Document:

Exhibit 10.5

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT,
dated as of July __, 2015 (this “Agreement”), is among Amarantus Bioscience Holdings, Inc. (the “Company”),
all of the Subsidiaries of the Company (such subsidiaries, the “Guarantors”
and together with the Company, the “Debtors”) and the holders of the Company’s 12% Promissory
Notes due twelve (12) months from the date hereof, in the original aggregate principal amount of $1,000,000 (collectively, the
“Notes”) signatory hereto, their endorsees, transferees and assigns (collectively, the “Secured Parties”).

 

WITNESSETH:

 

WHEREAS, pursuant
to the Purchase Agreement (as defined in the Notes), the Secured Parties have severally agreed to extend the loans to the Debtors
evidenced by the Notes; and

 

WHEREAS, in order
to induce the Secured Parties to extend the loans evidenced by the Notes, the Debtors have agreed to execute and deliver to the
Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party and through
the Agent (as defined in Section 18 hereof), a security interest in certain property of the Debtors to secure the prompt payment,
performance and discharge in full of all of the Debtors’ obligations under the Notes.

 

NOW, THEREFORE, in
consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.         Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used
but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel
paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the UCC.

 

(a)    “Collateral”
means the collateral in which the Secured Parties are granted a security interest by this Agreement and which shall include the following personal property of the Debtors,
whether presently owned or existing or hereafter acquired or coming into existence, wherever situated, and all additions and accessions
thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation,
all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any tort claims in connection
therewith, and all dividends, interest, cash, notes, securities, equity
interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Securities (as defined below):

 

    	 

    	 

    

 

(i)    All goods,
including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and
wherever situated, together with all documents of title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in
connection with the Debtors’ businesses and all improvements thereto; and (B) all inventory, including all now owned or hereafter
acquired inventory wherever located including in transit or in warehouses;

 

(ii)    All
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses,
distribution and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed
by Debtors), computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights,
goodwill, Intellectual Property and income tax refunds;

 

(iii)    All
accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties
with respect to each account, including any right of stoppage in transit;

 

(iv)    All
documents, letter-of-credit rights, instruments and chattel paper;

 

(v)    All
commercial tort claims;

 

(vi)    All
deposit accounts and all cash (whether or not deposited in such deposit accounts);

 

(vii)    All
investment property;

 

(viii)    All
supporting obligations; and

 

(ix)    All
files, records, books of account, business papers, and computer programs; and

 

(x)    the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.

 

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Without limiting
the generality of the foregoing, the “Collateral” shall include all investment property and general
intangibles respecting ownership and/or other equity interests in each subsidiary of the Debtors, including, without limitation,
the shares of capital stock and the other equity interests listed on Schedule H hereto (as the same may be modified from
time to time pursuant to the terms hereof), and any other shares of capital stock and/or other equity interests of any other direct
or indirect subsidiary of Debtors obtained in the future, and, in each case, all certificates representing such shares and/or
equity interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter
be received, receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in
connection with the Pledged Securities, including, but not limited to, all dividends, interest and cash.

 

Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent
that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided,
however, that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset
and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.

 

(b)    “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent
of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications
for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof,
(iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service
marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country
or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under
the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals
or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action for infringement of
the foregoing.

 

(c)    “Majority
in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal amounts
of Notes at the time of such determination) of the Secured Parties.

 

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(d)    “Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and
such other instruments or documents as the Agent (as that term is defined below) may reasonably request.

 

(e)    “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become
due, or that are now or may be hereafter contracted or acquired, or owing to, of Debtors to the Secured Parties, including, without
limitation, all obligations under this Agreement, the Notes, and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or
not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from
any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time. Without limiting the generality of the foregoing, the term “Obligations”
shall include, without limitation: (i) principal of, and interest on the Notes and the loans extended pursuant thereto; (ii) any
and all other fees, indemnities, costs, obligations and liabilities of the Debtors from time to time under or in connection with
this Agreement, the Notes, and any other instruments, agreements or other documents executed and/or delivered in connection herewith
or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would
be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of
a bankruptcy, reorganization or similar proceeding involving Debtors.

 

(f)    “Organizational
Documents” means with respect to Debtors, the documents by which Debtors were organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the internal governance of Debtors (such as bylaws,
a partnership agreement or an operating, limited liability or members agreement).

 

(g)    “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(j).

 

(h)    “Pledged
Securities” shall have the meaning ascribed to such term in Section 4(i).

 

(i)    “UCC”
means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that
defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed
in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions,
they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones
shall be controlling.

 

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2.             Grant of Security Interest
in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Notes and to secure the complete
and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, Debtors hereby unconditionally
and irrevocably pledge, grant and hypothecate to the Secured Parties a security interest in and to, a lien upon and a right of
set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security
Interest” and, collectively, the “Security Interests”).

 

3.             Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, Debtors shall deliver or cause to be
delivered to the Agent (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and
(b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together
with all Necessary Endorsements. The Debtors are, contemporaneously with the execution hereof, delivering to Agent, or has previously
delivered to Agent, a true and correct copy of each Organizational Document governing any of the Pledged Securities.

 

4.             Representations, Warranties,
Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure schedules delivered
to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall
be deemed a part hereof, Debtors represent and warrant to, and covenants and agrees with, the Secured Parties as follows:

 

(a)    Each
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by Debtors of this Agreement and
the filings contemplated therein have been duly authorized by all necessary action on the part of Debtors and no further action
is required by Debtors. This Agreement has been duly executed by Debtors. This Agreement constitutes the legal, valid and binding
obligation of Debtors, enforceable against Debtors in accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and
remedies of creditors and by general principles of equity.

 

(b)    Each
Debtor has no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, Debtors are the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property. Except as disclosed on
Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.

 

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(c)    Except
as set forth on Schedule B attached hereto, the Debtors are the sole owner of the Collateral (except for non-exclusive licenses
granted by Debtors in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights or
claims, and is fully authorized to grant the Security Interests. Except as set forth on Schedule C attached hereto, there
is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing (other than those that will be filed in favor of the Secured
Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule C attached
hereto and except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtors shall not execute and shall
not knowingly permit to be on file in any such office or agency any other financing statement or other document or instrument (except
to the extent filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement).

 

(d)    Except
as set forth on Schedule I attached hereto, no written claim has been received that any Collateral or Debtors’ use
of any Collateral violates the rights of any third party. Except as set forth on Schedule I attached hereto, there has been
no adverse decision to Debtors’ claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction
or to Debtors’ right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of Debtors, threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.

 

(e)    The
Debtors shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and
records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate
financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken to
perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing perfected first priority
lien in the Collateral.

 

(f)    This
Agreement creates in favor of the Secured Parties a valid security interest in the Collateral securing the payment and performance
of the Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder
in any Collateral which may be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected.
Except for the filing of the Uniform Commercial Code financing statements referred to in the immediately following paragraph, the
recordation of the Intellectual Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights and
copyright applications in the United States Copyright Office referred to in paragraph (m), the execution and delivery of deposit
account control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of
the Debtors, and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create,
perfect or protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing
of said financing statements, the recordation of said Intellectual Property Security Agreement, and the execution and delivery
of said deposit account control agreements, no consent of any third parties and no authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and
performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or
(iii) the enforcement of the rights of the Agent and the Secured Parties hereunder.

 

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(g)    Debtors
hereby authorizes the Agent to file one or more financing statements under the UCC or any other similar law, with respect to the
Security Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it, including foreign jurisdictions,
including but not limited to filing a fixed and floating charge over the Security Interests in the United Kingdom.

 

(h)    The
execution, delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational
Documents of Debtors or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law,
rule or regulation applicable to Debtors or (ii) conflict with, or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing Debtors’
debt or otherwise) or other understanding to which Debtors are a party or by which any property or asset of Debtors are bound or
affected. If any, all required consents (including, without limitation, from stockholders or creditors of Debtors) necessary for
Debtors to enter into and perform its obligations hereunder have been obtained.

 

(i)    The
capital stock and other equity interests listed on Schedule H hereto (the “Pledged Securities”) represent
all of the capital stock and other equity interests of all of the subsidiaries of the Debtors, and represent all capital stock
and other equity interests owned, directly or indirectly, by the Debtors. All of the Pledged Securities are validly issued, fully
paid and nonassessable, and except as set forth on Schedule H attached hereto the Debtors is the legal and beneficial owner
of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the security interests
created by this Agreement.

 

(j)    The
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not
held in a securities account or by any financial intermediary.

 

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(k)    Debtors
shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected first priority liens
and security interests in the Collateral in favor of the Secured Parties until this Agreement and the Security Interest hereunder
shall be terminated pursuant to Section 14 hereof. Debtors hereby agree to defend the same against the claims of any and all persons
and entities. Debtors shall safeguard and protect all Collateral for the account of the Secured Parties. At the request of the
Agent, Debtors will sign and deliver to the Agent on behalf of the Secured Parties at any time or from time to time one or more
financing statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the same
in all public offices wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, Debtors shall pay all fees, taxes and other amounts necessary
to maintain the Collateral and the Security Interests hereunder, and Debtors shall obtain and furnish to the Agent from time to
time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the
Security Interests hereunder.

 

(l)    Debtors
will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive
licenses granted by Debtors in their ordinary course of business and sales of inventory by Debtors in their ordinary course of
business) without the prior written consent of a Majority in Interest.

 

(m)    Debtors
shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.

 

(n)    Debtors
shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter
acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation
having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other
such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the
full replacement cost thereof. Debtors shall cause each insurance policy issued in connection herewith to provide, and the insurer
issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured under
each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever,
such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the Agent for at least
thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase coverage
under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in the payment
of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in the Notes)
exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss payments in each
instance will be applied by the Debtors to the repair and/or replacement of property with respect to which the loss was incurred
to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall
be payable to the Debtors; provided, however, that payments received by Debtors after an Event of Default occurs
and is continuing or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Agent on behalf
of the Secured Parties and, if received by Debtors, shall be held in trust for the Secured Parties and immediately paid over to
the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the related certificates, in each case,
naming the Agent as lender loss payee and additional insured shall be delivered to the Agent at least annually and at the time
any new policy of insurance is issued.

 

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(o)    Debtors
shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any material
adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value of
the Collateral or on the Secured Parties’ security interest, through the Agent, therein.

 

(p)    Debtors
shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time request
and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest in the
Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement with respect
to Debtors’ Intellectual Property (“Intellectual Property Security Agreement”) in which the Secured Parties
have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual
Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.

 

(q)    Debtors
shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon reasonable
prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time
to time.

 

(r)    Debtors
shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral.

 

(s)    Debtors
shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or
other legal process levied against any Collateral and of any other information received by Debtors that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.

 

(t)    All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of Debtors with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.

 

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(u)    The
Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any
rights and franchises material to its business.

 

(v)    Debtors
will not change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one),
legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written notice
to the Secured Parties of such change and, at the time of such written notification, Debtors provides any financing statements
or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

 

(w)    Except
in the ordinary course of business, Debtors may not consign any of its inventory or sell any of its inventory on bill and hold,
sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably
withheld.

 

(x)    Debtors
may not relocate their chief executive office to a new location without providing 30 days prior written notification thereof to
the Secured Parties and so long as, at the time of such written notification, Debtors provide any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.

 

(y)    Debtors
were organized and remains organized solely under the laws of the state set forth next to Debtors’ name in Schedule D
attached hereto, which Schedule D sets forth Debtors’ organizational identification number or, if Debtors do not have
one, states that one does not exist.

 

(z)    (i)   The actual name of Debtors are the name set forth in Schedule D attached hereto; (ii) Debtors have no trade names except
as set forth on Schedule E attached hereto; (iii) Debtors have not used any name other than that stated in the preamble
hereto or as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into Debtors or been acquired
by Debtors within the past five years except as set forth on Schedule E.

 

(aa)     At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the secured party to perfect the security interest created hereby, the Debtors shall deliver such Collateral
to the Agent.

 

(bb)    Debtors,
in their capacity as issuer, hereby agree to comply with any and all orders and instructions of Agent regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of Debtors as contemplated by Section 8-106 (or any successor
section) of the UCC. Further, Debtors agree that they shall not enter into a similar agreement (or one that would confer “control”
within the meaning of Article 8 of the UCC) with any other person or entity.

 

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(cc)    Debtors
shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this
Agreement. To the extent that any Collateral consists of electronic chattel paper, the Debtors shall cause the underlying chattel
paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).

 

(dd)    If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, the Debtors shall cause such an account control agreement, in form and substance in each case satisfactory
to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties.

 

(ee)    To
the extent that any Collateral consists of letter-of-credit rights, the Debtors shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured Parties.

 

(ff)    To
the extent that any Collateral is in the possession of any third party, the Debtors shall join with the Agent in notifying such
third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.

 

(gg)    If
Debtors shall at any time hold or acquire a commercial tort claim, Debtors shall promptly notify the Secured Parties in a writing
signed by Debtors of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent.

 

(hh)    Debtors
shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and
proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate with the Agent
in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or
local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.

 

(ii)    Debtors
shall cause each subsidiary of Debtors to immediately become a party hereto (an “Additional Debtor”), by
executing and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply
with the provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement
schedules for, or supplements to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement
schedules shall supersede, or supplements shall modify, the Schedules then in effect. The Additional Debtor shall also
deliver such opinions of counsel, authorizing resolutions, good standing certificates, incumbency certificates,
organizational documents, financing statements and other information and documentation as the Agent may reasonably request.
Upon delivery of the foregoing to the Agent, the Additional Debtor shall be and become a party to this Agreement with the
same rights and obligations as the Debtors, for all purposes hereof as fully and to the same extent as if it were an original
signatory hereto and shall be deemed to have made the representations, warranties and covenants set forth herein as of the
date of execution and delivery of such Additional Debtor Joinder, and all references herein to the “Debtor” shall
be deemed to include each Additional Debtor.

 

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(jj)    Debtors shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Notes.

 

(kk)    Debtors
shall register the pledge of the applicable Pledged Securities on the books of Debtors. Debtors shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such
issuer. Further, except with respect to certificated securities delivered to the Agent, the Debtors shall deliver to Agent an
acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection
by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a) it has
registered the pledge on its books and records; and (b) at any time directed by Agent during the continuation of an Event of Default,
such issuer will transfer the record ownership of such Pledged Securities into the name of any designee of Agent, will take such
steps as may be necessary to effect the transfer, and will comply with all other instructions of Agent regarding such Pledged
Securities without the further consent of the Debtors.

 

(ll)    In
the event that, upon an occurrence of an Event of Default, Agent shall sell all or any of the Pledged Securities to another party
or parties (herein called the “Transferee”)
or shall purchase or retain all or any of the Pledged Securities, Debtors shall, to the extent applicable: (i) deliver to Agent
or the Transferee, as the case may be, the articles of incorporation, bylaws, minute books, stock certificate books, corporate
seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account, financial records and all other Organizational
Documents and records of the Debtors and their direct and indirect subsidiaries; (ii) use its best efforts to obtain resignations
of the persons then serving as officers and directors of the Debtors and their direct and indirect subsidiaries, if so requested;
and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory body in order to permit
the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by Agent and allow
the Transferee or Agent to continue the business of the Debtors and their direct and indirect subsidiaries.

 

(mm)    Without
limiting the generality of the other obligations of the Debtors hereunder, Debtors shall promptly (i) cause to be registered at
the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect
to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be
duly recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.

 

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 (nn)    Debtors
will from time to time promptly execute and deliver all such further instruments and documents, and take all such further action
as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder
and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.

 

(oo)    Schedule
F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights,
and domain names owned by the Debtors as of the date hereof. Schedule F lists all material licenses in favor of Debtors
for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks
of the Debtors have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.

 

(pp)    Except
as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of
the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local
statute or rule in respect of such Collateral.

 

5.             Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership
interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests
upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement
of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to which Debtors are subject or to which Debtors
are party.

 

6.              Defaults.
The following events shall be “Events of Default”:

 

(a)    The occurrence
of an Event of Default (as defined in the Notes) under the Notes;

 

(b)    Any representation
or warranty of Debtors in this Agreement shall prove to have been incorrect in any material respect when made;

 

(c)    The failure
by Debtors to observe or perform any of its obligations hereunder for five (5) days after delivery to Debtors of notice of such
failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time frame and
Debtors are using best efforts to cure same in a timely fashion; or

 

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(d)    If any
provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Debtors, or a proceeding shall be commenced by Debtors, or by any governmental authority having
jurisdiction over Debtors, seeking to establish the invalidity or unenforceability thereof, or Debtors shall deny that Debtors
have any liability or obligation purported to be created under this Agreement.

 

7.             Duty To Hold
In Trust.

 

(a)    Upon
the occurrence of any Event of Default and at any time thereafter, Debtors shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Notes or otherwise, or
of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same
in trust for the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the
Secured Parties, pro-rata in proportion to their respective then-currently outstanding principal amount of Notes for
application to the satisfaction of the Obligations (and if any Note is not outstanding, pro-rata in proportion to the initial
purchases of the remaining Notes).

 

(b)    If
Debtors shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares
of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants,
rights or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in connection with any reorganization of Debtors or any of their
direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange
for, such Pledged Securities or otherwise), Debtors agree to (i) accept the same as the agent of the Secured Parties; (ii) hold
the same in trust on behalf of and for the benefit of the Secured Parties; and (iii) to deliver any and all certificates or instruments
evidencing the same to Agent on or before the close of business on the fifth business day following the receipt thereof by Debtors,
in the exact form received together with the Necessary Endorsements, to be held by Agent subject to the terms of this Agreement
as Collateral. 

 

8.             Rights and Remedies
Upon Default.

 

(a)   Upon the occurrence of any Event
of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the right to exercise all of the
remedies conferred hereunder and under the Notes, and the Secured Parties shall have all the rights and remedies of a secured party
under the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have the following rights and powers:

 

(i)    The Agent
shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any person,
any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and Debtors shall assemble the
Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at Debtors’ premises
or elsewhere, and make available to the Agent, without rent, all of Debtors’ respective premises and facilities for the purpose
of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.

 

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(ii)    Upon
notice to the Debtors by Agent, all rights of Debtors to exercise the voting and other consensual rights which it would otherwise
be entitled to exercise and all rights of Debtors to receive the dividends and interest which it would otherwise be authorized
to receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Parties,
any interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s
discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right
(but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof,
including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the Collateral or
Debtors or any of their direct or indirect subsidiaries.

 

(iii)    The Agent
shall have the right to operate the business of Debtors using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or
times and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to Debtors or right
of redemption of Debtors, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral,
the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all
or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of Debtors,
which are hereby waived and released.

 

(iv)    The
Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights against such
account debtors and obligors.

 

(v)    The
Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person
or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.

 

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 (vi)    The
Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of Debtors at the United
States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser
of any Collateral.

 

(b)    The
Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtors
will only be credited with payments actually made by the purchaser. In addition, Debtors waive any and all rights that they may
have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including,
without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.

 

(c)    For
the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, Debtors hereby grant to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to Debtors) to use, license or sublicense following an Event
of Default, any Intellectual Property now owned or hereafter acquired by Debtors, and wherever the same may be located, and including
in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.

 

9.              Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on
account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent
in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral,
and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of
Notes at the time of any such determination), and to the payment of any other amounts required by applicable law, after which the
Secured Parties shall pay to the Debtors any surplus proceeds. If, upon the sale, license or other disposition of the Collateral,
the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable
law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Parties to collect
such deficiency. To the extent permitted by applicable law, Debtors waive all claims, damages and demands against the Secured Parties
arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence or willful
misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

 

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10.           Securities
Law Provision. Debtors recognize that Agent may be limited in its ability to effect a sale to the public of all or part of
the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state
securities laws (collectively, the “Securities Laws”),
and may be compelled to resort to one or more sales to a restricted group of purchasers who may be required to agree to acquire
the Pledged Securities for their own account, for investment and not with a view to the distribution or resale thereof. Debtors
agree that sales so made may be at prices and on terms less favorable than if the Pledged Securities were sold to the public,
and that Agent has no obligation to delay the sale of any Pledged Securities for the period of time necessary to register the
Pledged Securities for sale to the public under the Securities Laws. Debtors shall cooperate with Agent in its attempt to satisfy
any requirements under the Securities Laws (including, without limitation, registration thereunder if requested by Agent) applicable
to the sale of the Pledged Securities by Agent.

 

11.           Costs and
Expenses. Debtors agree to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial
releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent. The Debtors
shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice, imperil
or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Agent the
amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents,
which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection, satisfaction,
foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance, amendment or
enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and the Secured
Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of
the Secured Parties under the Notes. Until so paid, any fees payable hereunder shall be added to the principal amount of the Notes
and shall bear interest at the Default Rate.

 

12.           Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations
shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability
for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i) has any duty
(either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating
to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) Debtors shall remain
obligated and liable under each contract or agreement included in the Collateral to be observed or performed by Debtors thereunder.
Neither the Agent nor any Secured Party shall have any obligation or liability under any such contract or agreement by reason of
or arising out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating to any of the Collateral,
nor shall the Agent or any Secured Party be obligated in any manner to perform any of the obligations of Debtors under or pursuant
to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent or any
Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts
which may have been assigned to the Agent or to which the Agent or any Secured Party may be entitled at any time or times.

 

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13.           Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Notes or any agreement
entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place
of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or
any consent to any departure from the Notes or any other agreement entered into in connection with the foregoing; (c) any
exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by
the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or
arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or
equitable defense available to Debtors, or a discharge of all or any part of the Security Interests granted hereby. Until the
Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the
Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or
bankruptcy. Debtors expressly waive presentment, protest, notice of protest, demand, notice of nonpayment and demand for
performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured
Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or
fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to
any party other than the Secured Parties, then, in any such event, Debtors’ obligations hereunder shall survive
cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of
this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions
hereof. Debtors waive all right to require the Secured Parties to proceed against any other person or entity or to apply any
Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. Debtors waive
any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.

 

14.            Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Notes have
been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities
of the Debtors contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative
and in full force and effect regardless of the termination of this Agreement.

 

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15.           Power
of Attorney; Further Assurances.

 

(a)    Debtors
authorize the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns with
full power of substitution, as Debtors’ true and lawful attorney-in-fact, with power, in the name of the Agent or Debtors,
to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts, money orders
or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the UCC or
any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications
and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtors, at any time, or from time to time, to execute and deliver any and all documents and instruments and to
do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests
granted therein in order to effect the intent of this Agreement and the Notes all as fully and effectually as the Debtors might
or could do; and Debtors hereby ratify all that said attorney shall lawfully do or cause to be done by virtue hereof. This power
of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any
of the Obligations shall be outstanding. The designation set forth herein shall be
deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which
Debtors are subject or to which Debtors are a party. Without limiting the generality of the foregoing, after the occurrence
and during the continuance of an Event of Default, each Secured Party is specifically authorized to execute and file any applications
for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United
States Patent and Trademark Office and the United States Copyright Office.

 

(b)    On
a continuing basis, Debtors will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C attached
hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested
by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement,
or for assuring and confirming to the Agent the grant or perfection of a perfected security interest in all the Collateral under
the UCC.

 

(c)    Debtors
hereby irrevocably appoint the Agent as Debtors’ attorney-in-fact, with full authority in the place and instead of Debtors
and in the name of Debtors, from time to time in the Agent’s discretion, to take any action and to execute any instrument
which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole
discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without
the signature of Debtors where permitted by law, which financing statements may (but need not) describe the Collateral as “all
assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Agent.
This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding.

 

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16.           Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement
(as such term is defined in the Notes).

 

17.           Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying
or affecting any of the Secured Parties’ rights and remedies hereunder.

 

18.           Appointment
of Agent. The Secured Parties hereby appoint GEMG LLC to act as their agent (“Agent”) for purposes of
exercising any and all rights and remedies of the Secured Parties hereunder. Such appointment shall continue until revoked in
writing by a Majority in Interest, at which time a Majority in Interest
shall appoint a new Agent. The Agent shall have the rights,
responsibilities and immunities set forth in Annex B hereto.

 

19.           Miscellaneous.

 

(a)    No
course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.

 

(b)    All
of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes or
by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

 

(c)    This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. 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 Debtors
and the Secured Parties holding 51% or more of the principal amount of Notes then outstanding, or, in the case of a waiver, by
the party against whom enforcement of any such waived provision is sought.

 

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(d)    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.

 

(e)    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.

 

(f)    This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtors
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other
than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Purchase
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound,
with respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”

 

(g)    Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.

 

(h)    Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction,
validity, enforcement and interpretation of this Agreement 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. Except to the extent mandatorily
governed by the jurisdiction or situs where the Collateral is located, Debtors agree that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and the Notes (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, Borough of Manhattan. Except to the extent mandatorily governed
by the jurisdiction or situs where the Collateral is located, Debtors hereby irrevocably submit 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, and hereby irrevocably waives, and agrees
not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding
is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any
such 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 manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.

 

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(i)    This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature
is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

 

(j)    Debtors
shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively,
“Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and
expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the foregoing) imposed
on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise from this Agreement
or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses which result from
the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision of a court of competent
jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification provision in
the Notes, the Purchase Agreement (as such term is defined in the Notes) or any other agreement, instrument or other document executed
or delivered in connection herewith or therewith.

 

(k)    Nothing
in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in Debtors or any if their
direct or indirect subsidiaries that is a partnership or as a member in Debtors or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any
partnership agreement or limited liability company agreement, as applicable, of any Debtors or any of their direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted for Debtors as a partner
or member, as applicable, pursuant hereto.

 

    	22

    	 

    

 

(l)    To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the
consent, approval or action of any partner or member, as applicable, of Debtors or any direct or indirect subsidiary of Debtors
or compliance with any provisions of any of the Organizational Documents, the Debtors hereby grants such consent and approval
and waives any such noncompliance with the terms of said documents.

 

[SIGNATURE PAGES FOLLOW]

 

    	23

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.

  

	Amarantus Bioscience Holdings, Inc.

 

	By:	 	 
	 	Name:	 
	 	Title:	 

 

	Amarantus THERAPEUTICS, Inc.

 

	By:	 	 
	 	Name:	 
	 	Title:	 

 

	Amarantus THERAPEUTICS, Inc.

 

	By:	 	 
	 	Name:	 
	 	Title:	 

 

	Amarantus MA, Inc.

 

	By:	 	 
	 	Name:	 
	 	Title:	 

 

    	24

    	 

    

 

[SIGNATURE PAGE OF HOLDERS TO SA]

 

Name of Investing Entity: __________________________

 

Signature of Authorized Signatory of
Investing entity: _________________________

 

Name of Authorized Signatory: _________________________

 

Title of Authorized Signatory: __________________________

 

    	25

    	 

    

  

ANNEX A

to

SECURITY

AGREEMENT

 

FORM OF
ADDITIONAL DEBTOR JOINDER

 

Security Agreement dated as of July 9, 2015
made by

Amarantus Bioscience Holdings, Inc.,

and its subsidiaries party thereto from
time to time, as Debtors

to and in favor of

the Secured Parties identified therein (the
“Security Agreement”)

 

Reference is made to
the Security Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings
given to such terms in, or by reference in, the Security Agreement.

 

The undersigned hereby
agrees that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned shall (a)
be an Additional Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtor under the Security
Agreement as fully and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to have made
the representations and warranties set forth therein as of the date of execution and delivery of this Additional Debtor Joinder.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST
IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS
SET FORTH THEREIN.

 

Attached hereto are
supplemental and/or replacement Schedules to the Security Agreement, as applicable.

 

An executed copy of
this Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth herein on or
after the date hereof. This Joinder shall not be modified, amended or terminated without the prior written consent of the Secured
Parties.

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
the undersigned has caused this Joinder to be executed in the name and on behalf of the undersigned.

 

	 	[Name of Additional Debtor]
	 	 
	 	By:
	 	Name:
	 	Title:
	 	 
	 	Address:

 

Dated:

 

    	 

    	 

    

 

ANNEX B

to

SECURITY

AGREEMENT

 

THE AGENT

 

1.    Appointment.
The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings provided
in the Security Agreement to which this Annex B is attached (the "Agreement")), by their acceptance of the benefits
of the Agreement, hereby designate ______ (“Agent”) as the Agent to act as specified herein and in the Agreement.
Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its behalf under the provisions of
the Agreement and any other Transaction Document (as such term is defined in the Purchase Agreement) and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof
and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or
through its agents or employees.

 

2.    Nature of Duties.
The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement. Neither the Agent nor any
of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action taken or omitted
by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence of any
oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful misconduct
as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of the Agent
shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement or any other Transaction
Document a fiduciary relationship in respect of Debtor or any Secured Party; and nothing in the Agreement or any other Transaction
Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect
of the Agreement or any other Transaction Document except as expressly set forth herein and therein.

 

3.    Lack of Reliance
on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems appropriate, has
made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Debtor and
its subsidiaries in connection with such Secured Party’s investment in the Debtor, the creation and continuance of the Obligations,
the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in connection therewith,
and (ii) its own appraisal of the creditworthiness of the Debtor and its subsidiaries, and of the value of the Collateral from
time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Secured
Party with any credit, market or other information with respect thereto, whether coming into its possession before any Obligations
are incurred or at any time or times thereafter. The Agent shall not be responsible to the Debtor or any Secured Party for any
recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered
in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility,
priority or sufficiency of the Agreement or any other Transaction Document, or for the financial condition of the Debtor or the
value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial condition of the Debtor, or
the value of any of the Collateral, or the existence or possible existence of any default or Event of Default under the Agreement,
the Notes or any of the other Transaction Documents.

 

    	 

    	 

    

 

4.    Certain Rights
of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf of all of the Secured
Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect to any material act
or action (including failure to act) in connection with the Agreement or any other Transaction Document, and shall be entitled
to act or refrain from acting in accordance with the instructions of a Majority in Interest; if such instructions are not provided
despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such action, and if
such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions to be taken
by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without limiting the
foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and the Debtor
shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to the foregoing
and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected to expose
it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.

 

5.    Reliance. The
Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made
by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other Transaction Documents
and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this Agreement and the
other Transaction Documents and its duties thereunder, upon advice of other experts selected by it. Anything to the contrary notwithstanding,
the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral exists or is owned by the Debtor
or is cared for, protected or insured or that the liens granted pursuant to the Agreement have been properly or sufficiently or
lawfully created, perfected, or enforced or are entitled to any particular priority.

 

    	 

    	 

    

 

6.    Indemnification.
To the extent that the Agent is not reimbursed and indemnified by the Debtor, the Secured Parties will jointly and severally reimburse
and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Notes, from and against any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder
or under the Agreement or any other Transaction Document, or in any way relating to or arising out of the Agreement or any other
Transaction Document except for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction
to have resulted solely from the Agent's own gross negligence or willful misconduct. Prior to taking any action hereunder as Agent,
the Agent may require each Secured Party to deposit with it sufficient sums as it determines in good faith is necessary to protect
the Agent for costs and expenses associated with taking such action.

 

7.    Resignation by
the Agent. 

 

(a)   The Agent
may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents at any
time by giving 30 days' prior written notice (as provided in the Agreement) to the Debtor and the Secured Parties. Such resignation
shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.

 

(b)
  Upon any such notice of resignation, the Secured Parties, acting by a Majority in Interest, shall appoint a successor Agent
hereunder.

 

(c)   If a
successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent who
shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead
the Debtor and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not limited
to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable by the Debtor
on demand.

 

8.    Rights with respect
to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that it shall not, and shall
not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to any other agreement
or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent or any of the other Secured
Parties in respect of the Collateral or its rights hereunder (other than any such action arising from the breach of this Agreement)
and (ii) that such Secured Party has no other rights with respect to the Collateral other than as set forth in this Agreement and
the other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and
the retiring Agent shall be discharged from its duties and obligations under the Agreement.  After any retiring Agent’s
resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex B shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent.

 

    	 

    	 

    

 

SCHEDULE A

 

 ̈

 

SCHEDULE B

 

 ̈

 

SCHEDULE C

 

 ̈

 

SCHEDULE D

 

 ̈

 

SCHEDULE E

 

 ̈

 

SCHEDULE F

 

 ̈

 

SCHEDULE G

 

 ̈

 

SCHEDULE H

 

 ̈

 

SCHEDULE I

 

 ̈EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of July 9, 2015, by and between WISDOM HOMES OF AMERICA, INC., a Nevada corporation, with headquarters located at 500 North Northeast Loop 323, Tyler, TX 75708 (the "Company"), and AUCTUS FUND, LLC, a Delaware limited liability company, with its address at 101 Arch Street, 20th Floor, Boston, MA 02110 (the "Buyer").

 

WHEREAS:

 

A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 Act"); 

 

B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 10% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of US$55,000 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the "Note"), convertible into shares of common stock, $0.001 par value per share, of the Company (the "Common Stock"), upon the terms and subject to the limitations and conditions set forth in such Note. 

 

C. The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth immediately below its name on the signature pages hereto; and 

 

NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows: 

 

1. PURCHASE AND SALE OF NOTE. 

 

a. Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer's name on the signature pages hereto. 

 

b. Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the "Purchase Price"), less amounts withheld pursuant to Sections 4(e) and 5 hereof, by wire transfer of immediately available funds to the Company, in accordance with the Company's written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer's name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

 

	 
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c. Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 7 and Section 8 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the "Closing Date") shall be 12:00 noon, Eastern Standard Time on or about July 9, 2014, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the "Closing") shall occur on the Closing Date at such location as may be agreed to by the parties. 

 

2. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the Company that: 

 

a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable (i) on account of interest on the Note (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the "Conversion Shares" and, collectively with the Note, the "Securities") for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. 

 

b. Accredited Investor Status. The Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D (an "Accredited Investor"). 

 

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

 

d. Information. The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer's right to rely on the Company's representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties made herein.

 

	 
	2

	

	 

 

e. Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities. 

 

f. Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be reasonably accepted by the Company, (c) the Securities are sold or transferred to an "affiliate" (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) ("Rule 144")) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) ("Regulation S"), and the Buyer shall have delivered to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be reasonably accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement, and Buyer hereby agrees to notify the Company of any such pledge within one (1) business day thereof. In the event that the Company does not reasonably accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, within three (3) business days of delivery of the opinion to the Company, the Company shall pay to the Buyer liquidated damages an amount equal to the lesser of (i) five percent (5%) of the outstanding amount of the Note or (ii) $1,000, per day plus accrued and unpaid interest on the Note, prorated for partial months, in cash or shares at the option of the Buyer ("Standard Liquidated Damages Amount"). If the Buyer elects to be pay the Standard Liquidated Damages Amount in shares of Common Stock, such shares shall be issued at the Conversion Price (as defined in the Note) at the time of payment. 

 

g. Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act or may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities): 

 

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

 

	 
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The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be reasonably accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note. 

 

h. Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms. 

 

i. Residency. The Buyer is a resident of the jurisdiction set forth immediately below the Buyer's name on the signature pages hereto. 

 

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Buyer that: 

 

a. Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. "Material Adverse Effect" means any material adverse effect on the business, operations, assets, or financial condition of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. "Subsidiaries" means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest. 

 

b. Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company's Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. 

 

	 
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c. Capitalization. As of the date hereof, the authorized capital stock of the Company consists of: (i) 300,000,000 shares of Common Stock, of which approximately 69,000,000shares are issued and outstanding a; and (ii) 20,000,000 shares of preferred stock, $0.001 par value per share, of which no shares are issued and outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company's stock option plans, approximately 200,000,000 shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 15,752,091shares are reserved for issuance upon conversion of the Note. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in the SEC Documents or in this Agreement, as of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares. The Company has filed in its SEC Documents true and correct copies of the Company's Certificate of Incorporation as in effect on the date hereof ("Certificate of Incorporation"), the Company's By-laws, as in effect on the date hereof (the "By-laws"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company's Chief Executive Officer on behalf of the Company as of the Closing Date. 

 

d. Issuance of Shares. The issuance of the Note is duly authorized and, upon issuance in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof. 

 

e. Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company. 

 

	 
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f. No Conflicts. The execution, delivery and performance of this Agreement and the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self-regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the OTCQB tier maintained by OTC Markets Group, Inc. or any similar quotation system on which its common stock currently trades, and does not reasonably anticipate that the Common Stock will be delisted by the OTCQB or any similar quotation system on which its common stock currently trades, in the foreseeable future nor are the Company's securities "chilled" by DTC. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing.  

 

g. SEC Documents; Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the "SEC Documents"). The Company has delivered to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March 31, 2015, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act. For the avoidance of doubt, filing of the documents required in this Section 3(g) via the SEC's Electronic Data Gathering, Analysis, and Retrieval system ("EDGAR") shall satisfy all delivery requirements of this Section 3(g). 

 

	 
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h. Absence of Certain Changes. Since March 31, 2015, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries. 

 

i. Absence of Litigation. Other than as set forth in the SEC Documents and as disclosed to the Buyer, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect.  

 

j. Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights ("Intellectual Property") necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future). Except as disclosed in the SEC Documents, there is no claim or action by any person pertaining to, or proceeding pending, or to the Company's knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best of the Company's knowledge, the Company's or its Subsidiaries' current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property. 

 

k. No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company's officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company's officers has or is expected to have a Material Adverse Effect. 

 

l. Tax Status. Except as disclosed to the Buyer, the Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes). The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company's tax returns is presently being audited by any taxing authority. Buyer acknowledges that the Company recently filed an amended prior tax year return which will lower the Company's outstanding unpaid tax obligations. 

 

	 
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m. Certain Transactions. Except for arm's length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (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, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 

 

n. Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company's reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act). 

 

o. Acknowledgment Regarding Buyer' Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity of arm's length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Buyer' purchase of the Securities. The Company further represents to the Buyer that the Company's decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives. 

 

p. No Integrated Offering. 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 in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other issuance of the Company's securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities. 

 

q. No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.  

 

	 
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r. Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the "Company Permits"), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since March 31, 2015, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect. 

 

s. Environmental Matters. 

 

(i) There are, to the Company's knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company's knowledge, threatened in connection with any of the foregoing. The term "Environmental Laws" means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, "Hazardous Materials") into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. 

 

(ii) Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company's or any of its Subsidiaries' business. 

 

(iii) There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law. 

 

	 
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t. Title to Property. Except as disclosed in the SEC Documents the Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect. 

 

u. Internal Accounting Controls. Except as disclosed in the SEC Documents the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company's board of directors, 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 generally accepted accounting principles 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. 

 

v. Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 

 

w. Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year. For the avoidance of doubt any disclosure of the Borrower's ability to continue as a "going concern" shall not, by itself, be a violation of this Section 3(w). 

 

x. No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an "investment company" required to be registered under the Investment Company Act of 1940 (an "Investment Company"). The Company is not controlled by an Investment Company. 

 

	 
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y. Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has 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 at a cost that would not have a Material Adverse Effect. Upon written request the Company will provide to the Buyer true and correct copies of all policies relating to directors' and officers' liability coverage, errors and omissions coverage, and commercial general liability coverage.

 

z. Bad Actor. No officer or director of the Company would be disqualified under Rule 506(d) of the Securities Act as amended on the basis of being a "bad actor" as that term is established in the September 19, 2013 Small Entity Compliance Guide published by the SEC.

 

aa. Shell Status. The Company represents that it previously has been a "shell" issuer and that at least twelve (12) months have passed since the Company has reported Form 10 type information indicating that it is no longer a "shell" issuer. Further, the Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to allow for salability of the Conversion Shares or (ii) accept such opinion from Holder's counsel. 

 

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

 

cc. Manipulation of Price. 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, or that could reasonably be expected to cause or 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.

 

dd.Sarbanes-Oxley Act. The Company and each Subsidiary is in material compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof. 

 

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

 

ff. Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement and it being considered an Event of Default under Section 3.5 of the Note.

 

4. COVENANTS. 

 

a. Best Efforts. The parties shall use their commercially reasonable best efforts to satisfy timely each of the conditions described in Section 7 and 8 of this Agreement.  

 

b. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or "blue sky" laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date. 

 

c. Use of Proceeds. The Company shall use the proceeds from the sale of the Note for working capital and other general corporate purposes and shall not, directly or indirectly, use such proceeds for any loan to or investment in any other corporation, partnership, enterprise or other person (except in connection with its currently existing direct or indirect Subsidiaries). 

 

	 
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d. Notice of Subsequent Transaction. While any amount remains outstanding under the Note, the Company shall, prior to the closing of any equity financing (including debt with an equity component) ("Future Offerings"), provide written notice to the Buyer describing the proposed Future Offering, including the terms and conditions thereof. In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of the proposed Future Offering. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering.  

 

e. Expenses. The Company shall reimburse Buyer for any and all expenses incurred by them in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith ("Documents"), including, without limitation, reasonable attorneys' and consultants' fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Documents. When possible, the Company must pay these fees directly, including, but not limited to, any and all wire fees, otherwise the Company must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice by the Buyer. At Closing, the Company's initial obligation with respect to this transaction is to reimburse Buyer's legal expenses shall be $2,750 plus the cost of wire fees. 

 

f. Financial Information. The Company agrees to send or make available the following reports to the Buyer until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives to such shareholders. For the avoidance of doubt, filing the documents required in (i) above via EDGAR or releasing any documents set forth in (ii) above via a recognized wire service shall satisfy the delivery requirements of this Section 4(f). 

 

g. Listing. The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB, OTCQB, OTC Pink Sheets, or any equivalent replacement exchange, the Nasdaq National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New York Stock Exchange ("NYSE"), or the NYSE MKT and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority ("FINRA") and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any material notices it receives from the OTCBB, OTCQB and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems. The Company shall pay any and all fees and expenses in connection with satisfying its obligation under this Section 4(g). 

 

	 
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h. Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company's assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company's assets, where the surviving or successor entity in such transaction (i) assumes the Company's obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTCBB, OTCQB, Nasdaq, NasdaqSmallCap, NYSE or AMEX. 

 

i. No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its securities. 

 

j. Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act. 

 

k. Trading Activities. Neither the Buyer nor its affiliates has an open short position (or other hedging or similar transactions) in the common stock of the Company and the Buyer agrees that it shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging transactions with respect to the common stock of the Company.  

 

l. Restriction on Activities. Commencing as of the date first above written, and until the sooner of the six month anniversary of the date first written above or payment of the Note in full, or full conversion of the Note, the Company shall not, directly or indirectly, without the Buyer's prior written consent, which consent shall not be unreasonably withheld: (a) change the nature of its business; (b) sell, divest, acquire, change the structure of any material assets other than in the ordinary course of business; or (c) file any registration statements with the SEC. 

 

m. Legal Counsel Opinions. Upon the request of the Buyer from to time to time, the Company shall be responsible (at its cost) for promptly supplying to the Company's transfer agent and the Buyer a customary legal opinion letter of its counsel (the "Legal Counsel Opinion") to the effect that the sale of Conversion Shares by the Buyer or its affiliates, successors and assigns is exempt from the registration requirements of the 1933 Act pursuant to Rule 144 (provided the requirements of Rule 144 are satisfied and provided the Conversion Shares are not then registered under the 1933 Act for resale pursuant to an effective registration statement). Should the Company's legal counsel fail for any reason to issue the Legal Counsel Opinion, the Buyer may (at the Company's cost) secure another legal counsel to issue the Legal Counsel Opinion, and the Company will instruct its transfer agent to accept such opinion. 

 

	 
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n. Par Value. If the closing bid price at any time the Note is outstanding falls below $0.001, the Company shall use its best efforts to cause the par value of its Common Stock to be reduced to $0.0001 or less. 

 

o. Breach of Covenants. The Company agrees that if the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default under Section 3.4 of the Note, the Company shall pay to the Buyer the Standard Liquidated Damages Amount in cash or in shares of Common Stock at the option of the Company, until such breach is cured. If the Company elects to pay the Standard Liquidated Damages Amounts in shares of Common Stock, such shares shall be issued at the Conversion Price at the time of payment. 

 

5. Advance Fee. Upon Closing, the Company shall pay Two Thousand Two Hundred Fifty and No/100 United States Dollars (US$2,250) to Auctus Fund Management, Inc. ("Auctus Management"), as a fee for services rendered in connection herewith (the "Advance Fee"). The Advance Fee shall be offset against the proceeds of the Note and shall be paid to Auctus Management upon the execution hereof.

 

6. Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the "Irrevocable Transfer Agent Instructions"). In the event that the Borrower proposes to replace its transfer agent, the Borrower shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement. Nothing in this Section shall affect in any way the Buyer's obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the cost of the Company, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required. 

 

	 
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7. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS TO SELL. The obligation of the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion: 

 

a. The Buyer shall have executed this Agreement and delivered the same to the Company. 

 

b. The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above. 

 

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

 

d. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement. 

 

8. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATION TO PURCHASE. The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer's sole benefit and may be waived by the Buyer at any time in its sole discretion: 

 

a. The Company shall have executed this Agreement and delivered the same to the Buyer. 

 

b. The Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) and in accordance with Section 1(b) above. 

 

c. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest of the Buyer, shall have been delivered to and acknowledged in writing by the Company's Transfer Agent. 

 

	 
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d. The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with respect to the Company's Certificate of Incorporation, By-laws and Board of Directors' resolutions relating to the transactions contemplated hereby. 

 

e. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement. 

 

f. No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations. 

 

g. The Conversion Shares shall have been authorized for quotation on the OTCBB, OTCQB or any similar quotation system and trading in the Common Stock on the OTCBB, OTCQB or any similar quotation system shall not have been suspended by the SEC or the OTCBB, OTCQB or any similar quotation system. 

 

h. The Buyer shall have received an officer's certificate described in Section 3(c) above, dated as of the Closing Date. 

 

9. GOVERNING LAW; MISCELLANEOUS. 

 

a. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement, the Note or any other agreement, certificate, instrument or document contemplated hereby shall be brought only in the state courts of Massachusetts or in the federal courts located in the state of Massachusetts. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via 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. 

 

	 
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b. Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. 

 

c. Construction; Headings. This Agreement shall be deemed to be jointly drafted by the Company and the Buyer and shall not be construed against any person as the drafter hereof. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement. 

 

d. Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof. 

 

e. Entire Agreement; Amendments. This Agreement, the Note and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer. 

 

f. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: 

 

If to the Company, to: 

 

Wisdom Homes of America, Inc.

500 North Northeast Loop 323

Tyler, TX 75708

Attn: James Pakulis

E-mail: jpakulis@wisdomhomes.us

 

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

 

Clyde Snow & Sessions, PC

201 S. Main Street, 13th Floor

Salt Lake City, UT 84111

Facsimile: (801) 521-6280 

 

If to the Buyer:

 

Auctus Fund, LLC

101 Arch Street, 20th Floor

Boston, MA 02110

 Attn: Lou Posner 

Facsimile: (617) 532-6420

 

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

 

Lucosky Brookman LLP

101 Wood Avenue South, 5th Floor

Woodbridge, NJ 08830

Attn: Joseph M. Lucosky, Esq.

Facsimile: (732) 395-4401  

 

Each party shall provide notice to the other party of any change in address. 

 

g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from the Buyer or to any of its "affiliates," as that term is defined under the 1934 Act, without the consent of the Company. 

 

	 
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h. Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 

 

i. Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder not withstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred. 

 

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

 

k. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 

 

l. Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required. 

 

	 
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m. Publicity. The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, OTCQB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, OTCQB (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon). 

 

n. Indemnification. In consideration of the Buyer's execution and delivery of this Agreement and acquiring the Securities hereunder, and in addition to all of the Company's other obligations under this Agreement or the Note, the Company shall defend, protect, indemnify and hold harmless the Buyer and its stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement or the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement or the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of this Agreement or the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by this Agreement. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law. 

 

[signature page follows]

 

	 
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IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written. 

 

	
 
	WISDOM HOMES OF AMERICA, INC.	
 

	 	 	 	 
		By:	/s/ James Pakulis	
 

	
 
	
Name: 
	James Pakulis	
 

	
 
	
Title:
	Chief Executive Officer 	
 

	
 
	
 
	
 
	
 

	
 
	
AUCTUS FUND, LLC
	
 

	
 
	
 
	
 
	
 

	
 
	
By:
	
/s/ Lou Posner
	
 

	
 
	
Name:
	
Lou Posner
	
 

	
 
	
Title:
	
Managing Director 
	
 

 

AGGREGATE SUBSCRIPTION AMOUNT:

 

	
Aggregate Principal Amount of Note: 
	
US$55,000

	
 
	
 

	
Aggregate Purchase Price: 
	
US$55,000

 

 

22

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