


 


5.1           Termination. 
Any party may terminate this Agreement (as to itself only) by written notice to the other parties, if the Closing has not been
consummated on or before October 29, 2014; provided, however, that such termination will not affect the right of
any party to sue for any breach by any other party (or parties). In the event of termination by the Company or any Purchaser of
its obligations to effect the Closing, written notice thereof shall forthwith be given to the other Purchasers by the Company and
each of the other Purchasers shall have the right to terminate their obligations to effect the Closing upon written notice to the
Company.


 


5.2           [RESERVED]


 


5.3           Fees
and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent
fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company
and any 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.


 


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


 


5.5           Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or e-mail to the address set forth on the signature pages attached hereto at or prior to
5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or e-mail to the address 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.


 


5.6           Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Required Purchasers or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought. 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.


 


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.


 




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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, in accordance with applicable law, 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.”


 


5.9           No
Third-Party Beneficiaries. The Placement Agent shall be the third party beneficiary of the representations and warranties of
the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. 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 this Section 5.9.


 


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


 


5.11         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         Indemnification.


 


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


 


(b)          Any
person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense
of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment
of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects
to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure
to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood
that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses
of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with
the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in
respect of such claim or litigation.


 




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5.15         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.


 


5.16         Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.


 


5.17         Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


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


 




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5.19         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 hereof 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. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company through EGS. EGS does not represent any of the
Purchasers and only represents the Placement Agent. 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.


 


5.20         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.


 


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


 


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


 


(Signature Pages Follow)


 




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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.


  


	lakeland industries, inc.	 	Address for Notice:
	 	 	Lakeland Industries, Inc.
	 	 	 	701-7 Koehler Avenue
	By:	 	 	Ronkonkoma, New York 11779
	 	Name:	 	Attn:  Gary Pokrassa
	 	Title:	 	e-mail: GAPokrassa@lakeland.com


 


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


Moomjian, Waite & Coleman, LLP


100 Jericho Quadrangle


Suite 208


Jericho, New York 11753


Attn: Gary T. Moomjian


Facsimile Number: (516) 937-5050


e-mail: gmoomjian@mwcllp.com


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 




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[PURCHASER SIGNATURE PAGES TO LAKE
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 Shares to Purchaser (if not same as
address for notice):


 


 


 


Subscription Amount: $_________________


 


Shares: _________________


 


EIN Number: _______________________


 


_____ Check if an exception to Section 3.2(j) is required (provided
such ownership may not exceed 9.999%).


 


 


[SIGNATURE PAGES CONTINUE]


 






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