Document:

Form of Note and Warrant Purchase Agreement

 Exhibit 10.1 
 NOTE AND WARRANT PURCHASE 
 AGREEMENT 
 Dated as of                 , 2008 
 by and among 
 FLO CORPORATION 
 and 
 THE PURCHASERS LISTED ON
EXHIBIT A 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	 ARTICLE I
	  	Purchase and Sale of Notes and Warrants	  	1
	 Section 1.1
	  	Purchase and Sale of Notes and Warrants	  	1
	 Section 1.2
	  	Purchase Price and Closing	  	1
	 Section 1.3
	  	Conversion Shares / Warrant Shares	  	2
			
	 ARTICLE II
	  	Representations and Warranties	  	3
	 Section 2.1
	  	Representations and Warranties of the Company	  	3
	 Section 2.2
	  	Representations and Warranties of the Purchasers	  	11
			
	 ARTICLE III
	  	Covenants	  	14
	 Section 3.1
	  	Securities Compliance	  	14
	 Section 3.2
	  	Registration and Listing	  	14
	 Section 3.3
	  	Inspection Rights	  	14
	 Section 3.4
	  	Compliance with Laws	  	14
	 Section 3.5
	  	Keeping of Records and Books of Account	  	14
	 Section 3.6
	  	Reporting Requirements	  	15
	 Section 3.7
	  	Other Agreements	  	15
	 Section 3.8
	  	Use of Proceeds	  	15
	 Section 3.9
	  	Reporting Status	  	15
	 Section 3.10
	  	Disclosure of Transaction	  	15
	 Section 3.11
	  	Disclosure of Material Information	  	16
	 Section 3.12
	  	Pledge of Securities	  	16
	 Section 3.13
	  	Amendments	  	16
	 Section 3.14
	  	Distributions	  	16
	 Section 3.15
	  	Reservation of Shares	  	16
	 Section 3.16
	  	Transfer Agent Instructions	  	16
	 Section 3.17
	  	Disposition of Assets	  	17
	 Section 3.18
	  	Restrictions on Certain Issuances of Securities	  	17
	 Section 3.19
	  	Subsequent Financings	  	17
			
	 ARTICLE IV
	  	Conditions	  	18
	 Section 4.1
	  	Conditions Precedent to the Obligation of the Company to Close and to Sell the Securities	  	18
	 Section 4.2
	  	Conditions Precedent to the Obligation of the Purchasers to Close and to Purchase the Securities	  	19
			
	 ARTICLE V
	  	Certificate Legend	  	21
	 Section 5.1
	  	Legend	  	21
			
	 ARTICLE VI
	  	Indemnification	  	22
	 Section 6.1
	  	General Indemnity	  	22
	 Section 6.2
	  	Indemnification Procedure	  	22
			
	 ARTICLE VII
	  	Miscellaneous	  	23
	 Section 7.1
	  	Fees and Expenses	  	23
	 Section 7.2
	  	Specific Performance; Consent to Jurisdiction; Venue	  	24

 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	 	  	Page
	 Section 7.3
	  	Entire Agreement; Amendment	  	24
	 Section 7.4
	  	Notices	  	24
	 Section 7.5
	  	Waivers	  	25
	 Section 7.6
	  	Headings	  	25
	 Section 7.7
	  	Successors and Assigns	  	25
	 Section 7.8
	  	No Third Party Beneficiaries	  	26
	 Section 7.9
	  	Governing Law	  	26
	 Section 7.10
	  	Survival	  	26
	 Section 7.11
	  	Counterparts	  	26
	 Section 7.12
	  	Publicity	  	26
	 Section 7.13
	  	Severability	  	26
	 Section 7.14
	  	Further Assurances	  	26

 NOTE AND WARRANT PURCHASE AGREEMENT 
 This NOTE AND WARRANT PURCHASE AGREEMENT dated as of
                , 2008 (this “Agreement”) is by and among FLO Corporation, a Delaware corporation (the “Company”), and each of
the purchasers of the senior convertible promissory notes of the Company whose names are set forth on Exhibit A attached hereto (each a “Purchaser” and collectively, the “Purchasers”). 
 The parties hereto agree as follows: 
 ARTICLE I 
 PURCHASE AND SALE OF NOTES AND WARRANTS 
 Section 1.1 Purchase and Sale of Notes and Warrants. 
 (a) Upon the following terms and conditions, the Company shall issue and sell to the Purchasers, and the Purchasers shall purchase from the Company, (i) senior convertible promissory notes in substantially the
form attached hereto as Exhibit B (the “Notes”) in the aggregate principal amount of up to Eight Million Five Hundred Thousand Dollars ($8,500,000), convertible into shares of the Company’s common stock, par value $.001
per share (the “Common Stock”). The Company and the Purchasers are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), including Regulation D (“Regulation D”), and/or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to any or all of the investments to be made hereunder. 
 (b) Upon the
following terms and conditions, each Purchaser shall be issued (i) Note Warrants, in substantially the form attached hereto as Exhibit C (the “Note Warrants”), to purchase a number of shares of Common Stock equal to one
hundred percent (100%) of the number of Conversion Shares (as defined herein) immediately issuable upon conversion of such Purchaser’s Note at an initial exercise price per share equal to $0.75 and a term of five (5) years following
the initial Closing, and (ii) Short-Term Warrants, in substantially the form attached hereto as Exhibit D (the “Short-Term Warrants” and collectively with the Note Warrants, the “Warrants”), to purchase
a number of shares of Common Stock equal to up to one hundred percent (100%) of the Purchase Price divided by 1.0 at an exercise price per share equal to $0.60 and a term expiring on the earlier of nine (9) months following registration of
the underlying shares or five (5) years following the initial Closing. The number of shares of Common Stock issuable upon exercise of the Warrants issuable to each Purchaser is set forth opposite such Purchaser’s name on
Exhibit A attached hereto. 
 Section 1.2 Purchase Price and Closing. Subject to the terms and conditions hereof, the
Company agrees to issue and sell to the Purchasers and, in consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Purchasers, severally but not jointly, agree to purchase
the Notes and Warrants 

  

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for an aggregate purchase price of up to Eight Million Five Hundred Thousand Dollars ($8,500,000), which may include in-kind consideration as approved and
valued by the Company’s Board of Directors (the “Purchase Price”). The closing of the purchase and sale of the Notes and Warrants to be acquired by the Purchasers from the Company under this Agreement (the
“Closing”) shall take place at the offices of DLA Piper US LLP at 10:00 a.m., Pacific time on                 , 2008 or such other date as the
Purchasers and the Company may agree upon (the “Closing Date”); provided, that all of the conditions set forth in Article IV hereof and applicable to the Closing shall have been fulfilled or waived in accordance herewith.
Subject to the terms and conditions of this Agreement, at the Closing the Company shall deliver or cause to be delivered to each Purchaser, against payment of the Purchase Price therefore as set forth below (x) its Notes for the principal
amount set forth opposite the name of such Purchaser on Exhibit A hereto and (y) Warrants to purchase such number of shares of Common Stock as is set forth opposite the name of such Purchaser on Exhibit A attached hereto. Subject
to the terms of the Escrow Agreement, prior to the Closing, each Purchaser shall have delivered its Purchase Price by wire transfer to an escrow account designated by the Company, and at the Closing such Purchase Price shall be released to the
Company in accordance with the Company’s instructions; provided, however, that a Purchaser may alternatively deliver in-kind consideration as approved and valued by the Company’s Board of Directors. Notwithstanding anything herein to the
contrary, the Company will have the right to issue and sell the Notes and Warrants in multiple closings otherwise pursuant to the terms of this Agreement, each of which shall be deemed a Closing with respect to such issuance and sale. Any such sale
after the initial Closing shall be made upon the same terms and conditions as those set forth herein, and each subsequent purchaser shall become a party to this Agreement (and Exhibit A hereto shall be amended to include such subsequent
purchaser) by affixing their signatures hereto or thereto, and shall have the rights and obligations, and be treated as, a Purchaser hereunder and thereunder. 
 Section 1.3 Conversion Shares / Warrant Shares. The Company has authorized and has reserved and covenants to continue to reserve, free of preemptive rights and other similar contractual rights of
stockholders, a number of its authorized but unissued shares of Common Stock equal to one hundred twenty percent (120%) of the aggregate number of shares of Common Stock to effect the conversion of the Notes and any interest accrued and
outstanding thereon and exercise of the Warrants as of the Closing Date. Any shares of Common Stock issuable upon conversion of the Notes and any interest accrued and outstanding on the Notes are herein referred to as the “Conversion
Shares”. Any shares of Common Stock issuable upon exercise of the Warrants (and such shares when issued) are herein referred to as the “Warrant Shares”. The Notes, the Warrants, the Conversion Shares and the Warrant Shares
are sometimes collectively referred to herein as the “Securities”. 
  

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 ARTICLE II 
 REPRESENTATIONS AND WARRANTIES 
 Section 2.1 Representations and Warranties of the
Company. The Company hereby represents and warrants to the Purchasers, as of the date hereof and the Closing Date (except as set forth on the Schedule of Exceptions attached hereto with each numbered Schedule corresponding to the section number
herein), as follows: 
 (a) Organization, Good Standing and Power. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company does not have any
Subsidiaries (as defined in Section 2.1(g)) or own securities of any kind in any other entity except as set forth on Schedule 2.1(g) hereto. The Company and each such Subsidiary is duly qualified as a foreign entity to do business and is
in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified will
not have a Material Adverse Effect. For the purposes of this Agreement, “Material Adverse Effect” means any material adverse effect on the business, operations, properties, prospects, or financial condition of the Company and its
Subsidiaries, taken as a whole, and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to perform any of its obligations under this Agreement in any material respect;
provided, however, that the foregoing shall not include operating losses in the amounts contemplated by the Commission Documents (as defined in Section 2.1(f) hereof), any effect of the announcement of the transactions
contemplated by this Agreement and the other Transaction Documents, or any effects of general economic conditions. 
 (b) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Notes, the Warrants, the Registration Rights Agreement, dated as of the date hereof, substantially in the form of
Exhibit G attached hereto (the “Registration Rights Agreement”), by and among the Company and the Purchasers, and the Escrow Agreement, dated as of the date hereof, substantially in the form of Exhibit E attached
hereto (the “Escrow Agreement”), by and among the Company and the escrow agent (collectively, the “Transaction Documents”) and to issue and sell the Securities in accordance with the terms hereof. The execution,
delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization
of the Company, its Board of Directors or stockholders is required. When executed and delivered by the Company, each of the Transaction Documents shall constitute a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of,
creditor’s rights and remedies or by other equitable principles of general application. 
 (c) Capitalization. The authorized
capital stock and the issued and outstanding shares of capital stock of the Company as of the date hereof is set forth on Schedule 2.1(c) hereto. All of the outstanding shares of the Common Stock and any other outstanding security of the
Company have been duly and validly authorized. Except as set forth in this Agreement or as set forth on Schedule 2.1(c) hereto, no shares of Common Stock or any other security of the Company are entitled to preemptive rights or registration
rights and there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement and as set forth on Schedule 2.1(c) hereto, there are no contracts, commitments, understandings, or arrangements by which the 

  

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Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into shares of
capital stock of the Company. Except for customary transfer restrictions contained in agreements entered into by the Company in order to sell restricted securities or as provided on Schedule 2.1(c) hereto, the Company is not a party to or
bound by any agreement or understanding granting registration or anti-dilution rights to any person with respect to any of its equity or debt securities. Except as set forth on Schedule 2.1(c) hereto, the Company is not a party to, and it has
no knowledge of, any agreement or understanding restricting the voting or transfer of any shares of the capital stock of the Company. 
 (d)
Issuance of Securities. The Notes and the Warrants to be issued at the Closing have been duly authorized by all necessary corporate action and, when paid for or issued in accordance with the terms hereof, the Notes shall be validly issued and
outstanding, free and clear of all liens, encumbrances and rights of refusal of any kind. When the Conversion Shares and Warrant Shares are issued and paid for in accordance with the terms of this Agreement and as set forth in the Notes and
Warrants, such shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and nonassessable, free and clear of all liens, encumbrances and rights of refusal of any kind and the holders shall be
entitled to all rights accorded to a holder of Common Stock. 
 (e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the performance by the Company of its obligations under the Notes and the consummation by the Company of the transactions contemplated hereby and thereby, and the issuance of the Securities as contemplated
hereby, do not and will not (i) violate or conflict with any provision of the Company’s Certificate of Incorporation (the “Certificate”) or Bylaws (the “Bylaws”), each as amended to date, or any
Subsidiary’s comparable charter documents, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries’ respective properties or assets are bound, or (iii) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries are bound or affected, except, in all cases, for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect (other than violations pursuant to clauses (i) or (iii) (with respect to federal and state securities laws)). Neither
the Company nor any of its Subsidiaries is required under federal, state, foreign or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under the Transaction Documents or issue and sell the Securities in accordance with the terms hereof (other than any filings, consents and approvals which may be required to be made by the
Company under applicable state and federal securities laws, rules or regulations). 
  

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 (f) Commission Documents, Financial Statements. The Common Stock of the Company is registered
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and except as set forth on Schedule 2.1(f) hereto, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act (all of the foregoing, including filings incorporated by reference therein, together with the Company’s
registration statement on Form 10-SB, as amended, filed with the Securities and Exchange Commission (the “Commission”), being referred to herein as the “Commission Documents”). Except as set forth on
Schedule 2.1(f) hereto, as of their respective dates, the financial statements of the Company included in the Commission Documents complied as to form in all material respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a
consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material respects the financial position of the Company and its Subsidiaries as of 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 year-end audit adjustments). 
 (g) Subsidiaries. Schedule 2.1(g) hereto sets
forth each Subsidiary of the Company, showing the jurisdiction of its incorporation or organization and showing the percentage of each person’s ownership of the outstanding stock or other interests of such Subsidiary. For the purposes of this
Agreement, “Subsidiary” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or
other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other Subsidiaries. All of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly
issued, and are fully paid and nonassessable. There are no outstanding preemptive, conversion or other rights, options, warrants or agreements granted or issued by or binding upon any Subsidiary for the purchase or acquisition of any shares of
capital stock of any Subsidiary or any other securities convertible into, exchangeable for or evidencing the rights to subscribe for any shares of such capital stock. Neither the Company nor any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the capital stock of any Subsidiary or any convertible securities, rights, warrants or options of the type described in the preceding sentence. Neither the Company nor any
Subsidiary is party to, nor has any knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of any Subsidiary. 
 (h) No Material Adverse Change. Except as set forth in the Commission Documents or on Schedule 2.1(h) hereto, since December 31, 2007, the Company has not experienced or suffered any Material
Adverse Effect. 
 (i) No Undisclosed Liabilities. Except as set forth in the Commission Documents, neither the Company nor any of its
Subsidiaries has incurred any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) other than those incurred in the ordinary course of the Company’s or
its Subsidiaries’ respective businesses or which, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect. 
  

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 (j) No Undisclosed Events or Circumstances. Since December 31, 2007, no event or circumstance
has occurred or exists with respect to the Company or its Subsidiaries or their respective businesses, properties, prospects, operations or financial condition, 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. 
 (k) Indebtedness. Schedule 2.1(k)
hereto sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) 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 balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $25,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness. 
 (l) Title to Assets. Each of the Company and the Subsidiaries has good and valid title to all of its
real and personal property reflected in the Commission Documents, free and clear of any mortgages, pledges, charges, liens, security interests or other encumbrances, except for those that, individually or in the aggregate, do not cause a Material
Adverse Effect. Any leases of the Company and each of its Subsidiaries are valid and subsisting and in full force and effect. 
 (m)
Actions Pending. There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary which
questions the validity of this Agreement or any of the other Transaction Documents or any of the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto. There is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or other proceeding pending or, to the knowledge of the Company, threatened against or involving the Company, any Subsidiary or any of their respective properties or assets, which
individually or in the aggregate, would reasonably be expected, if adversely determined, to have a Material Adverse Effect. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary or any officers or directors of the Company or Subsidiary in their capacities as such, which individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 (n) Compliance with Law. The business of the Company and the Subsidiaries has been and is presently being conducted in accordance
with all applicable federal, state and local governmental laws, rules, regulations and ordinances, except for any noncompliance therewith that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The
Company and each of its Subsidiaries have all franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it except to the extent that
the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 

 

 6 

 (o) Taxes. The Company and each of the Subsidiaries has accurately prepared and filed all federal,
state and other tax returns required by law to be filed by it, has paid or made provisions for the payment of all taxes shown to be due and all additional assessments, and adequate provisions have been and are reflected in the financial statements
of the Company and the Subsidiaries for all current taxes and other charges to which the Company or any Subsidiary is subject and which are not currently due and payable. None of the federal income tax returns of the Company or any Subsidiary have
been audited by the Internal Revenue Service. Except as set forth on Schedule 2.1(o) hereto, the Company has no knowledge of any additional assessments, adjustments or contingent tax liability (whether federal or state) of any nature
whatsoever, whether pending or threatened against the Company or any Subsidiary for any period, nor of any basis for any such assessment, adjustment or contingency. 
 (p) Certain Fees. Except as set forth on Schedule 2.1(p) hereto, the Company has not employed any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions,
finders’ structuring fees, financial advisory fees or other similar fees in connection with the Transaction Documents. 
 (q)
Disclosure. Except for the transactions contemplated by this Agreement, the Company confirms that neither it nor any other person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that
constitutes or might constitute material, nonpublic information. 
 (r) Operation of Business. Except as individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect, the Company and each of the Subsidiaries owns or possesses the rights to all patents, trademarks, domain names (whether or not registered) and any patentable improvements
or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks, trade names, copyrights, licenses and authorizations which are necessary for the conduct of its business as now conducted without
any conflict with the rights of others. 
 (s) Books and Records; Internal Accounting Controls. The records and documents of the
Company and its Subsidiaries accurately reflect in all material respects the information relating to the business of the Company and the Subsidiaries, the location and collection of their assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company or any Subsidiary. Except as set forth in the Commission Documents, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the
Company’s management, 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 actions are taken with respect to any differences. 
  

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 (t) Material Agreements. Except as set forth on Schedule 2.1(t) hereto and except for the
Transaction Documents (with respect to clause (i) of this Section 2.1(t) only) or as would not be reasonably likely to have a Material Adverse Effect, (i) the Company and each of its Subsidiaries have performed all obligations
required to be performed by them to date under any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement, filed or required to be filed with the Commission (the “Material Agreements”),
(ii) neither the Company nor any of its Subsidiaries has received any notice of default under any Material Agreement and, (iii) to the best of the Company’s knowledge, neither the Company nor any of its Subsidiaries is in default
under any Material Agreement now in effect. 
 (u) Transactions with Affiliates. There are no loans, leases, agreements, contracts,
royalty agreements, management contracts or arrangements or other continuing transactions between (a) the Company, any Subsidiary or any of their respective customers or suppliers on the one hand, and (b) on the other hand, any officer,
employee, consultant or director of the Company, or any of its Subsidiaries, or any person owning at least 5% of the outstanding capital stock of the Company or any Subsidiary or any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity controlled by such officer, employee, consultant, director or stockholder, or a member of the immediate family of such officer, employee, consultant, director or stockholder
which, in each case, is required to be disclosed in the Commission Documents or in the Company’s most recently filed definitive proxy statement on Schedule 14A, that is not so disclosed in the Commission Documents or in such proxy statement.

 (v) Securities Act of 1933. Based in material part upon the representations herein of the Purchasers, the Company has complied and
will comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Securities hereunder (except that no Form D will be filed until after the date hereof). Neither the Company nor anyone acting on
its behalf, directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of the Securities or similar securities to, or solicit offers with respect thereto from, or enter into any negotiations relating thereto with, any
person, or has taken or will take any action so as to bring the issuance and sale of any of the Securities under the registration provisions of the Securities Act and applicable state securities laws, and neither the Company nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the
Securities. 
 (w) Employees. Neither the Company nor any Subsidiary has any collective bargaining arrangements or agreements covering
any of its employees. Neither the Company nor any Subsidiary has any employment contract, agreement regarding proprietary information, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other similar contract or
restrictive covenant, relating to the right of any officer, employee or consultant to be employed or engaged by the Company or such Subsidiary required to be disclosed in the Commission Documents that is not so disclosed. Except as set forth on
Schedule 2.1(w) hereto, no officer, consultant or key employee of the Company or any Subsidiary whose termination, either individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, has terminated or, to
the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company or any Subsidiary. 
  

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 (x) Absence of Certain Developments. Except as set forth in the Commission Documents or on
Schedule 2.1(x) hereto, since December 31, 2007, neither the Company nor any Subsidiary has: 
 (i) issued any
stock, bonds or other corporate securities or any right, options or warrants with respect thereto; 
 (ii) borrowed any amount
in excess of $100,000 or incurred or become subject to any other liabilities in excess of $100,000 (absolute or contingent) except current liabilities incurred in the ordinary course of business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of business during the comparable portion of its prior fiscal year, as adjusted to reflect the current nature and volume of the business of the Company and its Subsidiaries; 
 (iii) discharged or satisfied any lien or encumbrance in excess of $100,000 or paid any obligation or liability (absolute or contingent)
in excess of $100,000, other than current liabilities paid in the ordinary course of business; 
 (iv) declared or made any
payment or distribution of cash or other property to stockholders with respect to its stock, or purchased or redeemed, or made any agreements so to purchase or redeem, any shares of its capital stock, in each case in excess of $50,000 individually
or $100,000 in the aggregate; 
 (v) sold, assigned or transferred any other tangible assets, or canceled any debts or claims,
in each case in excess of $100,000, except in the ordinary course of business; 
 (vi) sold, assigned or transferred any
patent rights, trademarks, trade names, copyrights, trade secrets or other intangible assets or intellectual property rights in excess of $100,000, or disclosed any proprietary confidential information to any person except to customers in the
ordinary course of business or to the Purchasers or their representatives; 
 (vii) suffered any material losses or waived any
rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business; 
 (viii) made any changes in employee compensation except in the ordinary course of business and consistent with past practices; 
 (ix) made capital expenditures or commitments therefor that aggregate in excess of $100,000; 
 (x) entered into any material transaction, whether or not in the ordinary course of business; 
 (xi) made charitable contributions or pledges in excess of $10,000; 
  

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 (xii) suffered any material damage, destruction or casualty loss, whether or not covered
by insurance; 
 (xiii) experienced any material problems with labor or management in connection with the terms and conditions
of their employment; or 
 (xiv) entered into an agreement, written or otherwise, to take any of the foregoing actions.

 (y) Investment Company Act Status. The Company is not, and as a result of and immediately upon the Closing will not be, an
“investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended. 
 (z) ERISA. No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan by the Company or any of its
Subsidiaries which is or would be materially adverse to the Company and its Subsidiaries. The execution and delivery of this Agreement and the issuance and sale of the Securities will not involve any transaction which is subject to the prohibitions
of Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or in connection with which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended, provided
that, if any of the Purchasers, or any person or entity that owns a beneficial interest in any of the Purchasers, is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which the Company is
a “party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section 2.1(z), the term “Plan” shall mean an
“employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any Subsidiary or by any trade or business, whether
or not incorporated, which, together with the Company or any Subsidiary, is under common control, as described in Section 414(b) or (c) of the Code. 
 (aa) Independent Nature of Purchasers. The Company acknowledges that the obligations of each Purchaser under the Transaction Documents are several and not joint with the obligations of any other Purchaser, and
no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under the Transaction Documents. The Company acknowledges that for reasons of administrative convenience only, the Transaction Documents have
been prepared by counsel for one of the Purchasers and such counsel does not represent all of the Purchasers but only such Purchaser and the other Purchasers have retained their own individual counsel with respect to the transactions contemplated
hereby. The Company acknowledges that it has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers. The Company
acknowledges that such procedure with respect to the Transaction Documents in no way creates a presumption that the Purchasers are in any way acting in concert or as a group with respect to the Transaction Documents or the transactions contemplated
hereby or thereby. 
  

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 (bb) 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 of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Securities pursuant to this Agreement to be integrated
with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Securities pursuant to Regulation D and Rule 506 thereof under the Securities Act, or any applicable exchange-related stockholder
approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Securities to be integrated with other offerings. The Company does not have any registration statement
pending before the Commission or currently under the Commission’s review and since September 2007, the Company has not offered or sold any of its equity securities or debt securities convertible into shares of Common Stock other than pursuant
to its 2007 Equity Incentive Plan. 
 (cc) Sarbanes-Oxley Act. The Company is in compliance with the applicable provisions of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations promulgated thereunder, that are effective and intends to comply with other applicable provisions of the Sarbanes-Oxley Act, and the rules and
regulations promulgated thereunder, upon the effectiveness of such provisions. 
 (dd) Dilutive Effect. The Company understands and
acknowledges that its obligation to issue Conversion Shares upon conversion of the Notes in accordance with this Agreement and the Notes and its obligations to issue the Warrant Shares upon the exercise of the Warrants in accordance with this
Agreement and the Warrants, is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interest of other stockholders of the Company. 
 (ee) DTC Status. The Company’s transfer agent is a participant in and the Common Stock is eligible for transfer pursuant to the Depository
Trust Company Automated Securities Transfer Program. The name, address, telephone number, fax number, contact person and email address of the Company’s transfer agent is set forth on Schedule 2.1(ee) hereto. 
 Section 2.2 Representations and Warranties of the Purchasers. Each of the Purchasers hereby represents and warrants to the Company with
respect solely to itself and not with respect to any other Purchaser as follows as of the date hereof and as of the Closing Date: 
 (a)
Organization and Standing of the Purchasers. If the Purchaser is an entity, such Purchaser is a corporation, limited liability company or partnership duly incorporated or organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. 
 (b) Authorization and Power. Each Purchaser has the requisite power and
authority to enter into and perform the Transaction Documents and to purchase the Securities being sold to it hereunder. The execution, delivery and performance of the Transaction Documents by each Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary corporate or partnership action, and no further consent or authorization of such Purchaser or its Board of Directors, stockholders, or partners, as 

  

 11 

 
the case may be, is required. When executed and delivered by the Purchasers, the other Transaction Documents shall constitute valid and binding obligations
of each Purchaser enforceable against such Purchaser in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar
laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application. 
 (c) No Conflict. The execution, delivery and performance of the Transaction Documents by the Purchaser and the consummation by the Purchaser of the transactions contemplated thereby and hereby do not and will
not (i) violate any provision of the Purchaser’s charter or organizational documents, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Purchaser is a party or by which the
Purchaser’s respective properties or assets are bound, or (iii) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Purchaser or by which any property or asset of the Purchaser are bound or affected, except, in all cases, other than violations pursuant to clauses (i) or (iii) (with respect to federal and state securities
laws) above, except, for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, materially and adversely affect the Purchaser’s ability to perform its
obligations under the Transaction Documents. 
 (d) Acquisition for Own Account. Each Purchaser is purchasing the Securities solely
for its own account and not with a view to or for sale in connection with distribution. Each Purchaser does not have a present intention to sell any of the Securities, nor a present arrangement (whether or not legally binding) or intention to effect
any distribution of any of the Securities to or through any person or entity; provided, however, that by making the representations herein, such Purchaser does not agree to hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with Federal and state securities laws applicable to such disposition. Each Purchaser acknowledges that it (i) has such knowledge and experience in financial and business
matters such that Purchaser is capable of evaluating the merits and risks of Purchaser’s investment in the Company, (ii) is able to bear the financial risks associated with an investment in the Securities and (iii) has been given full
access to such records of the Company and the Subsidiaries and to the officers of the Company and the Subsidiaries as it has deemed necessary or appropriate to conduct its due diligence investigation. 
 (e) Rule 144. Each Purchaser understands that the Securities must be held indefinitely unless such Securities are registered under the Securities
Act or an exemption from registration is available. Each Purchaser acknowledges that such person is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act (“Rule
144”), and that such Purchaser has been advised that Rule 144 permits resales only under certain circumstances. Each Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any
Securities without either registration under the Securities Act or the existence of another exemption from such registration requirement. 
  

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 (f) General. Each Purchaser understands that the Securities are being offered and sold in reliance
on a transactional exemption from the registration requirements of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such
Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Securities. Each Purchaser understands that no United States federal or state agency or any government or
governmental agency has passed upon or made any recommendation or endorsement of the Securities. 
 (g) No General Solicitation. Each
Purchaser acknowledges that the Securities were not offered to such Purchaser by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such Purchaser was invited by any of the foregoing
means of communications. Each Purchaser, in making the decision to purchase the Securities, has relied upon independent investigation made by it and has not relied on any information or representations made by third parties. 
 (h) Accredited Investor. Each Purchaser is an “accredited investor” (as defined in Rule 501 of Regulation D), and such Purchaser has
such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Securities. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act
and such Purchaser is not a broker-dealer. Each Purchaser acknowledges that an investment in the Securities is speculative and involves a high degree of risk. 
 (i) Certain Fees. The Purchasers have not employed any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions, finders’ structuring fees, financial advisory
fees or other similar fees in connection with the Transaction Documents. 
 (j) Independent Investment. Except as may be disclosed in
any filings by a Purchaser with the Commission, no Purchaser has agreed to act with any other Purchaser for the purpose of acquiring, holding, voting or disposing of the Securities purchased hereunder for purposes of Section 13(d) under the
Exchange Act, and each Purchaser is acting independently with respect to its investment in the Securities. The decision of each Purchaser to purchase Securities pursuant to this Agreement has been made by such Purchaser independently of any other
Purchaser and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or of
its Subsidiaries which may have been made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no Purchaser or any of its agents or employees shall have any liability to any Purchaser (or any other person) relating
to or arising from any such information, materials, statements or opinions. 
  

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 ARTICLE III 
 COVENANTS 
 The Company covenants with each Purchaser as follows, which covenants are for the benefit
of each Purchaser and their respective permitted assignees. 
 Section 3.1 Securities Compliance. The Company shall notify the
Commission in accordance with its rules and regulations, of the transactions contemplated by any of the Transaction Documents and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to the Purchasers, or their respective subsequent holders. 
 Section 3.2
Registration and Listing. The Company shall cause its Common Stock to continue to be registered under Sections 12(b) or 12(g) of the Exchange Act, to comply in all respects with its reporting and filing obligations under the Exchange Act, and
to not take any action or file any document to terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act, except as permitted herein. The Company will take all action necessary to continue the listing,
quotation or trading of its Common Stock on the OTC Bulletin Board or other exchange or market on which the Common Stock is then listed, trading or quoted. Subject to the terms of the Transaction Documents, the Company further covenants that it will
take such further action as the Purchasers may reasonably request, all to the extent required from time to time to enable the Purchasers to sell the Securities without registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act. 
 Section 3.3 Inspection Rights. Provided same would not be in
violation of Regulation FD, the Company shall permit, during normal business hours and upon reasonable request and reasonable notice, each Purchaser or any employees, agents or representatives thereof, so long as such Purchaser shall be obligated
hereunder to purchase the Notes or shall beneficially own any Conversion Shares or Warrant Shares, for purposes reasonably related to such Purchaser’s interests as a stockholder, to examine the publicly available, non-confidential records and
books of account of, and visit and inspect the properties, assets, operations and business of the Company and any Subsidiary, and to discuss the publicly available, non-confidential affairs, finances and accounts of the Company and any Subsidiary
with any of its officers, consultants, directors, and key employees. 
 Section 3.4 Compliance with Laws. The Company shall
comply, and cause each Subsidiary to comply, with all applicable laws, rules, regulations and orders, noncompliance with which would be reasonably likely to have a Material Adverse Effect. 
 Section 3.5 Keeping of Records and Books of Account. The Company shall keep and cause each Subsidiary to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its Subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation,
depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made. 
  

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 Section 3.6 Reporting Requirements. If the Commission ceases making the Company’s
periodic reports available via the Internet without charge, then the Company shall furnish the following to each Purchaser so long as such Purchaser shall be obligated hereunder to purchase the Securities or shall beneficially own Securities:

 (a) Quarterly Reports filed with the Commission on Form 10-Q as soon as practical after the document is filed with the Commission, and in
any event within five (5) days after the document is filed with the Commission; 
 (b) Annual Reports filed with the Commission on Form
10-K as soon as practical after the document is filed with the Commission, and in any event within five (5) days after the document is filed with the Commission; and 
 (c) Copies of all notices, information and proxy statements in connection with any meetings, that are, in each case, provided to holders of shares of Common Stock, contemporaneously with the delivery of such notices
or information to such holders of Common Stock. 
 Section 3.7 Other Agreements. The Company shall not enter into any agreement
in which the terms of such agreement would restrict or impair the right or ability to perform of the Company or any Subsidiary under any Transaction Document. 
 Section 3.8 Use of Proceeds. The net proceeds from the sale of the Securities hereunder shall be used by the Company for working capital and general corporate purposes and for the purposes set forth on
Schedule 3.8 hereto and not to redeem any Common Stock or securities convertible, exercisable or exchangeable into Common Stock or to settle any outstanding litigation. 
 Section 3.9 Reporting Status. So long as a Purchaser beneficially owns any of the Securities, the Company shall timely file all
reports required to be filed with the Commission pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination. 
 Section 3.10 Disclosure of Transaction. The Company shall issue a press release
describing the material terms of the transactions contemplated hereby (the “Press Release”) on the day of the Closing but in no event later than one hour after the Closing; provided, however, that if the Closing occurs
after 4:00 P.M. Eastern Time on any Trading Day, the Company shall issue the Press Release no later than 9:00 A.M. Eastern Time on the first Trading Day following the Closing Date. The Company shall also timely file with the Commission a Current
Report on Form 8-K with respect to the transactions contemplated hereby and complying with the requirements of such form (including with respect to attachment of exhibits thereto). 
  

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 Section 3.11 Disclosure of Material Information. The Company covenants and agrees that
neither it nor any other person acting on its behalf has provided or will provide any Purchaser or any Purchaser’s agents or counsel with any information that the Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company. 
 Section 3.12 Pledge of Securities. The Company acknowledges that the Securities may
be pledged by a Purchaser in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of
the Securities hereunder, and no Purchaser effecting a pledge of the Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction
Document; provided that a Purchaser and its pledgee shall be required to comply with the provisions of Article V hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. At the Purchasers’ expense, the Company
hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Purchaser. 
 Section 3.13 Amendments. The Company shall not amend or waive any provision of the Certificate or Bylaws of the Company in any way that would
adversely affect exercise rights, voting rights, conversion rights, prepayment rights or redemption rights of the holder of the Notes. 
 Section 3.14 Distributions. So long as any Notes or Warrants remain outstanding, the Company agrees that it shall not declare or pay any dividends or make any distributions to any holder(s) of Common Stock. 
 Section 3.15 Reservation of Shares. So long as any of the Notes or Warrants remain outstanding, the Company shall take all action necessary
to at all times have authorized and reserved for the purpose of issuance, one hundred twenty percent (120%) of the aggregate number of shares of Common Stock needed to provide for the issuance of the Conversion Shares and the Warrant Shares.

 Section 3.16 Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates, registered in the name of each Purchaser or its respective nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as specified from time to time by each Purchaser to the Company
upon conversion of the Notes or exercise of the Warrants substantially in the form of Exhibit F attached hereto (the “Irrevocable Transfer Agent Instructions”). Prior to registration of the Conversion Shares and the Warrant
Shares under the Securities Act, all such certificates shall bear a restrictive legend substantially in the form specified in Section 5.1 of this Agreement. The Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.16 will be given by the Company to its transfer agent in connection with the issuance of the Notes pursuant to this Agreement and that the Conversion Shares and Warrant Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent provided in this Agreement and applicable laws. Nothing in this Section 3.16 shall affect in any way each Purchaser’s obligations and agreements set forth in
Section 5.1 to comply with all applicable prospectus delivery requirements, if any, upon resale of the 

  

 16 

 
Conversion Shares and the Warrant Shares. If a Purchaser provides the Company with an opinion of counsel, in a form reasonably acceptable to the Company, to
the effect that a public sale, assignment or transfer of the Conversion Shares or Warrant Shares may be made without registration under the Securities Act or the Purchaser provides the Company with reasonable assurances that the Conversion Shares or
Warrant Shares can be sold pursuant to Rule 144 without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold, the Company shall permit the transfer, and, in the case of the Conversion
Shares and the Warrant Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by such Purchaser and without any restrictive legend. The Company acknowledges that a breach by
it of its obligations under this Section 3.16 will cause irreparable harm to the Purchasers 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 Section 3.16 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 3.16, that the Purchasers shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. 
 Section 3.17 Disposition of Assets. So long as the Notes remain outstanding, neither the Company nor any subsidiary shall sell, transfer or
otherwise dispose of any material amount of its properties, assets and rights including, without limitation, its software and intellectual property, to any person except for sales of obsolete assets and sales to customers in the ordinary course of
business or with the prior written consent of the holders of a majority of the principal amount of the Notes then outstanding. 
 Section 3.18 Restrictions on Certain Issuances of Securities. The Company shall not issue any securities that rank pari passu or senior to the Notes without the prior written consent of at least seventy-five percent
(75%) of the principal amount of the Notes outstanding at such time. 
 Section 3.19 Participation in Future Financing.

 (a) From the date hereof until                 ,
2009, upon any issuance by the Company of Common Stock, Common Stock Equivalents, Indebtedness (or a combination of units hereof) (a “Subsequent Financing”), each Purchaser shall have the right to participate in up to an amount of
the Subsequent Financing equal to 50% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. 
 (b) At least 5 Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written notice of its
intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than 1 Trading Day after such request, deliver a Subsequent Financing Notice to such 

  

 17 

 
Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds
intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment. 
 (c) Any Purchaser desiring to participate in such Subsequent Financing must provide written notice
to the Company by not later than 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice that
the Purchaser is willing to participate in the Subsequent Financing, the amount of the Purchaser’s participation, and that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no notice from a Purchaser as of such 5th Trading Day, such Purchaser shall be deemed to have notified the
Company that it does not elect to participate. 
 (d) If by 5:30 p.m. (New York City
time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice, the Company receives responses to a Subsequent Financing
Notice from Purchasers seeking to purchase more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. A
Purchaser’s “Pro Rata Portion” means the ratio of (x) the Purchase Price of the Notes purchased by such Purchaser over (y) the aggregate Purchase Price of all Notes purchased by all Purchasers participating under this
Section 3.19. 
 (e) The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again
have the right of participation set forth above in this Section 3.19, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice
within 30 Trading Days after the date of the initial Subsequent Financing Notice. 
 (f) Notwithstanding the foregoing, this
Section 3.19 shall not apply in respect of (i) any issuance for which the Conversion Price (as defined in the Notes) is not subject to adjustment pursuant to the terms of the Notes, or (ii) an underwritten public offering of the
Company’s securities. 
 ARTICLE IV 
 CONDITIONS 
 Section 4.1 Conditions Precedent to the Obligation of the Company to Close and
to Sell the Securities. The obligation hereunder of the Company to close and issue and sell the Securities to the Purchasers at the Closing is subject to the satisfaction or waiver, at or before the Closing of the conditions set forth below.
These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion. 
  

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 (a) Accuracy of the Purchasers’ Representations and Warranties. The representations and
warranties of each Purchaser 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 are expressly made as of a particular
date, which shall be true and correct in all material respects as of such date. 
 (b) Performance by the Purchasers. Each Purchaser
shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchasers at or prior to the Closing Date. 

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement. 
 (d) Delivery of Purchase Price. The Purchase Price for the Securities shall have been delivered to the Company on the Closing Date. 
 (e) Delivery of Transaction Documents. The Transaction Documents (other than the Escrow Agreement) shall have been duly executed and delivered by the Purchasers, and the Escrow Agreement shall have been duly
executed and delivered by the escrow agent, to the Company. 
 Section 4.2 Conditions Precedent to the Obligation of the Purchasers
to Close and to Purchase the Securities. The obligation hereunder of the Purchasers to purchase the Securities and consummate the transactions contemplated by this Agreement is subject to the satisfaction or waiver, at or before the Closing, of
each of the conditions set forth below. These conditions are for the Purchasers’ sole benefit and may be waived by the Purchasers at any time in their sole discretion. 
 (a) Accuracy of the Company’s Representations and Warranties. Each of the representations and warranties of the Company in this Agreement and
the other Transaction Documents shall be true and correct in all material respects as of the Closing Date, except for representations and warranties that speak as of a particular date, which shall be true and correct in all material respects as of
such date. 
 (b) Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with
all 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. 
 (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement. 
  

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 (d) No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any
governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any Subsidiary, or any of the officers, directors or affiliates of the Company or any Subsidiary
seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions. 
 (e) Notes and Warrants. At or prior to the Closing, the Company shall have delivered to the Purchasers the Notes (in such denominations as each Purchaser may request) and the Warrants (in such denominations as each Purchaser may
request). 
 (f) Secretary’s Certificate. The Company shall have delivered to the Purchasers a secretary’s certificate,
dated as of the Closing Date, as to (i) the resolutions adopted by the Board of Directors approving the transactions contemplated hereby, (ii) the Certificate, (iii) the Bylaws, each as in effect at the Closing, and (iv) the
authority and incumbency of the officers of the Company executing the Transaction Documents and any other documents required to be executed or delivered in connection therewith. 
 (g) Officer’s Certificate. On the Closing Date, the Company shall have delivered to the Purchasers a certificate signed by an executive
officer on behalf of the Company, dated as of the Closing Date, confirming the accuracy of the Company’s representations, warranties and covenants as of the Closing Date, confirming that there shall be no shares of the Company’s Series A
Preferred Stock issued and outstanding upon the Closing, and confirming the compliance by the Company with the conditions precedent set forth in this Section 4.2 as of the Closing Date (provided that, with respect to the matters in paragraphs
(c) and (d) of this Section 4.2, such confirmation shall be based on the knowledge of the executive officer after due inquiry). 
 (h) Material Adverse Effect. No Material Adverse Effect shall have occurred at or before the Closing Date. 
 (i) Transfer
Agent Instructions. The Irrevocable Transfer Agent Instructions, in the form of Exhibit F attached hereto, shall have been delivered to the Company’s transfer agent. 
 (j) Escrow Agreement. The Company and the escrow agent shall have executed the Escrow Agreement. 
 (k) Registration Rights Agreement. The Company shall have executed and delivered the Registration Rights Agreement to the Purchasers. 

(l) Legal Opinion. Company counsel shall have executed and delivered a legal opinion, substantially in the form attached as Exhibit — hereto, to the Purchasers. 
  

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 ARTICLE V 
 CERTIFICATE LEGEND 
 Section 5.1 Legend. Each certificate representing the Securities
shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws): 
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR FLO CORPORATION SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. 
 The Company agrees to issue or reissue certificates representing any of the Conversion Shares and the Warrant Shares, without the legend set forth above if at such time, prior to making any transfer of any such
Conversion Shares or Warrant Shares, such holder thereof shall give written notice to the Company describing the manner and terms of such transfer and removal as the Company may reasonably request, and provided the conditions set forth in this
paragraph shall have been met. Such proposed transfer and removal will not be effected until: (a) either (i) the Company has received an opinion of counsel reasonably satisfactory to the Company, to the effect that the registration of the
Conversion Shares or Warrant Shares under the Securities Act is not required in connection with such proposed transfer, (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Company with
the Commission and has become effective under the Securities Act, (iii) the Company has received other evidence reasonably satisfactory to the Company that such registration and qualification under the Securities Act and state securities laws
are not required, or (iv) the holder provides the Company with reasonable assurances that such security can be sold pursuant to Rule 144 under the Securities Act. The Company will respond to any such notice from a holder within three
(3) business days. In the case of any proposed transfer under this Section 5.1, the Company will use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required,
(x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state
securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Company. The restrictions on transfer contained in this Section 5.1 shall be in addition to, and not by way of limitation of, any
other restrictions on transfer contained in any other section of this Agreement. Whenever a certificate representing the Conversion Shares or Warrant Shares is required to be issued to a Purchaser without a legend, in lieu of delivering physical
certificates representing the Conversion Shares or Warrant Shares, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer 

  

 21 

 
program, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Conversion Shares or Warrant Shares to a Purchaser
by crediting the account of such Purchaser’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system (to the extent not inconsistent with any provisions of this Agreement). 
 ARTICLE VI 
 INDEMNIFICATION 

 Section 6.1 General Indemnity. The Company agrees to indemnify and hold harmless the Purchasers (and their respective
directors, officers, managers, partners, members, shareholders, affiliates, agents, successors and assigns) from and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements) incurred by the Purchasers as a result of any inaccuracy in or breach of the representations, warranties or covenants made by the Company herein. Each Purchaser severally but not jointly agrees to
indemnify and hold harmless the Company and its directors, officers, affiliates, agents, successors and assigns from and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements) incurred by the Company as result of any inaccuracy in or breach of the representations, warranties or covenants made by such Purchaser herein. The maximum aggregate liability of each Purchaser
pursuant to its indemnification obligations under this Article VI shall not exceed the portion of the Purchase Price paid by such Purchaser hereunder. 
 Section 6.2 Indemnification Procedure. Any party entitled to indemnification under this Article VI (an “indemnified party”) will give written notice to the indemnifying party of any matter giving
rise to a claim for indemnification; provided, that the failure of any party entitled to indemnification hereunder to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action, proceeding or claim is brought against an indemnified party in respect of which indemnification is sought hereunder, the indemnifying
party shall be entitled to participate in and, unless in the reasonable judgment of the indemnifying party a conflict of interest between it and the indemnified party exists with respect to such action, proceeding or claim (in which case the
indemnifying party shall be responsible for the reasonable fees and expenses of one separate counsel for the indemnified parties), to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. In the event that the
indemnifying party advises an indemnified party that it will not contest such a claim for indemnification hereunder, or fails, within thirty (30) days of receipt of any indemnification notice to notify, in writing, such person of its election
to defend, settle or compromise, at its sole cost and expense, any action, proceeding or claim (or discontinues its defense at any time after it commences such defense), then the indemnified party may, at its option, defend, settle or otherwise
compromise or pay such action or claim. In any event, unless and until the indemnifying party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the indemnified party’s costs and expenses arising
out of the defense, settlement or compromise of any such action, claim or proceeding shall be losses subject to indemnification hereunder. The indemnified party 

  

 22 

 
shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to the indemnified party which relates to such action or claim. The indemnifying party shall keep the indemnified party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. If the indemnifying party elects to defend any such action or claim, then the indemnified party shall be entitled to participate in such defense with counsel of its choice at its sole cost
and expense. The indemnifying party shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent. Notwithstanding anything in this Article VI to the contrary, the indemnifying party shall not,
without the indemnified party’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof which imposes any future obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such claim. The indemnification obligations to defend the indemnified party required by this Article VI
shall be made by periodic payments of the amount thereof during the course of investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred, so long as the indemnified party shall refund such moneys if it
is ultimately determined by a court of competent jurisdiction that such party was not entitled to indemnification. The indemnity agreements contained herein shall be in addition to (a) any cause of action or similar rights of the indemnified
party against the indemnifying party or others, and (b) any liabilities the indemnifying party may be subject to pursuant to law. No indemnifying party will be liable to the indemnified party under this Agreement to the extent, but only to the
extent that a loss, claim, damage or liability is attributable to the indemnified party’s breach of any of the representations, warranties or covenants made by such party in this Agreement or in the other Transaction Documents. 
 ARTICLE VII 
 MISCELLANEOUS 

 Section 7.1 Fees and Expenses. Each party shall pay the fees and expenses of its advisors, 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 shall pay reasonable attorneys’
fees and expenses (including disbursements and out-of-pocket expenses) incurred by the Purchasers for a total of one attorney in connection with (i) the preparation, negotiation, execution and delivery of the Transaction Documents and the
transactions contemplated thereunder, including disbursements and out-of-pocket expenses, and (ii) any amendments, modifications or waivers of this Agreement or any of the other Transaction Documents. In addition, the Company shall pay all
reasonable fees and expenses incurred by the Purchasers in connection with the enforcement of this Agreement or any of the other Transaction Documents, including, without limitation, all reasonable attorneys’ fees and expenses. Notwithstanding
the foregoing, the Company shall in no event be obligated to pay more than a total of $35,000 for attorney’s fees and expenses pursuant to this Section 7.1. 
  

 23 

 Section 7.2 Specific Performance; Consent to Jurisdiction; Venue. 
 (a) The Company and the Purchasers acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or
the other Transaction Documents were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement or the other Transaction Documents and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. 
 (b) The parties agree that venue for any dispute arising under this Agreement will lie exclusively in the state or federal courts located in New York
County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The parties irrevocably consent to personal jurisdiction in the state and federal courts
of the state of New York. The Company and each Purchaser consent to process being served in any such suit, action or proceeding by mailing a copy thereof 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 in this Section 7.2 shall affect or limit any right to serve process in any other manner permitted by law. The Company and the Purchasers hereby
agree that the prevailing party in any suit, action or proceeding arising out of or relating to the Securities, this Agreement or the other Transaction Documents, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing
party. The parties hereby waive all rights to a trial by jury. 
 Section 7.3 Entire Agreement; Amendment. This Agreement and the
Transaction Documents contain the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or in the other Transaction Documents, neither the Company nor any Purchaser
make any representation, warranty, covenant or undertaking with respect to such matters, and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. No provision of this Agreement
may be waived or amended other than by a written instrument signed by the Company and the Purchasers holding at least a majority of the principal amount of the Notes then held by the Purchasers. Any amendment or waiver effected in accordance with
this Section 7.3 shall be binding upon each Purchaser (and their permitted assigns) and the Company. 
 Section 7.4 Notices.
Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile 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:	  	FLO Corporation
		  	14000 Thunderbolt Place, Building R
		  	Chantilly, VA 20151
		  	Attention: Chief Executive Officer
		  	Tel. No.: (425) 278-1247
		  	Fax No.: (425) 278-1299

  

 24 

			
	with copies (which copies shall not constitute notice to the Company) to:	  	DLA Piper US LLP
		  	701 5th Ave., Suite 7000
		  	Seattle, WA 98104
		  	Attention: W. Michael Hutchings, Esq.
		  	Tel No.: (206) 839-4824
		  	Fax No.: (206) 839-4801
		
	If to any Purchaser:	  	At the address of such Purchaser set forth on Exhibit A to this Agreement, with copies to Purchaser’s counsel as set forth on Exhibit A or as specified in writing by such
Purchaser with copies to:
		
		  	 _________________________
 _________________________

 _________________________
 Attention: ______________________

 Tel No.: (___) ___-____
 Fax No.: (___)
___-____

 Any party hereto may from time to time change its address for notices by giving written notice of
such changed address to the other party hereto. 
 Section 7.5 Waivers. No waiver by either party 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 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 accruing to it thereafter. No consideration shall be offered or paid to any Purchaser to amend or consent to a waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the Transaction Documents. This provision constitutes a separate right granted to each Purchaser by the Company and shall not in any way be construed as the Purchasers acting in
concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise. 
 Section 7.6 Headings.
The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof. 
 Section 7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
assigns. After the Closing, the assignment by a party to this Agreement of any rights hereunder shall not affect the obligations of such party under this Agreement. Subject to Section 5.1 hereof, the Purchasers may assign the Securities and its
rights under this Agreement and the other Transaction Documents and any other rights hereto and thereto without the consent of the Company. 
  

 25 

 Section 7.8 No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 
 Section 7.9 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles
which would result in the application of the substantive law of another jurisdiction. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted. 
 Section 7.10 Survival. The representations and warranties of the Company and the Purchasers shall survive the execution and delivery hereof
and the Closing until the second anniversary of the Closing Date, except the agreements and covenants set forth in Articles I, III, V, VI and VII of this Agreement shall survive the execution and delivery hereof and the Closing hereunder.

 Section 7.11 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. 
 Section 7.12 Publicity. The Company agrees that it will not disclose, and will not include in any public announcement, the names of the
Purchasers without the consent of the Purchasers, which consent shall not be unreasonably withheld or delayed, or unless and until such disclosure is required by law, rule or applicable regulation, including without limitation any disclosure
pursuant to any registration statement, proxy statement, information statement or other filing, and then only to the extent of such requirement. 
 Section 7.13 Severability. The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

 Section 7.14 Further Assurances. From and after the date of this Agreement, upon the request of the Purchasers or the Company,
the Company and each Purchaser shall execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement and the
other Transaction Documents. 
  

 26Engagement Agreement by and between FLO Corporation and Burnham Hill Partners

 Exhibit 10.4 
 BURNHAM HILL PARTNERS 
 A DIVISION OF PALI CAPITAL INC. 
  

			
	590 MADISON AVENUE	 	TEL 212-980-2200
	NEW YORK, NEW YORK 10022	 	FAX 212-980-9466

             , 2008 
 Glenn L. Argenbright 
 President and Chief Executive Officer 

FLO Corporation 
 14000 Thunderbolt Place, Building R 
 Chantilly, Virginia 20151 
 Dear Mr. Argenbright: 
 This letter Agreement (the “Agreement”) confirms the engagement of Burnham Hill Partners (“BHP”), a division of Pali Capital Inc., by
FLO Corporation (the “Company”) to act as its exclusive placement agent in connection with an equity and/or debt financing through a transaction or transactions exempt from registration under the Securities Act of 1933, as amended
and in compliance with the applicable securities laws and regulations (a “Financing”). 
 In connection with BHP’s engagement
hereunder, the Company shall compensate BHP as set forth below: 
  

	 	(a)	In connection with the final closing of a Financing(s) resulting in total gross proceeds received by the Company of no less than $6.5 million, the Company shall pay BHP a cash fee
equal to ten (10%) percent of the gross proceeds received by the Company (the “Placement Fee”), offset by any fees paid to sub-placement agents by FLO in connection with the Financing contemplated by this agreement.

  

	 	(b)	In connection with the final closing of a Financing(s) resulting in total gross proceeds received by the Company of no less than $6.5 million, the Company shall issue to BHP and/or
its designees and assignees i) 5-year warrants in an amount equal to ten (10%) percent of the number of shares issued (or, in the case of convertible securities, the number of shares immediately issuable on an as converted basis) to investors
and ii) 5-year warrants in an amount equal to ten (10%) percent of the number of warrants issued to investors (the “Placement Warrants”). Such Placement Warrants issued to BHP and/or its designees and assignees shall be offset
by any Placement Warrants issued to sub-placement agents by FLO in connection with the Financing contemplated by this Agreement. The Placement Warrants shall be exercisable at 105% of the purchase price of the common stock issued, or, in the case of
convertible securities, 105% of the conversion price of the securities issued. The shares underlying the Placement Warrants shall have standard piggyback registration rights, be exercisable upon issuance pursuant to a cashless exercise provision, be
non-redeemable and at the election of the holder be included in any registration statement covering the shares issued pursuant to any financing activity under this Agreement. 

  

	 	(c)	In connection with the cash exercise of warrants issued to investors in connection with any Financing pursuant to this Agreement, BHP shall receive a cash fee equal to five
(5%) percent of the gross proceeds received by the Company upon cash exercise of such investor warrants. 

 In addition to the above, the
Company agrees to reimburse BHP for reasonable out-of-pocket expenses (which amount shall not exceed $5,000 without the prior approval of the Company) incurred in connection with this Agreement. All fees and expenses hereunder are payable in cash,
unless otherwise noted, and, to the extent not previously paid, shall be paid at the closing of any Financing. The Company shall also agree to reimburse reasonable legal fees of one law firm incurred by either BHP and/or the investor(s) in
connection with this Agreement. 
 In connection with this Agreement, the Company will furnish BHP with all information concerning the Company which BHP
reasonably deems appropriate and will provide BHP with access to its officers, directors, employees, accountants, counsel and other representatives (collectively, the “Representatives”), it being understood that BHP will rely solely
upon such information supplied by the Company and its Representatives without assuming any responsibility for the independent investigation or verification thereof. All non-public information concerning the Company that is given to BHP will be used
solely in the course of the performance of our services hereunder and will be treated confidentially by us for so long as it remains non-public. Except as otherwise required by law, BHP will not disclose any information to any third party without
the consent of the Company. 
  

 1 

 BHP’s engagement under this Agreement shall expire twelve (12) months from the date hereof (the
“Authorization Period”). Either party may, upon ten (10) days written notice to the other party, terminate this Agreement, provided, however, that upon its expiration or termination by the Company without cause, BHP will
continue to be entitled to its full fees provided for herein in the event that at any time prior to the expiration of six (6) months after such expiration or termination (the “Tail Period”), the Company completes a Financing or
other similar transaction or event consistent with the purpose and intent of this Agreement. Furthermore, during the Authorization Period, BHP shall retain the right, but not the obligation, to act as the Company’s exclusive financial advisor
with respect to any such additional engagement(s) undertaken by the Company. The terms and provisions of such additional engagement(s) shall be covered under a separate letter agreement mutually agreed to by both parties consistent with agreements
of such type. 
 Notice given pursuant to any of the provisions of this Agreement shall be given in writing and shall be sent by overnight courier or
personally delivered (a) if to the Company, to the Company’s Chief Executive Officer at the address listed above; and (b) if to BHP, to its offices at 590 Madison Avenue, 5th floor, New York, NY 10022. 
 No advice or opinion rendered by BHP, whether formal or informal, may be disclosed, in whole or in part, or summarized, excerpted from or otherwise referred to without
our prior written consent, which may not be unreasonably withheld, conditioned or delayed. In addition, BHP may not be otherwise referred to without its prior written consent. Since BHP will be acting on behalf of the Company in connection with its
engagement hereunder, the Company has entered into a separate letter agreement (the “Indemnification Agreement”), dated the date hereof, providing for the indemnification by the Company of BHP and certain related persons and
entities. 
 BHP is a division of Pali Capital, Inc., a registered broker-dealer. This Agreement shall remain in full force and effect as to BHP and the
Company, and shall be deemed fully assigned, in the event that BHP becomes an independent entity. Our engagement is for the limited purposes set forth under this Agreement, and the rights and obligations of each of BHP and the Company are herein
defined. In connection with this Agreement, BHP is acting as an independent contractor with duties owing solely to the Company. As such, each of BHP and the Company agrees that the other party has no fiduciary duty to it or its stockholders,
officers or directors as a result of the engagement described in this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of law principles thereof. This
Agreement may not be amended or modified except in writing signed by each of the parties hereto. 
 The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement or the Indemnification Agreement, which shall remain in full force and effect. 
 We are delighted to accept this engagement and look forward to working with you on this assignment. Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the
enclosed duplicate of this Agreement. 
  

 2 

					
	 TO:
	  	Burnham Hill Partners	  	Date: ______ __, 2008
		  	A division of Pali Capital Inc.	  	
		  	590 Madison Avenue	  	
		  	New York, NY 10022	  	

 In connection with your engagement pursuant to our letter agreement (the “Engagement
Agreement”) of even date herewith (the “Engagement”), we agree to indemnify and hold harmless Burnham Hill Partners (“BHP”), a division of Pali Capital Inc. and its affiliates, the respective directors,
officers, partners, agents and employees of BHP and its affiliates, and each other person, if any, controlling BHP or any of its affiliates or successor in interest (collectively, “Indemnified Persons”), from and against, and we
agree that no Indemnified Person shall have any liability to us or our owners, parents, affiliates, security holders or creditors for, any losses, claims, damages or liabilities (including actions or proceedings in respect thereof) (collectively
“Losses”) (A) related to or arising out of (i) our actions or failures to act (including statements or omissions made, or information provided, by us or our agents) in connection with the Engagement or (ii) actions or
failures to act by an Indemnified Person in connection with the Engagement with our consent or in reliance on our actions or failures to act, or (B) otherwise related to or arising out of the Engagement or your performance thereof, except that
this clause (B) shall not apply to any Losses that are finally judicially determined to have resulted primarily from your bad faith or gross negligence or breach of the Engagement Agreement. If such indemnification is for any reason not
available or insufficient to hold you harmless, we agree to contribute to the Losses involved in such proportion as is appropriate to reflect the relative benefits received (or anticipated to be received) by us and by you with respect to the
Engagement or, if such allocation is judicially determined unavailable, in such proportion as is appropriate to reflect other equitable considerations such as the relative fault of us on the one hand and of you on the other hand; provided, however,
that, to the extent permitted by applicable law, the Indemnified Persons shall not be responsible for amounts which in the aggregate are in excess of the amount of all fees actually received by you from us in connection with the Engagement. Relative
benefits to us, on the one hand, and you, on the other hand, with respect to the Engagement shall be deemed to be in the same proportion as (i) the total value paid or proposed to be paid or received or proposed to be received by us or our
security holders, as the case may be, pursuant to the transaction(s), whether or not consummated, contemplated by the Engagement bears to (ii) all fees paid or proposed to be paid to you by us in connection with the Engagement. 
 We will reimburse each Indemnified Person for all reasonable expenses (including reasonable fees and disbursements of counsel) as they are incurred by
such Indemnified Person in connection with investigating, preparing for or defending any action, claim, investigation, inquiry, arbitration or other proceeding (“Action”) referred to above (or enforcing this Agreement or the
Engagement Agreement), whether or not in connection with pending or threatened litigation in which any Indemnified Person is a party, and whether or not such Action is initiated or brought by you. We further agree that we will not settle or
compromise or consent to the entry of any judgment in any pending or threatened Action in respect of which indemnification may be sought hereunder (whether or not an Indemnified Person is a party therein) unless we have given you reasonable prior
written notice thereof and used all reasonable efforts, after consultation with you, to obtain an unconditional release of each Indemnified Person from all liability arising therefrom. In the event we enter into one or a series of transactions
involving a merger or other business combination or a dissolution or liquidation of all or a significant portion of our assets, we shall promptly notify you in writing. If requested by BHP, we shall then establish alternative means of providing for
our obligations set forth herein on terms and conditions reasonably satisfactory to BHP. 
 If multiple claims are brought against you in any
Action with respect to at least one of which indemnification is permitted under applicable law and provided for under this Agreement, we agree that any judgment, arbitration award or other monetary award shall be conclusively deemed to be based on
claims as to which indemnification is permitted and provided for. In the event that you are called or subpoenaed to give testimony in a court of law with respect to any Action, we agree to pay your expenses related thereto and for every day or part
thereof that you are required to be there or in preparation thereof. Our obligations hereunder shall be in addition to any rights that any Indemnified Person may have at common law or otherwise. Solely for the purpose of enforcing this Agreement, we
hereby consent to personal jurisdiction and to service and venue in any court in which any claim which is subject to this Agreement is brought by or against any Indemnified Person. We acknowledge that in connection with the Engagement you are acting
as an independent contractor with duties owing solely to us. YOU HEREBY AGREE, AND WE HEREBY AGREE ON OUR OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF OUR SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT
TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE ENGAGEMENT, YOUR PERFORMANCE THEREOF OR THIS AGREEMENT. 
 The provisions of this
Agreement shall apply to the Engagement (including related activities prior to the date hereof) and any modification thereof and shall remain in full force and effect regardless of the completion or termination of the Engagement. This Agreement and
the Engagement Agreement shall be governed by and construed in accordance with the laws of the state of New York, without regard to conflicts of law principles thereof. 
  

													
	Accepted and Agreed:	 		 	Very truly yours,
			
	BURNHAM HILL PARTNERS	 		 	Client: FLO Corporation

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