Document:

Exhibit 10.6

 

ALTEVA, INC.

NAMED EXECUTIVE OFFICER COMPENSATION POLICY

 

1.                                      Applicability.  This Named Executive Officer Compensation Policy (the “Policy”), effective October 20, 2014, applies to all named executive officers (“Executives”) of Alteva, Inc., a New York Corporation (the “Company”), and is intended to assist the Company in attracting, motivating and retaining Executives.

 

2.                                      Bonus and Long-Term Incentive.

 

(a)                                 A discretionary performance bonus may be paid to Executives for the Company’s fiscal year entirely at the discretion of the Company’s Board of Directors (the “Board”).  The decision whether to award a bonus and the applicable performance criteria will be determined by the Board and/or its Compensation Committee, but will be based in significant part on the Company’s meeting certain revenue and earnings projections.  Any discretionary performance bonus will be paid within a reasonable time following the Company’s receipt of final audited financial statements for the year to which any bonus is attributable.

 

(b)                                 Executives will be eligible to participate in the Amended and Restated Warwick Valley Telephone Company 2008 Long-Term Incentive Plan or any amended or successor plan (the “LTIP”), in accordance with the terms of the LTIP documents and applicable grant agreements.

 

3.                                      Termination Without Cause.  If the Company terminates an Executive’s employment without Cause (as defined in the LTIP) and the Executive executes and does not revoke a release, in form and substance satisfactory to the Company, which releases the Company, its affiliates and their employees and agents from all claims related to the Executive’s employment with the Company within the time period set forth in the release (the “Release”), then the Executive will receive severance equal to 3 weeks of base salary for every full year of service the Executive has provided to the Company, up to a maximum of 6 months of severance.  Severance payments will be paid as salary continuation, in a series of separate payments for purposes of Section 409A (defined below), in accordance with the Company’s standard payroll practice, commencing on the first payroll period falling at least 8 days after the Executive executes and returns the Release.

 

4.                                      Change in Control.   If the Company terminates an Executive’s employment without Cause within twelve (12) months following a Change in Control (as defined in the LTIP, except that the term “Agreement” in subpart (ii) of that definition shall refer to this Policy), and the Executive executes and does not revoke the Release within the time period set forth in the Release, then the Executive will be entitled to severance equal to one year of his or her then base salary.  Severance payments will be paid as salary continuation, in a series of separate payments for purposes of Section 409A (defined below), in accordance with the Company’s standard payroll practice, commencing on the first payroll period falling at least 8 days after the Executive executes and returns the Release.

 

 

5.                                      Board Discretion.  The Board has the authority to (a) administer this Policy; and (b) prospectively amend or terminate this Policy at any time for any reason, in each case, at its sole discretion, provided that neither the Board nor any administrator of this Policy, including a Company successor, may amend, derogate from or terminate Section 4 of this Policy (including any such action with respect to the LTIP that would have such an effect on Section 4 of this Policy) within twelve (12) months following a Change in Control.

 

6.                                      Compliance with Section 409A.  Any payments made under this Policy are intended to be either exempt from or compliant with Section 409A of the Internal Revenue Code and its Treasury Regulations (collectively, “Section 409A”), but the Company does not guarantee the tax treatment of payments hereunder.  If an Executive is a “specified employee” under Section 409A on the date of the Executive’s separation from service, no deferral of compensation payable because of the Executive’s separation from service shall be paid to the Executive until six (6) months have elapsed following the separation from service (the “Delayed Payment Period”) or, if earlier, the date of the Executive’s death following such separation from service.  All such amounts withheld during the Delayed Payment Period will be immediately payable following the Delayed Payment Period, and any payments that remain outstanding shall be paid over the time period originally scheduled under the terms of this Policy.

 

7.                                      Employment At-Will.  Nothing in this Policy shall modify the at-will employment status of an Executive’s employment with the Company.

 

2Exhibit
10.1

 

NOTE
PURCHASE AGREEMENT

 

This Note Purchase Agreement
(this “Agreement”) is being delivered to the purchaser identified on the signature page to this Agreement (the
“Subscriber”) in connection with its investment in the securities of Optex Systems Holdings, Inc., a Delaware
corporation (the “Company”). The Company is conducting a private placement in the aggregate amount of up to
$2,100,000 (the “Offering”) of convertible promissory notes, in the form attached hereto as Exhibit A
(the “Notes”) which are convertible into shares of the Company’s common stock, $0.001 par value per share
(the “Common Stock”). For purposes of this Agreement, the term “Securities” shall refer to
the Notes and the shares of Common Stock into which the Notes are convertible.

 

IMPORTANT INVESTOR NOTICES

 

NO OFFERING LITERATURE OR ADVERTISEMENT IN
ANY FORM MAY BE RELIED UPON IN THE OFFERING OF THESE SECURITIES EXCEPT FOR THIS NOTE PURCHASE AGREEMENT AND ANY SUPPLEMENTS HERETO,
AND NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS EXCEPT THOSE CONTAINED HEREIN.

 

UNTIL SUCH TIME AS A FORM 8-K IS FILED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (“SEC”) DISCLOSING THE TRANSACTIONS CONTEMPLATED HEREBY,
THIS AGREEMENT IS CONFIDENTIAL AND THE CONTENTS HEREOF MAY NOT BE REPRODUCED, DISTRIBUTED OR DIVULGED BY OR TO ANY PERSONS OTHER
THAN THE RECIPIENT OR ITS REPRESENTATIVE, ACCOUNTANT OR LEGAL COUNSEL, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY. EACH PERSON
WHO ACCEPTS DELIVERY OF THIS AGREEMENT, ACKNOWLEDGES AND AGREES TO THE FOREGOING RESTRICTIONS.

 

THIS AGREEMENT DOES NOT PURPORT TO BE ALL-INCLUSIVE
OR TO CONTAIN ALL OF THE INFORMATION THAT YOU MAY DESIRE IN EVALUATING THE COMPANY, OR AN INVESTMENT IN THE OFFERING. THIS AGREEMENT
DOES NOT CONTAIN ALL OF THE INFORMATION THAT WOULD NORMALLY APPEAR IN A PROSPECTUS FOR AN OFFERING REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) NOR HAS THE COMPANY PROVIDED A PRIVATE PLACEMENT MEMORANDUM WITH
RESPECT TO THIS OFFERING. YOU MUST CONDUCT AND RELY ON YOUR OWN EVALUATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING
THE MERITS AND RISKS INVOLVED, IN DECIDING WHETHER TO INVEST IN THE OFFERING.

 

THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER
OR SOLICITATION OF AN OFFER TO ANY PERSON OR IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION IS UNLAWFUL OR NOT AUTHORIZED.
EACH PERSON WHO ACCEPTS DELIVERY OF THIS AGREEMENT AGREES TO RETURN IT AND ALL RELATED DOCUMENTS IF SUCH PERSON DOES NOT PURCHASE
ANY OF THE SECURITIES DESCRIBED HEREIN.

 

NEITHER THE DELIVERY OF THIS AGREEMENT AT ANY
TIME NOR ANY SALE OF SECURITIES HEREUNDER SHALL IMPLY THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE CLOSING DATE. THE COMPANY WILL EXTEND TO EACH PROSPECTIVE INVESTOR (AND TO ITS REPRESENTATIVE, ACCOUNTANT OR LEGAL COUNSEL,
IF ANY) THE OPPORTUNITY, PRIOR TO ITS PURCHASE OF SECURITIES, TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY CONCERNING
THE OFFERING AND TO OBTAIN ADDITIONAL INFORMATION, TO THE EXTENT THE COMPANY POSSESSES THE SAME OR CAN ACQUIRE IT WITHOUT UNREASONABLE
EFFORT OR EXPENSE, IN ORDER TO VERIFY THE ACCURACY OF THE INFORMATION SET FORTH HEREIN. ALL SUCH ADDITIONAL INFORMATION SHALL ONLY
BE PROVIDED IN WRITING AND IDENTIFIED AS SUCH BY THE COMPANY THROUGH ITS DULY AUTHORIZED OFFICERS AND/OR DIRECTORS ALONE; NO ORAL
INFORMATION OR INFORMATION PROVIDED BY ANY BROKER OR THIRD PARTY MAY BE RELIED UPON.

 

NO REPRESENTATIONS, WARRANTIES OR ASSURANCES
OF ANY KIND ARE MADE OR SHOULD BE INFERRED WITH RESPECT TO THE ECONOMIC RETURN, IF ANY, THAT MAY ACCRUE TO AN INVESTOR IN THE COMPANY.

 

    	 

    	 

    

 

THIS AGREEMENT CONTAINS FORWARD-LOOKING STATEMENTS
REGARDING THE COMPANY’S PERFORMANCE, STRATEGY, PLANS, OBJECTIVES, EXPECTATIONS, BELIEFS AND INTENTIONS. THE OUTCOME OF THE
EVENTS DESCRIBED IN THESE FORWARD-LOOKING STATEMENTS IS SUBJECT TO SUBSTANTIAL RISKS, AND ACTUAL RESULTS COULD DIFFER MATERIALLY.
THE SECTIONS ENTITLED “EXECUTIVE SUMMARY,” “RISK FACTORS,” AND “DESCRIPTION OF BUSINESS,” IN
ANY SEC FILING OR REPORT (“SEC FILINGS”), AS WELL AS THIS AGREEMENT GENERALLY, CONTAIN DISCUSSIONS OF SOME OF
THE FACTORS THAT COULD CONTRIBUTE TO THESE DIFFERENCES.

 

THE SEC FILINGS AND REPORTS INCLUDE DATA OBTAINED
FROM INDUSTRY PUBLICATIONS AND REPORTS, WHICH THE COMPANY BELIEVES TO BE RELIABLE SOURCES; HOWEVER, NEITHER THE ACCURACY NOR THE
COMPLETENESS OF THIS DATA IS GUARANTEED AND WE HAVE NEITHER INDEPENDENTLY VERIFIED THIS DATA NOR SOUGHT THE CONSENT OF SUCH SOURCES
TO REFER TO THEIR REPORTS.

 

THE CONVERSION PRICE OF THE NOTES HAS BEEN
DETERMINED ARBITRARILY. SUCH CONVERSION PRICE DOES NOT NECESSARILY BEAR ANY RELATIONSHIP TO THE EXISTING VALUE OF THE ASSETS, EARNINGS
OR BOOK VALUE OF THE COMPANY, OR TO POTENTIAL ASSETS, EARNINGS, OR BOOK VALUE OF THE COMPANY. THE PRICE OF COMMON STOCK TRADED
ON ANY EXCHANGE MAY BE IMPACTED BY A LACK OF LIQUIDITY OR AVAILABILITY OF COMMON STOCK FOR PUBLIC SALE AND ALSO WILL NOT NECESSARILY
BEAR ANY RELATIONSHIP TO THE ASSETS, EARNINGS, BOOK VALUE OR POTENTIAL PROSPECTS OF THE COMPANY OR APPLICABLE QUOTED OR TRADING
PRICES THAT MAY EXIST FOLLOWING REGISTRATION OR THE LAPSE OF RESTRICTIONS ON THE SECURITIES SOLD PURSUANT TO THE OFFERING OR OTHER
RESTRICTIONS. SUCH PRICES SHOULD NOT BE CONSIDERED ACCURATE INDICATORS OF FUTURE QUOTED OR TRADING PRICES THAT MAY SUBSEQUENTLY
EXIST FOLLOWING THE OFFERING.

 

THE COMPANY RESERVES THE RIGHT, IN ITS SOLE
DISCRETION, TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART FOR ANY REASON OR FOR NO REASON AT ALL PRIOR TO ITS COUNTER-EXECUTION
OF ANY NOTE PURCHASE AGREEMENT DELIVERED TO IT BY ANY POTENTIAL SUBSCRIBER. THE COMPANY IS NOT OBLIGATED TO NOTIFY RECIPIENTS OF
THIS AGREEMENT WHETHER ALL OR WHAT PART OF THE NOTES OFFERED HEREBY HAVE BEEN SOLD.

 

SUBSCRIBERS MAY BE DEEMED TO BE IN POSSESSION
OF MATERIAL NON-PUBLIC INFORMATION WITHIN THE MEANING OF THE UNITED STATES SECURITIES LAWS AND REGULATIONS REGARDING A PUBLIC COMPANY.
THIS AGREEMENT HAS BEEN PREPARED SOLELY FOR USE IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND THE OFFERING AND THE TERMS
DESCRIBED IN THIS AGREEMENT MAY BE DEEMED TO BE MATERIAL, NONPUBLIC INFORMATION. ANY USE OF THIS INFORMATION FOR ANY PURPOSE OTHER
THAN IN CONNECTION WITH THE CONSIDERATION OF AN INVESTMENT IN THE SECURITIES OF THE COMPANY THROUGH THE OFFERING DESCRIBED HEREIN
MAY SUBJECT THE USER TO CIVIL AND/OR CRIMINAL LIABILITY. THE RECIPIENT, BY ACCEPTING THIS AGREEMENT, AGREES (I) NOT TO DISTRIBUTE
OR REPRODUCE THIS AGREEMENT, IN WHOLE OR IN PART, AT ANY TIME, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY; AND (II) TO REFRAIN
FROM TRADING IN THE PUBLICLY-TRADED SECURITIES OF THE COMPANY OR ANY OTHER RELEVANT COMPANY FOR SO LONG AS SUCH RECIPIENT IS IN
POSSESSION OF THE MATERIAL NON-PUBLIC INFORMATION. SUBSCRIBERS ARE ADVISED THAT THEY SHOULD SEEK THEIR OWN LEGAL COUNSEL PRIOR
TO EFFECTUATING ANY TRANSACTIONS IN THE PUBLICLY TRADED COMPANY’S SECURITIES.

 

FOR RESIDENTS OF ALL STATES

 

THIS OFFERING IS BEING MADE SOLELY TO “ACCREDITED
INVESTORS,” AS SUCH TERM IS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE AND WILL BE OFFERED AND SOLD IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION
AFFORDED BY SECTION 4(a)(2) THEREUNDER AND REGULATION D (RULE 506) OF THE SECURITIES ACT AND CORRESPONDING PROVISIONS OF STATE
SECURITIES LAWS.

 

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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN
OPINION OF COUNSEL TO THE HOLDER, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT, UPON PROVISION OF AN OPINION OF
COUNSEL TO THE HOLDER, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT SUCH SECURITIES MAY BE SOLD PURUSANT TO SAID RULE 144.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS AGREEMENT OR ANY OTHER INFORMATION
PROVIDED BY THE COMPANY IN CONNECTION THEREWITH. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE
CONTENTS OF THIS AGREEMENT AS INVESTMENT, LEGAL, BUSINESS, OR TAX ADVICE. EACH INVESTOR SHOULD CONTACT HIS, HER OR ITS OWN ADVISORS
REGARDING THE APPROPRIATENESS OF THIS INVESTMENT AND THE TAX CONSEQUENCES THEREOF, WHICH MAY DIFFER DEPENDING ON AN INVESTOR’S
PARTICULAR FINANCIAL SITUATION. IN NO EVENT SHOULD THIS AGREEMENT BE DEEMED OR CONSIDERED TO BE TAX ADVICE PROVIDED BY THE COMPANY.

 

FOR FLORIDA RESIDENTS ONLY

 

THE SECURITIES REFERRED TO HEREIN WILL BE SOLD
TO, AND ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER § 517.061 OF THE FLORIDA SECURITIES ACT. THE SECURITIES HAVE
NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING
THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH SUBSCRIBER TO THE COMPANY, AN AGENT
OF THE COMPANY, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH SUBSCRIBER,
WHICHEVER OCCURS LATER.

 

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1.           SUBSCRIPTION
AND PURCHASE PRICE

 

(a)          Subscription.
Subject to the conditions set forth in Section 2 hereof, the Subscriber hereby subscribes for and agrees to purchase the Note with
the principal face value indicated on the Subscriber signature page hereof (such principal face value, the “Purchase Price”)
on the terms and conditions described herein.

 

(b)          Purchase
of Note. The Subscriber’s delivery of this Agreement to the Company shall be accompanied by payment for the Note payable
in United States Dollars, by wire transfer of immediately available funds delivered to Jolie Kahn, Esq., as escrow agent (the “Escrow
Agent”) pursuant to the wire instructions attached hereto as Exhibit B, or as otherwise directed by the Company.
The Subscriber understands and agrees that, subject to Section 2 and applicable laws, by executing this Agreement, it is entering
into a legally binding agreement.

 

2.           Acceptance,
Offering Term and Closing Procedures; post closing adjustments

 

(a)          Offering
of Securities. The Company hereby agrees to sell, and subject to full, faithful and punctual performance and discharge by the
Company of all of its duties, obligations and responsibilities as set forth in this Agreement, the escrow agreement entered into
between the Company and the Escrow Agent, which sets forth the terms of the escrow referenced in paragraph 1(b) above (the “Escrow
Agreement”) and any other agreement entered into between the Subscriber and the Company relating to the purchase of the
Note (collectively, the "Transaction Documents"), and the Subscriber hereby agrees to purchase the Note pursuant
to the terms and conditions set forth in this Agreement. For the avoidance of doubt, upon the occurrence of the failure by the
Company to fully, faithfully and punctually perform and discharge any of its duties, obligations and responsibilities as set forth
in any of the Transaction Documents, which shall have been performed or otherwise discharged prior to the Closing (as defined below),
the Subscriber may, on or prior to the Closing, at its sole and absolute discretion, elect not to purchase the Note and, to the
extent the Subscriber has delivered all or any part of the Purchase Price to the Company or an escrow account at the direction
of the Company, receive the full and immediate refund of the Purchase Price. In the event the Closing does not take place because
of (i) the election not to purchase the Note by the Subscriber or (ii) the failure to effectuate the Initial Closing on or prior
to November 15, 2014 (unless extended by agreement of the parties hereto) for any reason or no reason, this Agreement and any other
Transaction Documents shall thereafter be terminated and have no further force or effect, and the parties shall take all steps,
including the execution of instructions to the Company, to ensure that the Purchase Price shall promptly be returned or caused
to be returned to the Subscriber without interest thereon or deduction therefrom.

 

(b)          Closing.
The closing of the purchase and sale of the Notes hereunder (the “Closing”) shall take place at such time and
place as determined by the parties hereto and may take place in on or more closings. The Closing shall take place on a Business
Day promptly following the satisfaction of the conditions set forth in Section 6 below, as determined by the parties hereto (the
“Closing Date”). “Business Day” shall mean from the hours of 9:00 a.m. (Eastern Time) through
5:00 p.m. (Eastern Time) of a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are
authorized or required to be closed. The Note purchased by the Subscriber will be delivered by the Company promptly following the
Final Closing Date (as defined herein).

 

(c)          Extraordinary
Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of Common Stock as a dividend
or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine
its outstanding shares of the Common Stock into a smaller number of shares of Common Stock, then, in each such event, the Purchase
Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein. The number of shares of Common Stock that the Subscriber shall
thereafter be entitled to receive upon conversion of the Note shall be adjusted to a number determined by multiplying the number
of shares of Common Stock that would otherwise (but for the provisions of this Section) be issuable on such conversion by a fraction
of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section) be in effect, and
(b) the denominator is the Purchase Price then in effect.

 

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(d)          Favored
Nations Provision. From the date hereof until such time as no Subscriber holds any Securities, and except in respect of the
issuance of Excluded Securities, in the event that the Company issues or sells any Common Stock, if a Subscriber then holding outstanding
Securities reasonably believes that any of the terms and conditions appurtenant to such issuance or sale are more favorable to
such investors than are the terms and conditions granted to the Subscribers hereunder, upon notice to the Company by such Subscriber
after disclosure of such issuance or sale, the Company shall amend the terms of this transaction as to such Subscriber only so
as to give such Subscriber the benefit of such more favorable terms or conditions. Notwithstanding anything to the contrary herein,
in the event the Company anticipates issuing or selling any Common Stock or Common Stock Equivalents (other than Excluded Securities)
the Company shall provide each Subscriber five (5) business days’ notice of such intended issuance or sale. The failure by
the Subscriber to notify the Company of an adjustment hereunder shall not preclude any rights of the Subscriber hereunder or its
ability to enforce its rights hereunder. The waiver of any adjustment by the Subscriber hereunder shall not be deemed a waiver
of any future adjustments to which such Subscriber may become entitled.  “Excluded Securities” shall mean
any (i) shares of Common Stock or standard options to purchase Common Stock issued to directors, officers or employees of the Company
in their capacity as such pursuant to an Approved Stock Plan, provided that (A) all such issuances (taking into account the shares
of Common Stock issuable upon exercise of such options) after the date hereof pursuant to this clause (i) do not, in the aggregate,
exceed more than 15% of the Common Stock issued and outstanding immediately prior to the Closing Date and (B) the exercise price
of any such options is not lowered after issuance by subsequent amendment thereof, none of such options are amended subsequent
to issuance to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are subsequent
to issuance otherwise materially changed in any manner that adversely affects any of the Subscribers; (ii) shares of Common Stock
issued upon the conversion or exercise of Convertible Securities or contractual agreements (other than options to purchase Common
Stock or other equity incentive awards issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior
to the date hereof, provided that the conversion price of any such Convertible Securities (other than options to purchase Common
Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered by subsequent amendment, none
of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) are subsequently amended to increase the number of shares issuable thereunder and none of
the terms or conditions of any such Convertible Securities (other than options to purchase Common Stock issued pursuant to an Approved
Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the
Subscribers; and (iii) the shares of Common Stock issuable in connection with a strategic merger, acquisition, consolidation, purchase
of substantially all of the securities or assets of a corporation or other entity or in connection with a strategic licenses agreement
and/or other partnering arrangements provided that that (A) the primary purpose of such issuance is not to raise capital as determined
in good faith by the Company, (B) the purchaser or acquirer of such shares of Common Stock in such issuance solely consists of
either (1) the actual participants in such strategic alliance or strategic partnership or financing transactions reasonably related
thereto, (2) the actual owners of such assets or securities acquired in such merger or acquisition or (3) the stockholders, partners
or members of the foregoing Persons, and (C) the number or amount (as the case may be) of such shares of Common Stock issued to
such Person by the Company shall not be disproportionate to such Person’s actual participation in such strategic alliance
or strategic partnership or ownership of such assets or securities to be acquired by the Company (as applicable). “Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to
or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be
issued to any employee, officer or director for services provided to the Company in their capacity as such. “Convertible
Securities” shall mean any stock or other security (other than Options) that is at any time and under any circumstances,
directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire,
any shares of Common Stock. “Options” means any rights, warrants or options to subscribe for or purchase shares
of Common Stock or Convertible Securities. “Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or
agency thereof.

 

(e)          Certificate
as to Adjustments. In each case of any adjustment or readjustment in the Notes, the Company, at its expense, will promptly
cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the
terms hereof and the Note and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company will forthwith mail a copy of each such certificate to the Subscriber.
To the extent any such certificate contains material non-public information, the Company shall, no later than the first Business
Day after the date of delivery of such certificate to the Subscriber, include such material non-public information in a Current

 

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Report on Form 8-K filed
with the SEC. From and after the filing of such Form 8-K, the Company shall have disclosed all material non-public information
(if any) delivered to the Subscriber by the Company or any of its Subsidiaries, or any of their respective officers, directors,
employees or agents in connection with the transactions described in such certificate.

 

(f) Right of Participation.
Until eighteen (18) months following the Final Closing Date, the Subscribers hereunder shall be given not less than five (5) days
prior written notice of any proposed sale by the Company of its Common Stock, Convertible Securities or other securities or equity
linked debt obligations (“Other Offering”), except in connection with the issuance of any Excluded Securities.
If Subscribers elect to exercise their rights pursuant to this Section 2(f), the Subscribers shall have the right during the five
(5) days following receipt of the notice, to purchase in the aggregate up to all of such offered Common Stock, Convertible
Securities, debt or other securities in accordance with the terms and conditions set forth in the notice of sale, relative to each
other in proportion to the principal amount of Notes issued to them as of the Final Closing Date. Subscribers who participate in
such Other Offering shall be entitled at their option to purchase, in proportion to each other, the amount of such Other Offering
that could have been purchased by Subscribers who do not exercise their rights hereunder until up to the entire Other Offering
is purchased by Subscribers. In the event such terms and conditions are modified during the notice period, Subscribers shall be
given prompt notice of such modification and shall have the right during the five (5) days following the notice of modification
to exercise such right.

 

3.           THE
SUBSCRIBER’s Representations, Warranties AND cOVENANTS

 

Each Subscriber, severally
and not jointly, hereby acknowledges, agrees with and represents, warrants and covenants to the Company, as follows:

 

(a)          The
Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized,
if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber, except as may be limited
by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement
of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or law).

 

(b)          The
Subscriber acknowledges its understanding that the Offering and sale of the Securities is intended to be exempt from registration
under the Securities Act, by virtue of Section 4(a)(2) of the Securities Act and the provisions of Regulation D promulgated thereunder
(“Regulation D”). In furtherance thereof, the Subscriber represents and warrants to the Company and its affiliates
as follows:

 

(i)          The
Subscriber realizes that the basis for the exemption from registration may not be available if, notwithstanding the Subscriber’s
representations contained herein, the Subscriber is merely acquiring the Securities for a fixed or determinable period in the future,
or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intention.

 

(ii)         The
Subscriber realizes that the basis for exemption would not be available if the Offering is part of a plan or scheme to evade registration
provisions of the Securities Act or any applicable state or federal securities laws, except sales pursuant to a registration statement
or sales that are exempted under the Securities Act.

 

(iii)        The
Subscriber is acquiring the Securities solely for the Subscriber’s own beneficial account, for investment purposes, and not
with a view towards, or resale in connection with, any distribution of the Securities.

 

(iv)        The
Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for providing
for its current needs and contingencies, and has no need for liquidity with respect to an investment in the Company.

 

(v)         The
Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any, acting in advisory
capacity to Subscriber in connection with this Offering, (collectively, the “Advisors”) has such knowledge and
experience in financial and business matters as to be capable of

 

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evaluating the merits and risks of
a prospective investment in the Securities. If other than an individual, the Subscriber also represents it has not been organized
solely for the purpose of acquiring the Securities.

 

(vi)        The
Subscriber (together with its Advisors, if any) has received all documents requested by the Subscriber, if any, and has carefully
reviewed them and understands the information contained therein, prior to the execution of this Agreement.

 

(c)          The
Subscriber is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to the legal, tax,
economic and related considerations involved in this investment. The Subscriber has relied on the advice of, or has consulted with,
only its Advisors. Each Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is annexed to this Agreement)
the specific details of any and all past, present or future relationships, actual or contemplated, between the Advisor and the
Company or any affiliate or sub-agent thereof.

 

(d)          The
Subscriber has carefully considered the potential risks relating to the Company and a purchase of the Securities, and fully understands
that the Securities are a speculative investment that involves a high degree of risk of loss of the Subscriber’s entire investment.
Among other things, the Subscriber has carefully considered each of the risks described under the heading “Risk Factors”
in the Company’s SEC Filings (as defined below).

 

(e)          The
Subscriber will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption therefrom,
and fully understands and agrees that the Subscriber must bear the economic risk of its purchase for an indefinite amount of time
because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of
any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered
under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available.
In particular, the Subscriber is aware that the Securities are “restricted securities,” as such term is defined in
Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless
all of the conditions of Rule 144 are met, including, but not limited to, the current reporting requirement set forth in Rule 144(i)
as a “former shell” company. The Subscriber also understands that the Company is under no obligation to assist the
Subscriber in complying with any exemption from registration under the Securities Act or applicable state securities laws. The
Subscriber understands that any sales or transfers of the Securities are further restricted by state securities laws and regulations
and the provisions of this Agreement.

 

(f)          No
oral or written representations or warranties have been made, or information furnished, to the Subscriber or its Advisors, if any,
by the Company or any of its officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries in connection with the
Offering, other than any representations of the Company contained herein, and in subscribing for the Note the Subscriber is not
relying upon any representations other than those contained herein.

 

(g)          The
Subscriber’s overall commitment to investments that are not readily marketable is not disproportionate to the Subscriber’s
net worth, and an investment in the Securities will not cause such overall commitment to become excessive.

 

(h)          The
Subscriber understands and agrees that the certificates for the Securities shall bear substantially the following legend:

 

“[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT, ACCOMPANIED BY AN OPINION
OF COUNSEL, IN

 

    	- 7 -

    	 

    

 

A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, AS TO THE AVAILABILITY OF RULE 144. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

(i)          The
Subscriber understands and acknowledges that certificates evidencing Securities shall not be required to contain the legend set
forth in Section 3(h) above or any other legend (i) while a registration statement covering the resale of such Securities
is effective under the Securities Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor
is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided
that the Subscriber provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer
under Rule 144 which shall not include an opinion of the Subscriber’s counsel), (iv) in connection with a sale, assignment
or other transfer (other than under Rule 144), provided that the Subscriber provides the Company with an opinion of counsel in
a form and from a firm reasonably acceptable to the Company, (with up to three such opinions, if available from Company counsel,
to be provided at the expense of the Company), to the effect that such sale, assignment or transfer of the Securities may be made
without registration under the applicable requirements of the Securities Act or (v) if such legend is not required under applicable
requirements of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued
by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than three (3) business days following
the delivery by the Subscriber to the Company or the transfer agent (with notice to the Company) of a legended certificate representing
such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance
and/or transfer, if applicable), together with any other deliveries from the Subscriber as may be required above in this Section 3(i),
as directed by the Subscriber, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated
Securities Transfer Program and such Securities are shares of Common Stock issuable upon conversion of the Note, credit the aggregate
number of shares of Common Stock to which the Subscriber shall be entitled to the Subscriber’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating
in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Subscriber, a
certificate representing such Securities that is free from all restrictive and other legends, registered in the name of the Subscriber
or its designee. The Company shall be responsible for any transfer agent fees, fees of legal counsel to the Company and/or DTC
fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.

 

(j)          Neither
the SEC nor any state securities commission has approved the Securities or passed upon or endorsed the merits of the Offering.
There is no government or other insurance covering any of the Securities.

 

(k)          The
Subscriber and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the Offering and the business, financial condition, results of operations and
prospects of the Company, and all such questions have been answered to the full satisfaction of the Subscriber and its Advisors,
if any.

 

(l)          (i)          In
making the decision to invest in the Securities the Subscriber has relied solely upon the information provided by the Company
in the Transaction Documents. To the extent necessary, the Subscriber has retained, at its own expense, and relied upon appropriate
professional advice regarding the investment, tax and legal merits and consequences of this Agreement and the purchase of the
Securities hereunder. The Subscriber disclaims reliance on any statements made or information provided by any person or entity
in the course of Subscriber’s consideration of an investment in the Securities other than the Transaction Documents. 

 

(ii)         The
Subscriber represents and warrants that: (i) the Subscriber was contacted regarding the sale of the Securities by the Company (or
an authorized agent or representative thereof) with whom the Subscriber had a prior substantial pre-existing relationship and (ii)
no Securities were offered or sold to it by means of any form of general solicitation or general advertising, and in connection
therewith, the Subscriber did not (A) receive or review any advertisement, article, notice or other communication published in
a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit, or generally available;
or (B) attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general
advertising; or (C) observe any website or filing of the Company with the SEC in which any offering of securities by the Company
was described and as a result learned of any offering of securities by the Company.

 

    	- 8 -

    	 

    

 

(m)          The
Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or
the like relating to this Agreement or the transactions contemplated hereby.

 

(n)           The
Subscriber is not relying on the Company or any of its employees, agents, or advisors with respect to the legal, tax, economic
and related considerations of an investment in the Securities, and the Subscriber has relied on the advice of, or has consulted
with, only its own Advisors.

 

(o)          The Subscriber
acknowledges that any estimates or forward-looking statements or projections furnished by the Company to the Subscriber were prepared
by the management of the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements
cannot be guaranteed by the Company or its management and should not be relied upon.

 

(p)          No
oral or written representations have been made, or oral or written information furnished, to the Subscriber or its Advisors, if
any, in connection with the Offering that are in any way inconsistent with the information contained herein.

 

(q)          (For
ERISA plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed
of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan
assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification
of plan assets and impose other fiduciary responsibilities. The Subscriber or Plan fiduciary (i) is responsible for the decision
to invest in the Company; (ii) is independent of the Company and any of its affiliates; (iii) is qualified to make such investment
decision; and (iv) in making such decision, the Subscriber or Plan fiduciary has not relied primarily on any advice or recommendation
of the Company or any of its affiliates.

 

(r)          The
Subscriber is an “Accredited Investor” as defined in Rule 501(a) under the Securities Act. In general, an “Accredited
Investor” is deemed to be an institution with assets in excess of $5,000,000 or individuals with a net worth in excess of
$1,000,000 (excluding such person’s residence) or annual income exceeding $200,000 or $300,000 jointly with his or her spouse.

 

(s)          The
Subscriber, either alone or together with its representatives, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the Offering, and has so evaluated the merits and risks
of such investment. The Subscriber has not authorized any person or entity to act as its Purchaser Representative (as that term
is defined in Regulation D of the General Rules and Regulations under the Securities Act) in connection with the Offering. The
Subscriber is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete
loss of such investment.

 

(t)          The
Subscriber has reviewed, or had the opportunity to review, all of the SEC Filings (as defined below) and all “Risk Factors”
and “Forward Looking Statements” disclaimers contained therein. In addition, the Subscriber has reviewed and acknowledges
it has such knowledge, sophistication and experience in securities matters.

 

4.           THE
COMPANY’S Representations, Warranties and Covenants

 

The Company hereby acknowledges,
agrees with and represents, warrants and covenants to each Subscriber as of the date hereof and as of the Closing Date, as follows:

 

(a) Organization and
Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of its state
of incorporation. The Company is duly qualified to do business, and is in good standing in the states required due to (a) the ownership
or lease of real or personal property for use in the operation of the Company's business or (b) the nature of the business conducted
by the Company. The Company has all requisite power, right and authority to own, operate and lease its properties and assets, to
carry on its business as now conducted, to execute, deliver and perform its obligations under this Agreement and the other Transaction
Documents to which it is a party, and to carry out the transactions contemplated hereby and thereby. All actions on the part of
the Company and its officers and directors necessary for the authorization, execution, delivery and performance of this Agreement

 

    	- 9 -

    	 

    

 

and the other Transaction Documents, the consummation
of the transactions contemplated hereby and thereby, and the performance of all of the Company's obligations under this Agreement
and the other Transaction Documents have been taken or will be taken prior to the Closing. This Agreement has been, and the other
Transaction Documents to which the Company is a party on the Closing will be, duly executed and delivered by the Company, and this
Agreement is, and each of the other Transaction Documents to which it is a party on the Closing will be, a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights
of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or law).

 

(b)          Issuance
of Securities. The Securities to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance
with the terms of this Agreement and the applicable Transaction Documents, will be duly and validly issued and, when issued, will
be fully paid and non-assessable.

 

(c)          Authorization;
Enforcement. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company,
and the consummation of the transactions contemplated hereby and thereby, will not (a) constitute a violation (with or without
the giving of notice or lapse of time, or both) of any provision of any law or any judgment, decree, order, regulation or rule
of any court, agency or other governmental authority applicable to the Company, (b) require any consent, approval or authorization
of, or declaration, filing or registration with, any person, (c) result in a default (with or without the giving of notice or lapse
of time, or both) under, acceleration or termination of, or the creation in any party of the right to accelerate, terminate, modify
or cancel, any agreement, lease, note or other restriction, encumbrance, obligation or liability to which the Company is a party
or by which it is bound or to which any assets of the Company are subject, (d) result in the creation of any lien or encumbrance
upon the assets of the Company, or upon any shares of Common Stock, preferred stock or other securities of the Company, (e) conflict
with or result in a breach of or constitute a default under any provision of the articles of incorporation or bylaws of the Company,
or (f) invalidate or adversely affect any permit, license, authorization or status used in the conduct of the business of the Company.

 

(d)          SEC
Filings. The Company is subject to, and in full compliance with, the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). The Company has made available to each Subscriber through
the EDGAR system true and complete copies of the Company’s filings for the prior two full fiscal years plus any interim period
(collectively, the “SEC Filings”), and all such SEC Filings are incorporated herein by reference. For the prior
two fiscal years plus any interim period, the SEC Filings, when they were filed with the SEC (or, if any amendment with respect
to any such document was filed, when such amendment was filed), complied in all material respects with the applicable requirements
of the Exchange Act and the rules and regulations thereunder and did not, as of such date, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. All reports and statements required to be filed by the Company
under the Exchange Act have been filed, together with all exhibits required to be filed therewith. The Company and each of its
direct and indirect subsidiaries, if any (collectively, the “Subsidiaries”), are engaged in all material respects
only in the business described in the SEC Filings, and the SEC Filings contain a complete and accurate description in all material
respects of the business of the Company and the Subsidiaries.

 

(e)          No
Financial Advisor. The Company acknowledges and agrees that each Subscriber is acting solely in the capacity of an arm’s
length purchaser with respect to the Securities and the transactions contemplated hereby. The Company further acknowledges that
Subscriber is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement
and the transactions contemplated hereby and any advice given by any Subscriber or any of its representatives or agents in connection
with this Agreement and the transactions contemplated hereby is merely incidental to such Subscriber’s purchase of the Securities.
The Company further represents to each Subscriber that the Company’s decision to enter into this Agreement has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(f)          Capitalization
and Additional Issuances. The authorized and outstanding capital stock of the Company on a fully diluted basis as of the date
of this Agreement and the Closing Date (not including the Securities) are set forth in the Company’s SEC Filings. Except
as set forth in the Company’s SEC Filings, there are no options, warrants, or rights to subscribe to, securities, rights,
understandings or obligations convertible into or exchangeable for or giving any right to subscribe for any shares of capital stock
or other equity interest of the Company or any of its subsidiaries. The only officer, director, employee and consultant stock option
or stock incentive plan or similar plan currently in effect or contemplated by the Company are described in the Company’s

 

    	- 10 -

    	 

    

 

SEC Filings. There are no outstanding agreements
or preemptive or similar rights affecting the Company's Common Stock.

 

(g)          Private
Placements. Assuming the accuracy of each Subscriber’s representations and warranties set forth in Section 3, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Subscribers as contemplated
hereby.

 

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

 

(i)          Shell
Company Status. The Company is not currently an issuer identified in Rule 144(i)(1) of the Securities Act. The Company is,
and has been for a period of at least 90 days, subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange
Act.

 

(j)          Litigation.
There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, other
Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’ officers or directors
which is outside of the ordinary course of business or individually or in the aggregate material to the Company or any of its Subsidiaries. 
No director, officer or employee of the Company or any of its Subsidiaries has willfully violated 18 U.S.C. §1519 or engaged
in spoliation in reasonable anticipation of litigation.  Without limitation of the foregoing, there has not been, and to the
knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its
Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries.  The SEC has not issued
any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Securities
Act or the Exchange Act. “Governmental Entity” means any nation, state, county, city, town, village, district,
or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or
quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any
court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the
foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any
of the foregoing. “Principal Market” means any of the following markets or exchanges on which the Common Stock
is listed or quoted for trading on the date in question: the NYSE MKT, The NASDAQ Capital Market, The NASDAQ Global Market, The
NASDAQ Global Select Market, the New York Stock Exchange, OTCQX, OTCQB, OTCPK or the OTC Bulletin Board (or any successors to any
of the foregoing).

 

(k)          Employee Relations.
Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. 
The Company believes that its and its Subsidiaries’ relations with their respective employees are good.  The Company
and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment
and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance
would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. “Material
Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including
results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a
whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or (iii) the authority or ability
of the Company or any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents. 

 

(l)          Tax Status.
The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries

 

    	- 11 -

    	 

    

 

know of no basis for any
such claim.  The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined
in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

 

(m)          Indebtedness
and Other Contracts. Except as set forth in the SEC Filings, neither the Company nor any of its Subsidiaries, (i) has any outstanding
Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under
which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse
Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness,
except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or
(iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment
of the Company’s officers, has or is expected to have a Material Adverse Effect.  For purposes of this Agreement: 
(y) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation,
“capital leases” in accordance with generally accepted accounting principles) (other than trade payables entered into
in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds
and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations
so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property
or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the
periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage,
claim, lien, tax, right of first refusal, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A) through (G) above; and (z) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto.

 

(n)          No
Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth in the SEC Filings, no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any
of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof)
or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws
on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly announced, (ii) could have a material adverse effect on any Subscriber’s investment hereunder
or (iii) would reasonably be expected to have a Material Adverse Effect.

 

(o)          No
Additional Agreements. Neither the Company nor any of its Subsidiaries has any agreement or understanding with any Subscriber
with respect to the transactions contemplated by the Transaction Documents other than pursuant to documents substantially identical
to the Transaction Documents.

 

(p)          No
Disqualification Events. To the Company’s knowledge, none of the Company, any of its predecessors, any affiliated issuer,
any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial
owner of 20% or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter
(as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale
(each, an “Issuer Covered Person”) is subject to any of the "Bad Actor" disqualifications described
in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person
is subject to a Disqualification Event.

 

    	- 12 -

    	 

    

  

(q)          General
Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) promulgated under the Securities Act) or
any person acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means
of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio;
and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.

 

5.          OTHER
AGREEMENTS OF THE PARTIES

 

(a)          Furnishing
of Information. As long as any Subscriber owns Securities, the Company covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant
to the Exchange Act. As long as any Subscriber owns Securities, if the Company is not required to file reports pursuant to the
Exchange Act, it will prepare and furnish to the Subscribers and make publicly available in accordance with Rule 144(c) under the
Securities Act such information as is required for the Subscribers to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time
to time to enable such person to sell such Securities without registration under the Securities Act within the limitation of the
exemptions proved by Rule 144 under the Securities Act.

 

(b)          Shareholder
Rights Plan. No claim will be made or enforced by the Company or, to the knowledge of the Company, any other person that any
Subscriber is an “Acquiring Person” under any shareholder rights plan or similar plan or arrangement in effect or hereafter
adopted by the Company, or that any Subscriber could be deemed to trigger the provisions of any such plan or arrangement, by virtue
of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Subscribers.

 

(c)          Securities
Laws Disclosure; Publicity. The Company shall within the time frame proscribed by the Exchange Act, file a Current Report on
Form 8-K with the SEC, including the Transaction Documents as exhibits thereto (the “8-K Filing”). From and
after the filing of the 8-K Filing, the Company shall have publicly disclosed all material, non-public information delivered to
any of the Subscribers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or
agents. The Company and each Subscriber shall consult with each other in issuing any press releases with respect to the transactions
contemplated hereby, and no Subscriber shall issue any such press release or otherwise make any such public statement without the
prior consent of the Company, which consent shall not unreasonably be withheld. Notwithstanding the foregoing, the Company shall
not publicly disclose the name of any Subscriber, or include the name of any Subscriber in any filing with the SEC or any regulatory
agency, without the prior written consent of such Subscriber, except to the extent such disclosure is required by law in which
case the Company shall provide the Subscribers with prior notice of such disclosure or in connection with the Registration Rights
described in Section 7 herein.

 

(d)          Integration.
The Company shall not, and shall use its best efforts to ensure that no affiliate of the Company shall, after the date hereof,
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security that would be integrated with the
offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities
to the Subscribers.

 

(e)          Reservation
of Securities. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to
the Transaction Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents.
In the event that at any time the then authorized shares of Common Stock are insufficient for the Company to satisfy its obligations
in full under the Transaction Documents, the Company shall promptly take such actions as may be required to increase the number
of authorized shares.

 

(f)          Use
of Proceeds. The Company anticipates using the gross proceeds from the Offering in accordance with Schedule I attached
hereto.

 

(g)          Quotation.
As long as any Subscriber owns Securities, the Company shall use its best efforts to maintain eligibility for the Company’s
Common Stock on the OTCBB, OTCQB or a national securities exchange.         

 

    	- 13 -

    	 

    

 

(h)          
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Subscriber
or its agents or counsel with any information that the Company believes constitutes material non-public information, and each Subscriber
agrees, and shall direct its agents and counsel not to, request any material non-public information from the Company or any Person
acting on its behalf, unless prior thereto such Subscriber shall have executed a written agreement with the Company regarding the
confidentiality and use of such information. The Company understands and confirms that each Subscriber shall be relying on the
foregoing covenant in effecting transactions in securities of the Company. In addition, effective upon the filing of the 8-K Filing,
the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written
or oral, between the Company and any of its Subsidiaries or any of their respective officers, directors, affiliates, employees
or agents, on the one hand, and the Subscriber or any of its affiliates on the other hand, shall terminate.

 

(i)          Accounts
and Records; Inspections. (i) The Company shall keep true records and books of account in which full, true and correct entries
will be made of all dealings or transactions in relation to the business and affairs of the Company and its subsidiaries in accordance
with GAAP applied on a consistent basis;

 

(ii)         The
Company shall permit each holder of any Securities or any of such holder’s officers, employees or representatives during
regular business hours of the Company, upon reasonable notice and as often as such holder may reasonably request, to visit and
inspect the offices and properties of the Company and its subsidiaries and to make extracts or copies of the books, accounts and
records of the Company or its subsidiaries at such holder’s expense; and

 

(iii)        Nothing
contained in this Section shall be construed to limit any rights which a holder of any Securities may otherwise have with respect
to the books and records of the Company and its subsidiaries, to inspect its properties or to discuss its affairs, finances and
accounts.

 

(j)          DTC Eligibility.
For as long as any Subscriber owns Securities, the Company shall use its best efforts to maintain full eligibility of the Company’s
Common Stock for electronic clearance and settlement services through the Depository Trust Company, although the Subscriber acknowledges
that the Company does not currently have DTC FAST eligibility and such lack of DTC FAST eligibility shall not constitute a default
under this Agreement, the Note or any other Transaction Document. The Company covenants and agrees to use its reasonable best efforts
to cure its lack of DTC FAST eligibility within ninety (90) days of the Final Closing Date. For the avoidance of doubt, the failure
to submit or resubmit an application for DTC FAST eligibility within ninety (90) days of the Final Closing Date or the failure
by the Company to use its reasonable best efforts in connection therewith shall be considered an Event of Default under this Agreement
and the Transaction Documents.

 

(k)          Indemnification.
The Company will indemnify and hold harmless each Subscriber and, where applicable, its directors, officers, employees, agents,
advisors and shareholders (each, an “Indemnitee”, from and against any and all loss, liability, claim, damage
and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating,
preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened)
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to
(i) any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in any of the Transaction
Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction
Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including
for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee
that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents,
(B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of
the Securities, or (C) the status of such Subscriber or holder of the Securities either as an investor in the Company pursuant
to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as
a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 

    	- 14 -

    	 

    

 

(l)          Closings.
The initial closing shall be referred to as the “Initial Closing” and may be held upon receipt and acceptance
of subscriptions prior to November 14, 2014. The date of the Initial Closing is sometimes referred to as the “Initial
Closing Date.” Subsequent closings (each a “Subsequent Closing”) will be held until the earlier to
occur of: (i) the date on which the entire Offering has been subscribed for and accepted by the Company, (ii) the date the Company
determines to terminate the Offering and (iii) December 15, 2015. The Offering may be extended up to December 30, 2015 (the “Final
Closing” and such date of the Final Closing, the “Final Closing Date”), without additional notice
to Subscribers. Officers, directors and affiliates of the Company, and the placement agent, if any, may purchase securities in
the Offering or otherwise receive securities in connection with the conversion of outstanding debt

 

6.           CONDITIONS
TO ACCEPTANCE OF SUBSCRIPTION

 

(a) The Closing of the
sale of the Notes is conditioned upon satisfaction of the following conditions precedent on or before the Closing Date:

 

(i)          As
of the Closing, no legal action, suit or proceeding shall be pending against the Company that seeks to restrain or prohibit the
transactions contemplated by this Agreement.

 

(ii)         The
representations and warranties of the Company and the Subscribers contained in this Agreement shall have been true and correct
in all material respects on the date of this Agreement (except whether such representations are qualified by material or material
adverse effect, which shall be true and correct in all respects) and shall be true and correct as of the Closing as if made on
the Closing Date and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and
conditions required to be performed, satisfied or complied with by the Company in connection with the consummation of the transactions
contemplated by the Transaction Documents at or prior to the Closing Date and the Company shall deliver a certificate, executed
by its Chief Executive Officer, dated as of the Closing Date, certifying that the foregoing is true.

 

(iii)        The
Company shall deliver to the Subscribers, a certificate from the Company, signed by its Secretary or Assistant Secretary, including
incumbency specimen signatures of any signatory of any Transaction Document of the Company and certifying that the attached copies
of the Company’s Certificate of Incorporation, as amended and Bylaws, as amended, and resolutions of the Board of Directors
of the Company approving this the Offering, are all true, complete and correct and remain in full force and effect.

 

7.           REGISTRATION
RIGHTS

 

The Company shall file
a “resale” registration statement with the SEC covering 125% of the shares of Common Stock issuable upon conversion
of the Notes, so that such shares of Common Stock will be registered under the Securities Act. The Company will maintain the effectiveness
of the “resale” registration statement from the effective date of the registration statement until all Registrable
Securities (as defined in the Registration Rights Agreement) covered by such registration statement have been sold, or may be sold
without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule
144. The Company will use its reasonable best efforts to have such “resale” registration statement filed within sixty
(60) days after the Final Closing Date (the “Filing Deadline”) and declared effective by the SEC as soon as
possible and, in any event, within one hundred and twenty (120) days after the Final Closing Date of the Offering (the “Effectiveness
Deadline”), unless extended by Subscribers in the Offering holding 60% of the principal amount of Notes issued in the
Offering.

 

The Company is obligated
to pay to the Subscribers a fee of 1% per month of the investors’ investment, payable in cash, up to a maximum of six (6%)
percent, on the Filing Deadline and the Effectiveness Deadline if the registration obligations set forth herein have not been met,
and pro- rata for each month, or partial month, in excess of the Filing Deadline and/or the Effectiveness Deadline that the registration
statement has not been declared effective; provided, however, that the Company shall not be obligated to pay any such liquidated
damages if the Company is unable to fulfill its registration obligations as a result of rules, regulations, positions or releases
issued or actions taken by the SEC pursuant to its authority with respect to “Rule 415”, provided the Company registers
at

 

    	- 15 -

    	 

    

  

such time the maximum number of shares of Common
Stock permissible upon consultation with the staff of the SEC.

 

The description of registration rights
is qualified in its entirety by reference to Registration Rights Agreement annexed hereto as Exhibit C.

 

8.           MISCELLANEOUS
PROVISIONS

 

(a)          All
parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue of
the fact that such party’s counsel was or was not the principal draftsman of this Agreement. Each Subscriber and the Company
acknowledge that the firm Sichenzia Ross Friedman Ference, LLP is acting as co-counsel to the Company and has previously represented
certain of the Subscribers. Each of the Company and the undersigned Subscriber consent to sure representation of the Company in
connection with this Offering and the Transaction Documents, and waive any and all conflicts that could arise as a result of any
prior or future representation.

 

(b)          Neither
this Agreement, nor any provisions hereof, shall be waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, modification, discharge or termination is sought.

 

(c)          The
representations, warranties and agreement of each Subscriber and the Company made in this Agreement shall survive the execution
and delivery of this Agreement and the delivery of the Securities.

 

(d)          Any
party may send any notice, request, demand, claim or other communication hereunder to the Subscriber at the address set forth on
the signature page of this Agreement or to the Company at its primary office (including personal delivery, expedited courier, messenger
service, fax, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed
to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to
which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties written
notice in the manner herein set forth.

 

(e)          Except
as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of, the parties to this Agreement
and their heirs, executors, administrators, successors, legal representatives and assigns. If any Subscriber is more than one person
or entity, the obligation of any Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments
contained herein shall be deemed to be made by, and be binding upon, each such person or entity and its heirs, executors, administrators,
successors, legal representatives and assigns. This Agreement and the other Transaction Documents sets forth the entire agreement
and understanding between the parties as to the Offering contemplated hereby and merges and supersedes all prior discussions, agreements
and understandings of any and every nature among them.

 

(f)          The
Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Subscriber.
The Subscriber may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without
the consent of the Company, in which event such assignee shall be deemed to be the Subscriber hereunder with respect to such assigned
rights.

 

(g)          The
Company hereby represents and warrants as of the date hereof and as of the Closing Date that none of the terms offered to any Person
with respect to any offer, sale or subscription of Securities (each a "Subscription Document"), is or will be
more favorable to such Person than those of the Subscriber and this Agreement shall be, unless waived by the Subscriber, without
any further action by the Subscriber or the Company, deemed amended and modified in an economically and legally equivalent manner
such that the Subscriber shall receive the benefit of the more favorable terms contained in such Subscription Document. Notwithstanding
the foregoing, the Company agrees, at its expense, to take such other actions (such as entering into amendments to the Transaction
Documents) as the Subscriber may reasonably request to further effectuate the foregoing.

 

(h)          Except
as otherwise provided herein, this Agreement shall not be changed, modified or amended except in writing signed by both (a) the
Company and (b) Subscribers in the Offering holding 60% of the principal amount of Notes issued in the Offering then held by the
original Subscribers. The Company shall be prohibited from offering any additional consideration to any Subscriber in this Offering
(or such original Subscriber’s

 

    	- 16 -

    	 

    

  

transferee) for the purposes of inducing such
person to change, modify, waive or amend any term of this Agreement or any other Transaction Document without making the same offer
on a pro-rata basis to all other Subscribers (and those transferees) in this Offering allocable to the securities acquired by such
transferee(s).

 

(i)          This
Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts
of law principles.

 

(j)          The
Company and each Subscriber hereby agree that any dispute that may arise between them arising out of or in connection with this
Agreement shall be adjudicated before a court located in the City of New York, Borough of Manhattan, and they hereby submit to
the exclusive jurisdiction of the federal and state courts of the State of New York located in the City of New York, Borough of
Manhattan with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such
court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the sale of the
securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified
mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either party
shall furnish in writing to the other.

 

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

 

(l)          This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

[Signature Pages Follow]

 

    	- 17 -

    	 

    

  

ALL
SUBSCRIBERS MUST COMPLETE THIS PAGE

OPTEX
SYSTEMS HOLDINGS, inc.

 

IN WITNESS WHEREOF, the
Subscriber has executed this Agreement on the ____ day of _____, 2014.

 

	$   	 
	Principal Face Value of Note	 

  

Manner in which Title is to be held (Please Check One):

 

	1.	___	Individual	7.	___	
        Trust/Estate/Pension or Profit sharing Plan

        Date Opened:______________

	2.	___	Joint Tenants with Right of Survivorship	8.	___	
        As a Custodian for

        ________________________________

        Under the Uniform Gift to Minors Act of the State of

        ________________________________

	3.	___	Community Property	9.	___	Married with Separate Property
	4.	___	Tenants in Common	10.	___	Keogh
	5.	___	Corporation/Partnership/ Limited Liability Company	11.	___	Tenants by the Entirety
	6.	___	IRA	 	 	 

 

ALTERNATIVE DISTRIBUTION INFORMATION

 

To direct distribution
to a party other than the registered owner, complete the information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA INVESTMENT.

 

Name of Firm (Bank, Brokerage, Custodian):

 

Account Name:

 

Account Number:

 

Representative Name:

 

Representative Phone Number:

 

Address:

 

City, State, Zip:

 

    	- 18 -

    	 

    

 

IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER
MUST SIGN.

INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE 19.

SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 20.

 

EXECUTION
BY NATURAL PERSONS

 

	 	 	 
	 	Exact Name in Which Title is to be Held	 

 

	 	 	 	 
	Name (Please Print)	 	Name of Additional Purchaser	 
	 	 	 	 
	 	 	 	 
	Residence: Number and Street	 	Address of Additional Purchaser	 
	 	 	 	 
	 	 	 	 
	City, State and Zip Code	 	City, State and Zip Code	 
	 	 	 	 
	 	 	 	 
	Social Security Number	 	Social Security Number	 
	 	 	 	 
	 	 	 	 
	Telephone Number	 	Telephone Number	 
	 	 	 	 
	 	 	 	 
	Fax Number (if available)	 	Fax Number (if available)	 
	 	 	 	 
	 	 	 	 
	E-Mail (if available)	 	E-Mail (if available)	 
	 	 	 	 
	 	 	 	 
	(Signature)	 	 (Signature of Additional Purchaser)	 

 

 

ACCEPTED this ___ day of _________ 2014, on behalf of the Company.

 

 

	 	By:	 	 
	 	 	Name: 
	 	 	Title:

 

 

[SIGNATURE PAGE FOR NOTE PURCHASE AGREEMENT]

 

    	- 19 -

    	 

    

 

EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY

 

(Corporation, Partnership, LLC, Trust, Etc.)

 

	 	 	 
	 	Name of Entity (Please Print)	 

 

	Date of Incorporation or Organization:	 
	 	 
	State of Principal Office:	 
	 	 
	Federal Taxpayer Identification Number:	 
	 	 
	 	 
	Office Address	 
	 	 
	 	 
	City, State and Zip Code	 
	 	 
	 	 
	Telephone Number	 
	 	 
	 	 
	Fax Number (if available)	 
	 	 
	 	 
	E-Mail (if available)	 

 

	 	By: 	 
	 	 	Name:
	 	 	Title:

 

[seal]

 

	Attest: 	 	 	 
	 	(If Entity is a Corporation)	 	 

 

	 	 
	 	Address

 

 

ACCEPTED this ____ day of __________
2014, on behalf of the Company.

 

 

	 	By: 	 
	 	 	Name: 
	 	 	Title:

 

 

[SIGNATURE PAGE FOR NOTE PURCHASE AGREEMENT]

 

    	- 20 -

    	 

    

  

INVESTOR QUESTIONNAIRE

 

Instructions: Check all boxes below which
correctly describe you.

 

		o	You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), (ii) a savings and loan association or other institution, as defined in Section
3(a)(5)(A) of the Securities Act, whether acting in an individual or fiduciary capacity, (iii) a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iv)
an insurance company as defined in Section 2(13) of the Securities Act, (v) an investment company registered under the Investment
Company Act of 1940, as amended (the “Investment Company Act”), (vi) a business development company as
defined in Section 2(a)(48) of the Investment Company Act, (vii) a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended, (viii)
a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees and you have total assets in excess of $5,000,000, or (ix) an employee benefit
plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and (1)
the decision that you shall subscribe for and purchase shares of common stock or preferred stock, is made by a plan fiduciary,
as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment
adviser, or (2) you have total assets in excess of $5,000,000 and the decision that you shall subscribe for and purchase the Notes
is made solely by persons or entities that are accredited investors, as defined in Rule 501 of Regulation D promulgated under the
Securities Act (“Regulation D”) or (3) you are a self-directed plan and the decision that you shall subscribe
for and purchase the Securities is made solely by persons or entities that are accredited investors.

 

		o	You are a private business development company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940, as amended.

 

		o	You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended (the “Code”), a corporation, Massachusetts or similar business trust or a partnership, in each case
not formed for the specific purpose of making an investment in the Securities and its underlying securities in excess of $5,000,000.

 

		o	You are a director or executive officer of the Company.

 

		o	You are a natural person whose individual net worth, or joint net worth with your spouse, exceeds
$1,000,000 (excluding residence) at the time of your subscription for and purchase of the Securities.

 

		o	You are a natural person who had an individual income in excess of $200,000 in each of the two
most recent years or joint income with your spouse in excess of $300,000 in each of the two most recent years, and who has a reasonable
expectation of reaching the same income level in the current year.

 

		o	You are a trust, with total assets in excess of $5,000,000, not formed for the specific purpose
of acquiring the Securities and whose subscription for and purchase of the Securities is directed by a sophisticated person as
described in Rule 506(b)(2)(ii) of Regulation D.

 

		o	You are an entity in which all of the equity owners are persons or entities described in one of
the preceding paragraphs.

 

    	- 21 -

    	 

    

 

Check all boxes below which correctly describe you.

 

With respect to this investment in the Securities, your:

 

	Investment Objectives: 	p Aggressive Growth 	p Speculation	 
	 	 	 	 
	Risk Tolerance:	o Low Risk 	o Moderate Risk 	p High Risk

 

Are you associated with a FINRA Member Firm? o
Yes o No

 

Your initials (purchaser and
co-purchaser, if applicable) are required for each item below:

 

____  
____ I/We understand that this investment is not guaranteed.

 

____  
____ I/We are aware that this investment is not liquid.

 

____  
____ I/We are sophisticated in financial and business affairs and are able to evaluate the risks and merits of an investment
in this offering.

 

____  
____ I/We confirm that this investment is considered “high risk.” (This type of investment is considered high
risk due to the inherent risks including lack of liquidity and lack of diversification.  Success or failure of private placements such as this is dependent on the corporate issuer of these securities and is outside the control
of the investors. While potential loss is limited to the amount invested, such loss is possible.)

 

The Subscriber hereby represents
and warrants that all of its answers to this Investor Questionnaire are true as of the date of its execution of the Note Purchase
Agreement pursuant to which it purchased the Note.

 

 

	 	 	 
	Name of Purchaser [please print]	 	Name of Co-Purchaser [please print]
	 	 	 
	 	 	 
	Signature of Purchaser (Entities please provide signature of Purchaser’s duly authorized signatory.)	 	Signature of Co-Purchaser
	 	 	 
	 	 	 
	Name of Signatory (Entities only)	 	 
	 	 	 
	 	 	 
	Title of Signatory (Entities only)	 	 

 

 

[SIGNATURE PAGE FOR INVESTOR QUESTIONNAIRE]

OPTEX SYSTEMS HOLDINGS, INC.

 

    	- 22 -

    	 

    

 

Exhibit A

 

Form of Note

 

    	- 23 -

    	 

    

  

Exhibit B

 

Wire Instructions

 

    	- 24 -

    	 

    

  

Exhibit C

 

Registration Rights Agreement

 

    	- 25 -

    	 

    

  

SCHEDULE I

 

Use of Proceeds

Acquisitions and incidental costs

General Working Capital

 

    	- 26 -

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