Document:

ex10-48.htm

Exhibit 10.48

 

EXECUTION COPY

 

AMENDMENT NO. 2

 

Dated as of January 14, 2015

 

to

 

CREDIT AGREEMENT

 

Dated as of May 30, 2013

 

THIS AMENDMENT NO. 2 (this “Amendment”) is made as of January 14, 2015 by and among Littelfuse, Inc., a Delaware corporation (the “Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, N.A., as Agent (the “Agent”), under that certain Credit Agreement dated as of May 31, 2013 by and among the Borrower, the Lenders and the Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.

 

WHEREAS, the Borrower has requested that the requisite Lenders and the Agent agree to make certain modifications to the Credit Agreement;

 

WHEREAS, the Borrower, the Lenders party hereto and the Agent have so agreed on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders party hereto and the Agent hereby agree to enter into this Amendment.

 

1.     Amendment to the Credit Agreement. Effective as of the date of satisfaction of the conditions precedent set forth in Section 2 below, the parties hereto agree that the Credit Agreement is hereby amended as follows:

 

(a)     Section 1.01 of the Credit Agreement is amended to add the following definition thereto in the appropriate alphabetical order:

 

“Amendment No. 2 Effective Date” means January 14, 2015.

 

(b)     The definition of “Consolidated Funded Indebtedness” appearing in Section 1.01 of the Credit Agreement is amended to insert a new sentence at the end thereof as follows:

 

“Notwithstanding the foregoing, “Consolidated Funded Indebtedness” shall exclude any Indebtedness with respect to that certain Loan Entrustment Agreement, dated as of November 17, 2014, by and among Littelfuse Semiconductor (Wuxi) Co., Ltd., Bank of America, N.A., Shanghai Branch, and Suzhou Littelfuse Ovs Co., Ltd., as amended, restated, supplemented or otherwise modified from time to time.”

 

 

 

 

 

(c)     Section 3.01 of the Credit Agreement of the Credit Agreement is hereby further amended to insert a new clause (i) therein immediately following clause (h) thereof as follows:

 

“(i) Certain FATCA Matters. For purposes of determining withholding Taxes imposed under FATCA, from and after the Amendment No. 2 Effective Date, the Loan Parties and the Agent shall treat (and the Lenders hereby authorize the Agent to treat) this Agreement and the Loans as not qualifying as “grandfathered obligations” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).”

 

2.     Conditions of Effectiveness. The effectiveness of this Amendment is subject to the conditions precedent that (i) the Agent shall have received counterparts of this Amendment duly executed by the Borrower, the Required Lenders and the Agent, (ii) the Agent shall have received counterparts of the Consent and Reaffirmation attached as Exhibit A hereto duly executed by the Guarantors and (iii) the Agent shall have received payment and/or reimbursement of the Agent’s and its affiliates’ reasonable fees and expenses (including, to the extent invoiced, reasonable fees and expenses of counsel for the Agent) in connection with this Amendment.

 

3.     Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as follows:

 

(a)     This Amendment and the Credit Agreement as modified hereby constitute legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enhancement of creditors’ rights generally and by general principles of equity.

 

(b)     As of the date hereof and after giving effect to the terms of this Amendment, (i) no Default has occurred and is continuing and (ii) the representations and warranties of the Borrower set forth in Article V of the Credit Agreement (as amended hereby) or any other Loan Document are true and correct in all material respects (or in all respects to the extent the applicable representation and warranty is qualified by materiality or Material Adverse Effect) (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that the representations and warranties contained in subsections (a), (b) and (c) of Section 5.05 of the Credit Agreement are deemed to refer to the most recent statements furnished pursuant to clauses (a), (b) and (c), respectively, of Section 6.01 of the Credit Agreement).

 

4.     Reference to and Effect on the Credit Agreement.

 

(a)     Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.

 

(b)     Each Loan Document and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.

 

(c)     Except with respect to the subject matter hereof, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement, the Loan Documents or any other documents, instruments and agreements executed and/or delivered in connection therewith.

 

 

 

 

 

(d)     This Amendment is a “Loan Document” under (and as defined in) the Credit Agreement.

 

5.     Governing Law. and Amendment shall be construed in accordance with and governed by the law of the State of New York.

 

6.     Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

7.     Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Signatures delivered by facsimile or PDF shall have the same force and effect as manual signatures delivered in person.

 

[Signature Pages Follow]

 

 

 

 

 

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

 

 

	
 
	
LITTELFUSE, INC.,
	
 

	
 
	
as the Borrower
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Philip Franklin
	
 

	
 
	
Name: Philip Franklin
	
 

	
 
	
Title: Senior Vice President and Chief Financial Officer 
	
 

 

Signature Page to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc.

 

 

 

 

 

	
 
	
JPMORGAN CHASE BANK, N.A.,
	
 

	
 
	
individually as a Lender, as the Swing Line Lender, as the L/C Issuer and as Agent
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Suzanne Ergastolo
	
 

	
 
	
Name: Suzanne Ergastolo
	
 

	
 
	
Title: Vice President
	
 

 

Signature Page to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc 

 

 

 

 

 

	
 
	
BANK OF AMERICA, N.A.,
	
 

	
 
	
as a Lender
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Carlos Morales
	
 

	
 
	
Name: Carlos Morales
	
 

	
 
	
Title: SVP
	
 

 

 

Signature Page to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc

 

 

 

 

 

	
 
	
WELLS FARGO BANK, NATIONAL ASSOCIATION,
	
 

	
 
	
as a Lender
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Edmund H Lester
	
 

	
 
	
Name: Edmund H Lester
	
 

	
 
	
Title: Senior Vice President
	
 

 

Signature Page to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc

 

 

 

 

 

	
 
	
PNC BANK, NATIONAL ASSOCIATION,
	
 

	
 
	
as a Lender
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Kristin L. Lenda
	
 

	
 
	
Name: Kristin L. Lenda
	
 

	
 
	
Title: Senior Vice President 
	
 

 

 

Signature Page to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc

 

 

 

 

 

	
 
	
THE NORTHERN TRUST COMPANY,
	
 

	
 
	
as a Lender
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Murtuza Ziauddin
	
 

	
 
	
Name: Murtuza Ziauddin
	
 

	
 
	
Title: Vice President
	
 

 

Signature Page to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc

 

 

 

 

 

	
 
	
BMO HARRIS BANK N.A.,
	
 

	
 
	
as a Lender
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Edward McGuire
	
 

	
 
	
Name: Edward McGuire
	
 

	
 
	
Title: Managing Director
	
 

 

Signature Page to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc

 

 

 

 

 

	
 
	
BRANCH BANKING & TRUST COMPANY,
	
 

	
 
	
as a Lender
	
 

	 	 	 	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ John P. Malloy
	
 

	
 
	
Name: John P. Malloy
	
 

	
 
	
Title: Senior Vice President
	
 

 

Signature Page to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc

 

 

 

 

 

EXHIBIT A

 

 

Consent and Reaffirmation

 

 

Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 2 to Credit Agreement with respect to that certain Credit Agreement dated as of May 31, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Littelfuse, Inc., a Delaware corporation (the “Borrower”), the Lenders and JPMorgan Chase Bank, N.A., as Agent (the “Agent”), which Amendment No. 2 to Credit Agreement is dated as of January 14, 2015 and is by and among the Borrower, the financial institutions listed on the signature pages thereof and the Agent (the “Amendment”). Capitalized terms used in this Consent and Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement. Without in any way establishing a course of dealing by the Agent or any Lender, each of the undersigned consents to the Amendment and reaffirms the terms and conditions of the Guaranty and any other Loan Document executed by it and acknowledges and agrees that the Guaranty and each and every such Loan Document executed by the undersigned in connection with the Credit Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed. All references to the Credit Agreement contained in the above-referenced documents shall be a reference to the Credit Agreement as so modified by the Amendment and as the same may from time to time hereafter be amended, modified or restated.

 

 

Dated: January 14, 2015

[Signature Page Follows]

 

 

 

 

 

IN WITNESS WHEREOF, this Consent and Reaffirmation has been duly executed as of the day and year above written.

 

	  	
COLE HERSEE COMPANY

 

 

By: /s/ Philip Franklin

Name: Philip Franklin

Title: Director

 

 

	  	
SYMCOM, INC.

 

 

By: /s/ Philip Franklin

Name: Philip Franklin

Title: Director

 

 

	  	
SSAC, LLC

 

 

By: /s/ Philip Franklin 

Name: Philip Franklin

Title: Manager

 

 

	  	
SC BUILDING, LLC

 

 

By: /s/ Philip Franklin

Name: Philip Franklin

Title: Manager

 

 

	  	
LFUS, LLC

 

 

By: /s/ Philip Franklin

Name: Philip Franklin

Title: Manager

 

 

	  	
HAMLIN, INCORPORATED

 

 

By: /s/ Philip Franklin

Name: Philip Franklin

Title: Director

 

Signature Page to Consent and Reaffirmation to Amendment No. 2 to

Credit Agreement dates as of May 30, 2013

Littelfuse, Inc.Exhibit 10.1

 

Execution Version

 

SECURITIES PURCHASE
AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of February 18, 2015, by and among (i)
Creative Realities, Inc., a Minnesota corporation (the “Company”) and Creative Realities, Inc., a Utah corporation,
Creative Realities, LLC, a Delaware limited liability company, and Wireless Ronin Technologies Canada, Inc., a Canada corporation
(such entities, together with the Company, the “Company Parties”) and (ii) Mill City Ventures III, Ltd., a
Minnesota corporation (“Purchaser”).

 

WHEREAS, subject to the terms and conditions
set forth in this Agreement and pursuant to an exemption from the registration requirements of Section 5 of the Securities Act
contained in Section 4(a)(2) thereof and/or Regulation D thereunder, the Company Parties desire to issue and sell to Purchaser,
and Purchaser desires to purchase from the Company Parties, securities of the Company and the Company Parties as more fully described
in this Agreement;

 

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

 

ARTICLE I.

DEFINITIONS

 

1.1Definitions. In addition to the
terms defined elsewhere in this Agreement, (a) capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the Note, as defined herein, and (b) the following terms have the meanings set forth in this Section 1.1:

 

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

 

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

 

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

 

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

 

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

 

“Closing Date” means the
Trading Day on which all of the Transaction Documents have been executed and delivered by the parties thereto, and all conditions
precedent to (i) the Purchaser’s obligations to pay the Purchase Amount and (ii) the obligations of the Company Parties
to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the third Trading Day following
the date hereof, all as contemplated in Section 2.1.

 

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

 

    	 

    	 

    

 

“Common Stock” means the
common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter
be reclassified or changed.

 

“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries, which would entitle the holder thereof to acquire at any time Common
Stock.

 

“Company Counsel” means
Maslon LLP, with offices located at 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota 55402.

 

“Conversion Price” shall
have the meaning ascribed to such term in the Note.

 

“Conversion Shares” shall
have the meaning ascribed to such term in the Note.

 

“Disclosure Schedules” means
the Disclosure Schedules of the Company delivered concurrently herewith.

 

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

 

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

 

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

 

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

 

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

 

“Material Adverse Effect”
means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in
the aggregate, materially adverse to: (i) the legality, validity or enforceability of any Transaction Document, (ii) the results
of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (iii) the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document.

 

“Note” means the Secured
Convertible Promissory Notes of the Company Parties offered and sold pursuant to this Agreement, the form of which is attached
hereto as Exhibit A.

 

“Person” means an individual
or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or instrumentality of a government).

 

“Principal Market” means
the primary national securities exchange on which the Common Stock is then traded.

 

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

 

    	2

    	 

    

 

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

 

“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.2.

 

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

 

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

 

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

 

“Securities” means the Note,
the Warrants and the Underlying Shares.

 

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

 

“Security Agreement” means
that certain Security Agreement by and among the Company, Broadcast International, Inc., Creative Realities, LLC, and Wireless
Ronin Technologies Canada, Inc., made in favor of the Purchaser, and pursuant to which the above-named corporate parties shall
grant a security interest in their respective accounts receivable as collateral security for the obligations of the Company under
the Note. The form of Security Agreement is attached hereto as Exhibit C.

 

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

 

“Subsidiary” means any subsidiary
of the Company as set forth on Schedule 3.1(a)

 

“Trading Day” means (i)
any day on which the Common Stock is listed or quoted and traded on its Principal Market, (ii) if the Common Stock is not then
listed or quoted and traded on any national securities exchange, then a day on which trading occurs on any over-the-counter markets,
or (iii) if trading does not occur on the over-the-counter markets, any business day.

 

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

 

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

 

“Warrants” means, collectively,
the Common Stock purchase warrants delivered to the Purchaser at the Closing in accordance with Section 2.2(a) hereof, which Warrants
shall be in the form of Exhibit B attached hereto.

 

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

 

    	3

    	 

    

 

ARTICLE II.

PURCHASE AND SALE

 

2.1Closing.
On the Closing Date, and upon the terms and subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the parties hereto, the Company Parties agree to sell, and the
Purchaser agrees to purchase, $1,000,000 in principal amount of a Note (at face value), and (ii) a number of Warrants as determined
pursuant to Section 2.2(a)(iii). The Purchaser shall deliver to the Company, via wire transfer of immediately available funds
equal to its Purchase Amount as set forth on the signature page hereto executed by such Purchaser, and the Company Parties shall
deliver to the Purchaser an executed Note and a Warrant as determined pursuant to Section 2.2(a). In addition, the Company Parties
and the Purchaser shall deliver the other items set forth in Section 2.2 at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or such other location
as the parties shall mutually agree.

 

2.2Deliveries.

 

(a)On or prior to the Closing
Date, the Company shall deliver or shall have earlier delivered to the Purchaser the following:

 

(i)this Agreement duly executed
by the Company Parties;

 

(ii)a Note registered in the name
of the Purchaser and in the original principal amount equal to the Purchase Amount of such Purchaser;

 

(iii)a Warrant registered in the
name of such Purchaser to purchase, at any time and from time to time, an aggregate number of shares of Common Stock equal to
50% of the number of Conversion Shares issuable upon any conversion of the Note, as determined at the time issued to the Purchaser
at the Closing and at the initial Conversion Price;

 

(iv)the Security Agreement duly
executed by each corporate party thereto; and

 

(v)a legal opinion from Company
Counsel, in customary form and substance for transactions of the nature contemplated by this Agreement.

 

(b)On or prior to the Closing
Date, the Purchaser shall deliver or shall have earlier delivered to the Company the following:

 

(i)this Agreement duly executed
by such Purchaser; and

 

(ii)Purchaser’s Purchase
Amount by wire transfer to the account specified in writing by the Company, less a two percent (2.0%) origination fee (i.e., $20,000)
and less the reimbursable expenses described in Section 6.2 below.

 

    	4

    	 

    

 

2.3Closing Conditions.

 

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

 

(i)the accuracy in all material
respects on the Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a specific
date therein in which case they shall be accurate as of such date);

 

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

 

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

 

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

 

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

 

(i)the accuracy in all material
respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of
a specific date therein);

 

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

 

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

 

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

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1Representations and Warranties of
the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and
shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section
of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:

 

(a)Subsidiaries. All of
the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.

 

    	5

    	 

    

 

(b)Organization and Qualification.
The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational
or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as
a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could
not have or reasonably be expected to result in a Material Adverse Effect.

 

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

 

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

 

    	6

    	 

    

 

(e)Filings, Consents and Approvals.
The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the notice and/or application(s)
to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Shares and Underlying Shares
for trading thereon in the time and manner required thereby, if any, and (ii) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws, which filings will be made by the Company within the
time period required by such laws (collectively, the “Required Approvals”).

 

(f)Issuance of the Securities.
The Note is duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be a duly
and validly issued security of the Company, free and clear of all Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with the terms of the Transaction
Documents, will be validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents.

 

(g)Capitalization. The
capitalization of the Company as of January 31, 2015, is as set forth on Schedule 3.1(g). The Company has not issued any
capital stock since that date except as may be disclosed in SEC Reports, other than pursuant to the exercise of employee stock
options, or pursuant to the conversion or exercise of Common Stock Equivalents. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents, except as set forth on Schedule 3.1(g). Except with respect to the holders of the Company’s
Series A Preferred Convertible Stock and warrants issued in association therewith (and the conversion prices and exercise prices
thereof, respectively, both of which will be adjusted as a result of the issuance of the Securities pursuant to this Agreement),
the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities.

 

    	7

    	 

    

 

(h)SEC Reports; Financial
Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act.
The financial statements of the Company included in the SEC Reports have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present the financial position of the Company and its consolidated Subsidiaries
as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case
of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(i)Material Changes; Undisclosed
Events, Liabilities or Developments. Since the date of the latest SEC Report, (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant
to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed
or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities
to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending
before the Commission any request for confidential treatment of information.

 

(j)Litigation. There is
no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which could reasonably be expected to have a Material Adverse Effect or that adversely affects or challenges the legality, validity
or enforceability of any of the Transaction Documents or the Securities. Attached as Schedule 3.1(j) is a summary of currently
pending Actions involving the Company and the Subsidiaries. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.

 

    	8

    	 

    

 

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

 

(l)Title to Assets. The
Company and the Subsidiaries do not own any real property. The Company and the Subsidiaries have good and marketable title in
all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for (i) Liens as do not materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves
have been made in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties.

 

(m)Fees. No brokerage
or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated
by the Transaction Documents.

 

(n)Private Placement.
Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Note, Warrants and Underlying Shares by the Company to the Purchaser
as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the
Trading Market.

 

(o)Disclosure. The Company
acknowledges and agrees that the Purchaser has not made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2.

 

(p)Indebtedness. Schedule
3.1(p) sets forth, all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company
or any Subsidiary has commitments. For the purposes of this Agreement, the term “Indebtedness” means (y)
any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary
course of business); (z) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether
or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business.
Except as set forth on Schedule 3.1(p), neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

    	9

    	 

    

 

(q)Tax Status. Except
as set forth on Schedule 3.1(q), the Company and its Subsidiaries each (i) has made or filed all United States federal,
state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company or of any Subsidiary know of no basis for any such claim.

 

The Purchaser acknowledges and agrees that
the representations contained in Section 3.1 shall not affect the Company’s right to rely on such Purchaser’s representations
and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or
any other document or instrument executed or delivered in connection with this Agreement or the consummation of the transaction
contemplated hereby.

 

3.2Representations and Warranties of
the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date to the Company
as follows (unless as of a specific date therein):

 

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

 

(b)Understandings or Arrangements.
The Purchaser is acquiring the Securities hereunder in the ordinary course of its business. The Purchaser understands that the
Note, Warrants and Underlying Shares are “restricted securities” and will not have been registered under the Securities
Act or any applicable state securities law, and represents that it is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law.

 

    	10

    	 

    

 

(c)Opportunity to Obtain Information.
The Purchaser acknowledges that representatives of the Company have made available to the Purchaser the opportunity to review
the books and records of the Company and its Subsidiaries and to ask questions of and receive answers from such representatives
concerning the business and affairs of the Company and its Subsidiaries.

 

(d)Purchaser Status. At
the time the Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it converts
any portion of the Note or exercises any Warrants, it will be an “accredited investor” as defined in Rule 501 under
the Securities Act.

 

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

 

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

 

(g)Certain Transactions and
Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first
received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Other than to other Persons
party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).

 

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

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1Use of Proceeds. The Company
shall use the net proceeds from the sale of the Securities hereunder to provide working capital for the Company and its Subsidiaries.

 

    	11

    	 

    

 

4.2Indemnification. Subject to the
provisions of this Section 4.2, the Company will indemnify and hold the Purchaser and its directors, officers, employees and agents
(each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach
of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction
Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates,
by any shareholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated
by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties
or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such shareholder
or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect
of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after
a reasonable period of time to assume such defense and to employ counsel, or (iii) in such action there is, in the reasonable
opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser
Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel
in the aggregate (i.e., for all Purchaser Parties). The Company will not be liable to any Purchaser Party under this Agreement
(y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed, or (z) to the extent, but only to the extent, that a loss, claim, damage or liability is attributable to
any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party
in this Agreement or in the other Transaction Documents.

 

4.3Reservation of Securities; Reporting
Status; Compliance with Laws. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance
pursuant to the Transaction Documents in such amount as may then be required to issue all of the Underlying Shares. In addition,
from and after the date hereof and for so long as the Note remains issued and outstanding, the Company will (i) continue to file
SEC Reports with the Commission, (ii) use commercially reasonable efforts to maintain its listing or quotation on a Trading Market,
and (iii) will comply with all Laws.

 

4.4Certain Transactions and Confidentiality.
The Purchaser covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute
any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution
of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced by
the Company.  Furthermore, the Purchaser covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company, such Purchaser will maintain the confidentiality of the
existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules.

 

4.5Financial
Reports. For so long as the Note remains issued and outstanding, the Company will provide to the Purchaser monthly
profit and loss statements and balance sheets concurrently with the provision of such financial information to one or more directors
of the Company, or as soon as such financial information becomes available (if not requested by or provided to one or more directors
of the Company), whichever is sooner; provided, however, that beginning with the month of April 2015, such financial information
shall in no event be provided later than 15 Business Days after the end of each month.

 

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4.6Transfer
Restrictions.

 

(a)The Securities may only be
disposed of in compliance with state and federal securities laws. In connection with any transfer of any Securities other than
pursuant to an effective registration statement or Rule 144, or to the Company, the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company (the fees
and expenses of which shall be paid by such transferor), the form and substance of which opinion shall be reasonably satisfactory
to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall
have the rights and obligations of a Purchaser under this Agreement.

 

(b)The Purchasers agree to the
imprinting, so long as is required by this Agreement, of a legend on any of the Note, Warrants and Underlying Shares in the following
form:

 

[NEITHER] THIS SECURITY [NOR THE
SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933 (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AND, AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, TO THE EXTENT REQUIRED BY THE SECURITIES PURCHASE AGREEMENT DATED AS OF FEBRUARY
18, 2015, BY AND BETWEEN THE ISSUER AND Mill City Ventures III, Ltd., THE SUBSTANCE
OF WHICH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

4.7General Covenants.  During
any such time as the Note(s) remain outstanding, the Company shall not take any of the following actions without the prior written
approval of Purchasers (or its assignees) holding at least a majority in then-outstanding principal amount of the Note(s):
(a) declare or pay any cash dividends on account of any Common Stock; (b) redeem any capital stock of the Company; or (c)
incur any debt for borrowed money that is senior to the obligations under the Note in respect of payment or in respect of the
“Collateral,” as such term is defined in the Security Agreement.

 

    	13

    	 

    

 

ARTICLE V.

REGISTRATION RIGHTS

 

5.1Resale Registration Statement.
The Company shall amend its Registration Statement on Form S-1 (File No. 333-201806) (the “Resale Registration Statement”)
to include the Underlying Shares.

 

5.2 Cut-Back. If, for any reason,
the Commission (including an independent determination by the Company, in consultation with Company Counsel, based on existing
written guidance or applicable rules of the Commission) or an underwriter participating in an underwritten primary offering conducted
pursuant to the Resale Registration Statement requires that the number of shares to be registered for resale pursuant to the Resale
Registration Statement be reduced, then such reduction (the “Cut Back”) shall be allocated pro rata among
the parties whose shares have been included in the Resale Registration Statement, until the reduction so required shall have been
effected.

 

5.3Expenses. All expenses incurred
by the Company in complying with this Article 5, including without limitation all registration and filing fees, printing
expenses (if required), fees and disbursements of counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with state securities or “blue sky” laws,
fees of the FINRA, transfer taxes, and fees of transfer agents and registrars, are called “Registration Expenses.”
The Company will pay all Registration Expenses in connection with the Resale Registration Statement.

 

ARTICLE VI.

GENERAL PROVISIONS

 

6.1Termination.  This Agreement
may be terminated by the Purchaser by written notice to the Company if the Closing has not been consummated on or before 30 days
of the date hereof.

 

6.2Fees and Expenses. Except as
expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement; provided, however, that the Company will pay for the reasonable attorneys’
fees of the Purchaser incurred in the course of negotiating, preparing the Transaction Documents in an aggregate amount not to
exceed $7,000. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with
the delivery of any Securities to the Purchasers.

 

6.3Entire Agreement. The Transaction
Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

    	14

    	 

    

 

6.4Notices. Any and all notices
or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at
the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (Minneapolis, Minnesota time) on
a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30
p.m. (Minneapolis, Minnesota time) on any Trading Day, (c) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

6.5Amendments; Waivers. No provision
of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchaser (or, in the case that any portion of the Note shall have been assigned, then the holders of at
least a majority in the then-outstanding principal amount of the Notes may waive, modify or amend this Agreement), and in the
case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or
a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

6.6Headings. The headings herein
are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

 

6.7Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Any Purchaser
may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities,
provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of
the Transaction Documents that apply to the “Purchaser.”

 

6.8Third-Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any other Person.

 

6.9Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, without regard to the conflicts-of-law principles
thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal
courts sitting in Hennepin County, Minnesota. Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in Hennepin County, Minnesota, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or
proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action, suit or proceeding
shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

 

    	15

    	 

    

 

6.10Execution. This Agreement may
be executed in counterparts, all of which when taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties
need not sign the same counterpart. If any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf”
format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

6.11Severability. 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.

 

6.12Remedies. In addition to being
entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company
will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree
to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would
be adequate.

 

6.13Saturdays, Sundays, Holidays, etc.
If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall
not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

6.14Construction. The parties agree
that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and,
therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any amendments thereto.

 

6.15WAIVER OF JURY TRIAL. IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY,
TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

* * * * * * *

 

    	16

    	 

    

 

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

 

COMPANY PARTIES

 

CREATIVE REALITIES, INC.

 

By: /s/ John Walpuck                 

             John
Walpuck

            Chief Financial Officer

 

BROADCAST
INTERNATIONAL, Inc.

 

By: /s/ John Walpuck                 

             John Walpuck

             Chief Financial Officer

 

CREATIVE
REALITIES, LLC

 

By: /s/ John Walpuck                 

             John Walpuck

             Chief Executive Officer

 

Wireless
Ronin Technologies Canada, Inc.

 

By: /s/ John Walpuck                 

             John Walpuck

            Chief Financial Officer

 

Address for Notice to the Company Parties:

 

55 Broadway, 9th Floor

New York, New York 10006

Facsimile: 973-244-1535

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

    	17

    	 

    

 

[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE
AGREEMENT]

 

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

 

Name of Purchaser: Mill City Ventures III,
Ltd.

 

Signature of Authorized Signatory of Purchaser:
/s/ Douglas M. Polinksy

 

Name of Authorized Signatory: Douglas
M. Polinsky

 

Title of Authorized Signatory: Chief
Executive Officer

 

Email Address of Authorized Signatory: __________________________________________

 

Facsimile Number of Authorized Signatory: _______________________________________

 

Address for Notice to Purchaser: 328 Barry Avenue S., Suite
210, Wayzata, MN 55391

 

Address for Delivery of Note and Warrants to Purchaser (if not
same as address for notice):

 

________________________________________________________________________________

 

Purchase Amount: $1,000,000.00

 

Warrant Shares: 1,515,152

 

EIN Number: __________________________________

 

    	18

    	 

    

 

Exhibit A

 

Attached is the form of Note

 

    	19

    	 

    

 

Exhibit B

 

Attached is the form of Warrant

 

    	20

    	 

    

 

Exhibit C

 

Attached is the form of Security Agreement

 

    	21

    	 

    

 

Schedule 3.1(a)

Subsidiaries

 

	Parent
    Subsidiary	Jurisdiction
    of Organization
	Creative
    Realities, LLC	Delaware
	Wireless
    Ronin Technologies Canada, Inc.	Canada
	Broadcast
    International, Inc.	Utah
	Interact
    Devices, Inc.	California

 

    	 

    	 

    

 

Schedule 3.1(g)

Capitalization

 

 

 

Notes: (1) “Convertible Preferred” is presented on
an as-converted basis, and the 281,120 shares presented in the Creative Realities, Inc. column are shares issued as in-kind dividends
in connection with a 12/31/2014 dividend payment. (2) “Debt Conversions” are common shares issued upon the conversion
of debt that took place coincident with the closing of the merger transaction with Creative Realities, LLC in August 2014. Thus,
those shares should be understood as being issued and outstanding.

 

    	 

    	 

    

 

Schedule 3.1(j)

Actions

 

Company vs. HMN, Inc.

 

In August 2014, we initiated a breach-of-contract lawsuit against
a customer and certain parties related to that customer for failure to pay. The defendants have answered and asserted counterclaims.
In the event we are unable to reach a negotiated settlement with the defendants, we intend to litigate our claims and contest
the defendants’ counterclaims. At this time, we do not believe this matter is likely to have a material and adverse impact
on the Company.

 

Company vs. Core Technologies, Inc.

 

In November 2014, a former vendor alleging our failure to pay outstanding
invoices initiated a breach-of-contract lawsuit against us. We have answered and asserted certain counterclaims. In the event
we are unable to reach a negotiated settlement with the vendor, we intend to litigate our counterclaims and contest those claims
made against us. At this time, we do not believe this matter is likely to have a material and adverse impact on the Company.

 

    	 

    	 

    

 

Schedule 3.1(k)

Compliance

 

Broadcast International, Inc. entered into certain agreements in
settlement of various payables coincident with the closing of the merger transaction of that corporation with the Company (which
was effected on August 1, 2014). Certain of the closing and post-closing payments required by those settlement agreements have
not been made. No actions have been instituted by any of the contracting parties relating to that Subsidiary’s non-performance.

 

    	 

    	 

    

 

Schedule 3.1(p)

Indebtedness

 

Creative Realities, LLC is a party to a three-year master lease
agreement with Dell Computer including a $50,000 leasing line established December 2014. Presently, we have used approximately
$15,500 of this line to purchase computer equipment. The lease contains a $1 buyout at the end of the term.

 

    	 

    	 

    

 

Schedule 3.1(q)

Tax Status

 

None.

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