Document:

Document

Exhibit 10.2

EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of October 26, 2020, (the “Agreement”), is by and between M.D.C. Holdings, Inc. (the “Company”) and David D. Mandarich (the “Executive”).  Together, the Company and the Executive are referred to herein as the “Parties” and individually as a “Party”.
Recitals
A.    The Executive has served the Company in various capacities for over forty years.
B.    The Company desires to assure itself of the services of the Executive for the period provided in this Agreement.
C.    The Executive is willing to continue to serve in the employ of the Company for such period upon the terms and conditions hereinafter provided.
D.    This Agreement replaces in its entirety the Employment Agreement dated August 1, 2008, as amended on March 8, 2012 and as further amended on October 13, 2018, which August 1, 2008 Employment Agreement was a restatement of an Employment Agreement dated February 26, 2003, and before that, a restatement of an Employment Agreement dated October 1, 1997.
Agreement
In consideration of the Executive’s past, present and future performance of services for the Company and in consideration of the mutual promises and agreements hereinafter set forth, the Company and the Executive agree as follows:
1.    Employment and Duties
.  The Company will employ the Executive, and the Executive will be employed by the Company, as the President and Chief Executive Officer of the Company at the Company’s headquarters in Denver, Colorado (or such other location as the Parties may agree) for the term of this Agreement.  In this capacity, the Executive will perform such services, consistent with his office, as from time to time are assigned by the Executive Chairman and Board of Directors of the Company (the “Board of Directors”), devoting such time and effort to manage, operate and direct the activities of the Company and perform all of the functions of the offices held by him, as directed by the Board of Directors from time-to-time; provided, however, that the Executive may also engage in other activities (subject to Section 6(b) below) consistent with his prior practices while employed by the Company, so long as such activities do not adversely affect the performance by the Executive of his duties and responsibilities hereunder.
2.    Term
.  The term of the Executive’s employment hereunder will continue through December 31, 2024 (the “Initial Term”); provided, however, that the term of employment will be automatically extended beyond the Initial Term for successive two year periods (each, an 

“Additional Term”) unless the Company or the Executive give written notice to the other Party hereto of its or his intent to terminate this Agreement at the end of the then current term, such notice to be given at least six months prior to the expiration of the Initial Term or any extension thereof (the Initial Term and any and all Additional Terms are hereinafter collectively referred to as the “Employment Term”).
3.    Compensation and Benefits
. 
(a)    Base Salary
.  During each calendar year of the Employment Term, the Company will pay the Executive a base salary of not less than $830,000 per year (the “Base Salary”), payable in accordance with the Company’s standard payroll practices less applicable deductions and withholdings.  Not less frequently than annually, the Executive will be eligible for periodic increases in Base Salary under the Company’s normal policies and procedures for executive salary increases, which currently provide for annual reviews of executive salaries.  The Executive’s Base Salary for any year may not be reduced below the Executive’s Base Salary for the prior year without the consent of both Parties.
(b)    Annual Incentive Compensation
.  The Executive will continue to participate in the Company’s Executive Officer Performance-Based Compensation Plan as it may be amended, and any successor or supplementary incentive compensation plans established by the Company (the “Performance Plans”).  Notwithstanding the foregoing, the Board of Directors may grant a special bonus at any time.  Annual cash bonuses are deemed “earned” if (1) the Executive is employed on the last day of the year to which the bonus relates and (2) the bonus will be paid no later than March 15th of the year immediately following the year to which the special bonus relates.  The payments the Executive is entitled to receive under the Performance Plans and this Section 3(b) are referred to herein as the “Annual Incentive Compensation” for the year to which they are attributable, regardless of the year in which they are paid. To the extent that the benefits provided under this paragraph are taxable to the Executive (or the Executive’s spouse after the Executive’s death or presumed death) after the Termination Date, the Company will invoice the Executive or the Executive’s spouse, as applicable, on a monthly basis for the amount of any tax withholding owed by the Company for such taxable benefits.
(c)    Long-Term Incentive Compensation
.  The Executive will continue to participate in the Company’s Equity Incentive Plan for employees, as it may be amended, and any successor or supplementary compensation and incentive plans or programs established by the Company (the “Equity Plans”).  Notwithstanding the foregoing, the Board of Directors may grant a special long-term incentive compensation award at any time.  Long-term incentive compensation awards are deemed “earned” if (1) the Executive is employed on the last day of the applicable performance period, or (2) the award is otherwise fully vested, and (3) the award will be paid no later than March 15th of 
2

the year immediately following the year in which the applicable performance period expired, or (4) the award will be paid no later than March 15th of the year immediately following the date the award is fully vested.  The payments the Executive is entitled to receive under the Equity Plans and this Section 3(c) are referred to herein as “Long-Term Incentive Compensation”.  In the event of a Retirement as defined in Section 4(a)(v), death, presumed death, the Executive becoming Totally Disabled as defined in Section 3(f)(i), termination of the Executive’s employment by the Company without Cause (which includes a non-renewal by the Company of this Agreement for each Additional Term) or termination by the employee for Good Reason as defined in Section 4(a)(iv), or in the event of a Change in Control as defined in Section 4(a)(iii) following which the employment of the Executive is terminated by the Company, all outstanding non-vested Awards (as defined in the Equity Plans) will be fully vested, exercisable, and/or payable at the maximum level (in other words, the Awards will be “Auto-Accelerated”) regardless of whether all vesting conditions relating to length of service, attainment of performance goals, or otherwise have been satisfied; provided, however, with respect to PSU awards that are outstanding on a Termination Date (as defined below) caused by the Executive’s Retirement, the number of shares to be issued and delivered to the Executive, if any, for such outstanding PSUs will be determined at the end of the three-year performance period in which such Retirement occurs, as certified by the compensation committee of the Board of Directors, and will be issued and paid to the Executive as though he continued to be employed through the end of the performance period.
(d)    Group Health Coverage
.  The Company will make available and pay for group medical, dental and vision insurance coverage (together, “Group Health Coverage”) for the Executive and the Executive’s spouse during the Employment Term and for the duration of the Executive’s lifetime (or, following the Employment Term, the Company will provide reasonably equivalent Group Health Coverage for the remainder of the Executive’s lifetime and, for the Executive’s spouse, for the remainder of the Executive’s lifetime and for sixty months after the Executive’s death or presumed death).  Such Group Health Coverage following the Employment Term will be deemed to be provided pursuant to the Executive’s and the Executive’s spouse’s timely election for continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) to the fullest extent such COBRA coverage is available to the Executive and the Executive’s spouse, will commence upon the otherwise applicable coverage termination date upon the Executive’s termination of employment and will continue, with such coverage provided monthly, until the Executive’s death or presumed death (and, for the Executive’s spouse for sixty months after the Executive’s death or presumed death).  For each month following the Employment Term, the Company will pay, or fully reimburse the Executive (or the Executive’s spouse, following the Executive’s death or presumed death) for the full cost or premiums for the Group Health Coverage.  The Parties acknowledge that, under current tax law, the Company’s payment or reimbursement for the full cost of the Group Health Coverage premiums will be taxable to the Executive (or to the Executive’s spouse, following the Executive’s death or presumed death); and the Group Health Coverage provided after the Employment Term will be subject to the Code Section 409A restrictions set forth in Section 5(b).
(e)    Expense Reimbursement
3

.  The Company promptly will pay, or reimburse the Executive for, all ordinary and necessary business expenses incurred by him in the performance of his duties hereunder including, but not limited to, expenses and dues associated with the Executive’s involvement with professional, industry, community, civic and charitable organizations, provided that the Executive properly accounts for all such expenses in accordance with Company policy. 
(f)    Other Benefits Plans, Fringe Benefits and Vacations
.  Subject to the terms therein, the Executive is eligible to participate in each of the Company’s employee benefit plans, policies or arrangements and any such plans, policies or arrangements that the Company may maintain or establish during the Employment Term, and receive all fringe benefits and vacations for which his position makes him eligible in accordance with the Company’s policies and the terms and provisions of such plans, policies or arrangements including, but not limited to, the following:
(i)    If the Executive should become disabled (short of becoming “Totally Disabled” as defined below) during the Employment Term, the Company will provide to the Executive (whether through insurance or otherwise) disability benefits in an amount such that the after-tax amount per year received by the Executive is equal to the after-tax amount of the Executive’s Base Salary in effect for the year in which the Executive becomes disabled.  Such disability benefit will be payable monthly, until the earlier of (1) the end of the Executive’s disability prior to his becoming Totally Disabled or (2) the Executive’s termination of employment.  For purposes of this Agreement, the Executive will be “Totally Disabled” if he is physically or mentally incapacitated so as to render him incapable of performing his usual and customary duties for a period expected to last not less than twelve consecutive months during which he receives income replacement benefits from a Company-provided health and accident plan for at least twelve months.  The Executive’s receipt of Social Security disability benefits will be deemed conclusive evidence of Total Disability for purposes of this Agreement; provided, however, that in the absence of his receipt of such Social Security benefits, the Board of Directors may, in its reasonable discretion, but based upon appropriate medical evidence, determine that the Executive is Totally Disabled as provided in Treasury Regulation Section 1.409A3(i)(4).
(ii)    Each calendar year during the Employment Term, but without carryover from year to year (regardless of the Company’s general vacation policy), the Executive is entitled to vacation (“PTO”) of not less than six weeks, excluding standard paid Company holidays.
(iii)    The Company will not terminate or change, in such a way as to affect adversely the Executive’s rights or reduce his benefits under any Company benefit plan, program, policy or arrangement now in effect or which may hereafter be established and in which the Executive is eligible to participate, including, without limitation, the Executive Officer Performance Based Compensation Plan, the Company’s Equity Plans, life insurance, Group Health Coverage and disability plans.
4.    Termination
4

.
(a)    General
.  The Company may terminate the Executive’s employment for any reason or no reason, and the Executive may terminate his employment for any reason or no reason; provided, however, that the Company may terminate the Executive’s employment at any time without Cause.  For purposes of this Agreement, the following terms have the following meanings:
(i)    Accrued Benefits means (1) accrued but unpaid Base Salary through the Termination Date, payable within thirty days following the Termination Date; (2) any Annual Incentive Compensation earned but unpaid with respect to the year preceding the year in which the Termination Date occurs or as otherwise payable in accordance with the terms of the applicable arrangement, payable in accordance with the Performance Plans and Section 3(b); (3) any Long-Term Incentive Compensation earned but unpaid with respect to performance periods that ended in the year preceding the year in which Termination Date occurs or as otherwise payable in accordance with the terms of the applicable arrangement, payable in accordance with Section 3(c); (4) reimbursement for any unreimbursed business expenses incurred through the Termination Date and any expenses incurred through the Termination Date under Section 3(e), payable within thirty days following the Termination Date; (5) accrued but unused PTO under Section 3(f)(ii), payable within thirty days following the Termination Date; and (6) all other payments, benefits, or fringe benefits to which the Executive is entitled as of the Termination Date, payable under the terms of any applicable compensation arrangement or benefit, equity, or fringe benefit plan or program or grant.
(ii)    Cause means (1) the Executive’s willful refusal to perform material duties reasonably required or requested of him hereunder (other than as a result of total or partial incapacity due to physical or mental illness) by the Board of Directors for thirty days after having received written notice of such refusal from the Board of Directors and having failed to commence to perform such duties within such period, (2) the Executive’s commission of material acts of fraud, dishonesty or misrepresentation in the performance of his duties hereunder, (3) any final, non-appealable conviction of the Executive for an act or acts on the Executive’s part constituting a felony under the laws of the United States or any state thereof, or (4) any material uncured breach of the provisions of Sections 6(a) and 6(b) hereof which continues for thirty days after the Executive has received written notice of such breach from the Company.
(iii)    Change in Control has the same meaning as provided in the Company's Equity Plans.
(iv)    Good Reason means (1) a material diminution or change, adverse to the Executive, in the Executive’s positions, titles, status, rank, nature of responsibilities, or authority with the Company, including the Executive’s removal as a member of the Board of Directors or if the Executive is not nominated for re-election by the Board of Directors, (2) the Executive having to report to anyone other than the Board of Directors, (3) a decrease in the Executive’s annual Base Salary, Annual Incentive Compensation or Long-Term Incentive 
5

Compensation opportunity, including the Company’s termination of the Performance Plans or the Company’s amendment of the Performance Plans to provide for payments to the Executive in any calendar year which are less than the amount calculated in accordance with Article III of the Performance Plans, as the same may be amended from time to time, without the Executive’s written consent, (4) a material reduction in the aggregate benefits for which the Executive is eligible under the Company’s benefit plans, (5) the Company requiring the Executive to relocate to another place of employment more than fifty miles from his primary residence, or (6) a material breach by the Company of this Agreement or any equity award agreement.
(v)    Retirement means the termination, at the election of the Executive, of the Executive’s employment after the Initial Term, which shall include the non-renewal by the Executive of this Agreement for an Additional Term.  The Executive must provide the Company with ninety days’ written notice to the Company if he intends to terminate employment on account of Retirement.  
(vi)    Termination Date means the date on which the Executive’s employment hereunder terminates in accordance with this Agreement (which, in the case of a notice of non-renewal of the Employment Term in accordance with Section 2 hereof, means the date on which the Employment Term expires).
(vii)    Termination Payment means a single lump sum cash payment equal to the sum of: (1) an amount equal to the aggregate Base Salary earned by the Executive during the thirty-six months prior to such termination and (2) a cash amount equal to two hundred percent (200%) of the Annual Incentive Compensation which the Executive was paid pursuant to Section 3(b) hereof for the applicable performance period prior to that in which such termination occurs (to the extent a portion of the Annual Incentive Compensation is paid in restricted stock, that portion of the Annual Incentive Compensation is included in the calculation and considered in addition to the cash portion in the Termination Payment).  In addition, Termination Payment includes: 
(1)    To the extent permissible under applicable law and under any insurance policy insuring the Company’s Group Health Coverage (if any), the Company will make available and pay for the full cost of Group Health Coverage (through the Group Health Coverage eligibility provisions, insurance riders, or otherwise) for the Executive and his spouse in accordance with Section 3(d).  
(2)    All options, restricted stock and other equity awards and rights granted to the Executive under the Equity Incentive Plans will be Auto-Accelerated.  In furtherance of the foregoing, in the event a Stock Option Agreement or Restricted Stock Unit Agreement does not provide accelerated vesting upon termination of employment, including upon Retirement, the terms of such award are hereby amended so that all existing options and restricted stock units will fully vest upon the Executive’s Termination Date, including his Retirement.  Further, in the event that the fair market value of restricted stock units on the date of full vesting is less than the fair market value of the restricted stock units on the date of award, additional shares of stock will be granted on the date of full vesting so as to equalize the award value to equal the fair market value of the award on the date of grant.
6

(b)    Termination for Cause or Termination by the Executive Without Good Reason
.  In the event that the Executive’s employment hereunder is terminated by the Company for Cause or by the Executive without Good Reason, the Executive will be entitled to receive the Accrued Benefits.
(c)    Termination Without Cause or Termination by the Executive for Good Reason
.  In the event that the Executive’s employment hereunder is terminated by the Company without Cause (which includes a non-renewal by the Company of this Agreement for each Additional Term), or by the Executive for Good Reason, as soon as practicable (but not later than thirty days) after such termination, but in no event (other than as provided in Section 5(b)) later than two-and-one-half months after the end of the calendar year during which the Executive’s employment is terminated, the Executive will receive the Accrued Benefits and the Termination Payment.
(d)    Termination Following a Change in Control
.  In the event that the Executive’s employment hereunder is terminated by the Company within two years following a Change in Control, the Executive will receive the Accrued Benefits and the Termination Payment.  In the event there is a termination pursuant to this Section 4(d) and the Change in Control involves a two-tier tender offer, the Company will pay the Executive the difference between the exercise price of the otherwise unvested options and the price offered in the first tier, or adjust the option terms to provide the Executive with an equivalent value.
(e)    Termination Due to Retirement, Death, Presumed Death or Becoming Totally Disabled
.  In the event that the Executive’s employment hereunder is terminated due to the Executive’s Retirement, death, presumed death or the Executive becoming Totally Disabled, the Executive, or the Executive’s beneficiary or estate, as applicable, will receive the Accrued Benefits and the Termination Payment. 
5.    Other Tax Matters
.
(a)    The Company will withhold all applicable federal, state, and local taxes, FICA (Social Security and Medicare), and workers’ compensation contributions and other amounts as may be required by law with respect to compensation payable to the Executive or the Executive’s spouse pursuant to this Agreement.  In the event the Executive’s spouse receives the Group Health Coverage pursuant to Section 3(d), the Company will withhold FICA (Social Security and Medicare) in the year of the Executive’s death or presumed death, issue a Form W-2, and report the net amount of Company contributions on a Form 1099-MISC.  The Company will 
7

continue to report the full amount of Company contributions that it provides for the Executive’s spouse in each successive calendar year on a Form 1099-MISC.
(b)    Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and applied so that the payment of the benefits set forth herein will either be exempt from, or in the alternative, comply with, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the published guidance thereunder (“Section 409A”).  A termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment that are considered “nonqualified deferred compensation” under Section 409A unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “Termination Date” or like terms will mean “separation from service.”  Notwithstanding any provision of this Agreement to the contrary, if the Executive is a “specified employee” within the meaning of Section 409A on the date of his “separation from service,” any payments or arrangements due upon a termination of the Executive’s employment under any arrangement that constitutes a “nonqualified deferral of compensation” within the meaning of Section 409A and which do not otherwise qualify under the exemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferral exemption or the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), will be delayed and paid or provided on the earlier of (i) the date which is six months after the Executive’s “separation from service” for any reason other than death or presumed death, or (ii) the date of the Executive’s death or presumed death.  
(c)    After his Termination Date, the Executive will have no duties or responsibilities that are inconsistent with having a “separation from service” within the meaning of Section 409A as of the Termination Date and, notwithstanding anything in the Agreement to the contrary, distributions upon termination of employment of nonqualified deferred compensation may only be made upon a “separation from service” as determined under Section 409A and such date will be the Termination Date for purposes of this Agreement.  Each payment under this Agreement or otherwise will be treated as a separate payment for purposes of Section 409A.  In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement which constitutes a “nonqualified deferral of compensation” within the meaning of Section 409A and to the extent an amount is payable within a time period, the time during which such amount is paid will be in the discretion of the Company.
(d)    All reimbursements and in-kind benefits provided under this Agreement will be made or provided in accordance with the requirements of Section 409A.  To the extent that any reimbursements are taxable to the Executive, such reimbursements will be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred.  Reimbursements will not be subject to liquidation or exchange for another benefit and the amount of such reimbursements that the Executive receives in one taxable year will not affect the amount of such reimbursements that the Executive receives in any other taxable year.
8

(e)    If any payment, benefit, or distribution of any type to or for the benefit of the Executive, whether paid or payable, provided or to be provided, or distributed or distributable pursuant to the terms of this Agreement or otherwise (collectively, the “Parachute Payments”) would (as determined by the Company) subject the Executive to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Parachute Payments will be reduced so that the maximum amount of the Parachute Payments (after reduction) will be one dollar less than the amount which would cause the Parachute Payments to be subject to the Excise Tax.  The Company will reduce or eliminate the Parachute Payments by first reducing or eliminating any cash Parachute Payments that do not constitute deferred compensation within the meaning of Section 409A, then by reducing or eliminating any other Parachute Payments that do not constitute deferred compensation within the meaning of Section 409A, then by reducing or eliminating all other Parachute Payments that do constitute deferred compensation within the meaning of Section 409A, beginning with those payments last to be paid, subject to and in accordance with all applicable requirements of Section 409A.
6.    Covenants.
(a)    Confidentiality
.  The Executive agrees that, during the Employment Term and for a period of twelve months beginning on the last day of the Employment Term, he will not divulge, furnish or make accessible to any person, corporation, partnership, trust or other organization or entity (other than the Executive’s legal, tax and other advisors, to the extent they need to know  such confidential information to advise the Executive), any information, trade secrets, technical data or know-how relating to the business, business practices, methods, attorney-client communications, pending or contemplated acquisitions or other transactions, products, processes, equipment or any confidential or secret aspect of the business of the Company without the prior written consent of the Company, unless such information has become public knowledge or has become known generally to competitors of the Company through sources other than the Executive.
(b)    Competitive Activity
.  Until the end of the Employment Term, and for a period of twelve months beginning on (1) the last day of the Employment Term or (2) a termination of the Executive’s employment by the Company for Cause, the Executive will not, without the written consent of the Board of Directors, directly or indirectly, knowingly engage or be interested in (as owner, partner, shareholder, employee, director, officer, agent, consultant or otherwise), with or without compensation, any business whose principal activities are in competition with the most important business activities engaged in or contemplated by the Company during the Employment Term and such twelve month period, limited to geographic areas within a fifty mile radius of where the Company does its most important business activities.  The most important business activities presently engaged in or contemplated by the Company include:
    the acquisition and development of residential real estate for owner occupied single family detached housing;
    construction of single family detached homes;
9

    mortgage lending to purchasers of single-family homes sold by the Company; and
    the sale of insurance products to purchasers or owners of single-family homes sold by the Company.
A decision by the Company to enter a market in which the Executive has a pre-existing interest does not constitute competitive activity if, after the Company enters that market, the nature and extent of the Executive’s interest does not substantially change to the detriment of the Company and the Executive has provided the Company with written notice of the existence of the interest.  Further, a conflict of interest does not exist, and the Executive will not have engaged in competitive activity, if the Executive’s interest or situation is permitted under the terms of an agreement with the Company that predates the date of this Agreement, or if an exception has been made by the Board of Directors after full disclosure to and review and approval of the interest, situation or circumstances.  Nothing herein, however, will prohibit the Executive from acquiring or holding not more than ten percent of any class of publicly traded securities of any such business.
(c)    Remedy for Breach
.  The Executive acknowledges that the provisions of this Section 6 are reasonable and necessary for the protection of the Company and that the Company will be irrevocably damaged if such covenants are not specifically enforced.  Accordingly, the Executive agrees that, in addition to any other relief to which the Company may be entitled, the Company will be entitled to seek and obtain injunctive relief (without the requirement of any bond) from a court of competent jurisdiction for the purposes of restraining the Executive from any actual or threatened breach of such covenants.
7.    Indemnification
.  The Parties acknowledge that they are parties to the Indemnification Agreement dated as of March 20, 1987, the terms of which are incorporated herein by reference.
8.    Miscellaneous
.
(a)    Governing Law
.  This Agreement is governed by and construed in accordance with the laws of the State of Delaware applicable to agreements made and to be performed in that State.
(b)    Notices
.  Any notice, consent or other communication made or given in connection with this Agreement must be in writing and will be deemed to have been duly given when delivered by personally, when transmitted by facsimile transmission, one day after being deposited with Federal Express or other nationally recognized overnight delivery service or when 
10

mailed United States registered or certified mail, return receipt requested, to the parties at the following addresses or at such other address as a Party may specify by notice to the other.
To the Executive:

David D. Mandarich
c/o M.D.C. Holdings, Inc.
4350 South Monaco Street
Suite 500
Denver, CO 80237

To the Company:

M.D.C. Holdings, Inc.
4350 South Monaco Street
Suite 500
Denver, CO 80237
Attention: Rebecca Givens, General Counsel

(c)    Entire Agreement; Construction; Amendment
.  This Agreement supersedes any and all existing agreements between the Parties or any of its affiliates or subsidiaries relating to the terms of his employment.  The Parties acknowledge that options, restricted stock and performance share units have been granted to the Executive under the Equity Plans.  Accordingly, to the extent the provisions of this Agreement may conflict with the Equity Plans, the Equity Plans control.  To the extent the provisions of this Agreement may conflict with provisions in any award agreement or award certificate between the Executive and the Company, or conflict with the Equity Plans’ provisions addressing vesting rights, the provisions of this Agreement control.  This Agreement may not be amended except by a written agreement signed by the Parties.
(d)    Inconsistencies
.  In the event of any inconsistency between any provision of this Agreement and any provision of any Company compensation arrangement (other than equity award plans approved by the Company’s shareholders and award grant documents under such plans implementing the specified terms of such equity award plans), or any provisions of the Indemnification Agreement, which are incorporated herein by reference, the provisions of this Agreement will control, unless the Parties otherwise agree in a writing that expressly refers to the provision of this Agreement that is being waived.
(e)    Waiver
.  The failure of a Party to insist upon strict adherence to any term of this Agreement on any occasion will not be considered a waiver thereof or deprive that Party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
11

(f)    Assignment
.  Except as otherwise provided in this paragraph, this Agreement will inure to the benefit of and be binding upon the Parties and their respective heirs, representatives, successors and assigns.  This Agreement is not assignable by the Executive, and is assignable by the Company only to any corporation or other entity resulting from the reorganization, merger or consolidation of the Company with any other corporation or entity or any corporation or entity to which the Company may sell all or substantially all of its assets, and it must be so assigned by the Company to, and accepted as binding upon it, by such other corporation or entity in connection with any such reorganization, merger, consolidation or sale.
(g)    Litigation Costs
.  In addition to any other relief awarded a Party in any proceeding to enforce any provision of this Agreement, the Parties agree that the decision rendered will award the Party prevailing in such action all attorneys’ fees, disbursements and other costs incurred by the prevailing Party in such case.  Further, notwithstanding the Indemnification Agreement dated as of March 20, 1987, which is incorporated herein by reference, the Employee’s litigation costs will in all events (whether Employee is a prevailing party or not) include expenses including, but not limited to, attorneys’ fees, accountants’ fees, fees of experts and all other fees, costs, expenses, and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any Claim to any Identifiable Event (as such terms are defined in the Indemnification Agreement) (all such litigation costs and expenses referred to as “Expenses”). For all purposes, Expenses include the Company advancing (within two business days of such request) any and all Expenses to the Employee.
(h)    No Mitigation/No Offset
.  The Executive is under no obligation to seek other employment or to otherwise mitigate the obligations of the Company under this Agreement, and there will be no offset against amounts or benefits due to the Executive under this Agreement or otherwise on account of any claim (other than any preexisting debts then due in accordance with their terms) the Company may have against him or any remuneration or other benefit earned or received by the Executive after such termination.
(i)    Severability
.  It is the desire and intent of the Parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought.  Accordingly, if any provision of this Agreement is invalid or unenforceable, the balance of the Agreement will remain in effect, and if any provision is inapplicable to any person or circumstance, it will nevertheless remain applicable to all other persons and circumstances.  Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited, or unenforceable in such jurisdiction, it will, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions 
12

of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
(j)    Counterparts
.  This Agreement may be executed in counterparts, each of which will be deemed an original, but all such counterparts together constitute one and the same instrument.  Signatures delivered by facsimile or PDF are effective for all purposes.
(k)    Headings
.  The headings of the Sections and subsections contained in this Agreement are for convenience only and are deemed to control or affect the meaning or construction of any provision of this Agreement.

13

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as evidence of their adoption as of the dates set forth above.
M.D.C. HOLDINGS, INC.

By:       /s/    Robert N. Martin                
Name:  Robert N. Martin 
Title:  Senior Vice President and Chief Financial Officer

Date: October 27, 2020

EXECUTIVE

By:       /s/    David D. Mandarich                
Name:  David D. Mandarich

Date: October 27, 2020

14Exhibit
4.1

 

SECURITIES
PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of October 27, 2020, between Ring Energy, Inc., a Nevada corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in
this Agreement.

 

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

 

ARTICLE I.

DEFINITIONS

 

1.1       
Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following
terms have the meanings set forth in this Section 1.1:

 

“Acquiring Person”
shall have the meaning ascribed to such term in Section 4.5.

 

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

 

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

 

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

 

“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification,
commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
 “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations
at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers)
of commercial banks in The City of New York are generally are open for use by customers on such day.

 

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

 

     

     

    

 

“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii)
the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than
the second (2nd) Trading Day following the date hereof.

 

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

 

“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

“Company
Counsel” means Baker & Hostetler LLP, with offices located at 811 Main Street, Suite 1100, Houston, TX 77002.

 

“Company
Nevada Counsel” means Dickinson Wright PLLC, with offices located at 100 West Liberty, Suite 940, Reno, Nevada 8950.

 

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

 

“Common
Units” means each Common Unit consisting of (a) one Share, (b) a Purchase Warrant to purchase one Purchase Warrant Share.

 

“Common
Unit Purchase Price” equals $0.70 per each Common Unit, subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

“Common
Unit Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Common Units hereunder
as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Common Unit
Subscription Amount,” in United States dollars and in immediately available funds.

 

“Disclosure
Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time)
and before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following
the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is signed
between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading Day, no later than 9:01 a.m. (New York
City time) on the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent.

 

     

     

    

 

“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s).

 

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

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock, options or other equity awards to employees, officers, directors
or consultants of the Company pursuant to any equity or option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose
for services rendered to the Company; provided, that the issuance of any such securities to consultants must be issued as
 “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing
of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein, (b) securities upon
the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities
have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities or to extend the term of such securities (in each case, other than in connection
with stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, reverse stock splits or
other similar events occurring after the date hereof); provided, further, that it is understood that such securities will not be
deemed to have been amended if the terms of such securities are automatically changed in accordance with their terms as such terms
exist on the date of this Agreement, such as a decrease in their exercise price due to an anti-dilution provision, (c) securities
issued in a concurrent underwritten public offering for gross proceeds of up to approximately $17,600,000 (inclusive of exercise
of the underwriters’ over-allotment option), entered into on the date hereof and (d) securities issued pursuant to acquisitions
or strategic transactions approved by a majority of the disinterested directors of the Company; provided, that such securities
are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit
the filing of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein, and provided
that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries,
an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

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

 

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

 

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

 

     

     

    

 

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

 

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

 

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

 

“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(n).

 

“Offering”
means the offering of the securities contemplated by this Agreement.

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Placement
Agent” means A.G.P./Alliance Global Partners.

 

“Pre-Funded
Units” means each Pre-Funded Unit consisting of (a) one Pre-Funded Warrant to initially purchase one Pre-Funded Warrant
Share, and (b) a Purchase Warrant to purchase one Purchase Warrant Share.

 

“Pre-Funded
Unit Purchase Price” equals $0.699 per each Pre-Funded Unit, subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

“Pre-Funded
Unit Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Pre-Funded Units purchased
hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Pre-Funded
Unit Subscription Amount,” in United States dollars and in immediately available funds.

 

“Pre-Funded
Warrants” means, collectively, the Pre-Funded Common Stock purchase warrants delivered to the Purchasers at the Closing
in accordance with Section 2.2(a) hereof, which Pre-Funded Warrants shall be exercisable immediately and shall expire when exercised
in full, in the form of Exhibit A-2 attached hereto.

 

“Pre-Funded
Warrant Shares” means the Shares issuable upon exercise of the Pre-Funded Warrants

 

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

 

“Prospectus”
means the prospectus included in the Registration Statement at the time the Registration Statement first became effective.

 

     

     

    

 

“Prospectus
Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with
the Commission and delivered by the Company to each Purchaser at the Closing.

 

“Purchase
Warrants” means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance
with Section 2.2(a) hereof, which Purchase Warrants shall be exercisable for a term of five years commencing on the Closing Date,
in the form of Exhibit A-1 attached hereto.

 

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

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8.

 

“Registration
Statement” means the effective registration statement with Commission file No. 333-237988 which registers the sale of
the Shares, the Warrants and the Warrant Shares to the Purchasers.

 

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

 

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

 

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

 

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

 

“Securities”
means the Shares, the Warrants and the Warrant Shares.

 

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

 

“Shares”
means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

 

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

 

“Subscription
Amount” means, as to each Purchaser, the sum of the Common Unit Subscription Amount and the Pre-Funded Unit Subscription
Amount.

 

     

     

    

 

“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.11(a).

 

“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.11(b).

 

“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports, and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.

 

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

 

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

 

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

 

“Transfer
Agent” means Standard Transfer Co., with offices located at 440 E 400 S Suite 200, Salt Lake City, Utah 84111, and any
successor transfer agent of the Company.

 

“Warrants”
means, collectively, the Purchase Warrants and the Pre-Funded Warrants.

 

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

 

ARTICLE II.

PURCHASE AND SALE

 

2.1       Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, up to an aggregate of approximately $4,760,000 of Common Units as determined pursuant
to Section 2.2(a); provided, however, that, solely to the extent a Purchaser determines that such Purchaser (together with such
Purchaser’s Affiliates, and any Person acting as a group together with such purchaser or any of such Purchaser’s Affiliates)
would beneficially own in excess of the Beneficial Ownership Limitation, in lieu of purchasing Common Units, such Purchaser may
elect to purchase Pre-Funded Units at the Pre-Funded Unit Purchase Price in lieu of Common Units. The “Beneficial Ownership
Limitation” shall be 4.99% (or, at the election of the Purchaser, 9.99%) of the number of shares of Common Stock outstanding
immediately after giving effect to the issuance of the Securities on the Closing Date. The Company shall deliver to each Purchaser
its respective Shares, Purchase Warrants and/or Pre-Funded Warrants (as applicable to such Purchaser) as determined pursuant to
Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.
Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of
Company Counsel or such other location as the parties shall mutually agree. The Company covenants that, if the Purchaser delivers
a Notice of Exercise (as defined in the Pre-Funded Warrant) no later than 12:00 p.m. (New York City time) on the Closing Date to
exercise any Pre-Funded Warrants between the date hereof and the Closing Date, the Company shall deliver Pre-Funded Warrant Shares
to the Purchaser on the Closing Date in connection with such Notice of Exercise. Unless otherwise directed by the Placement Agent,
settlement of the Shares shall occur via “Delivery Versus Payment” (“DVP”) (i.e., on the Closing
Date, the Company shall issue the Shares registered in the Purchasers’ names and addresses and released by the Transfer Agent
directly to the account(s) at the Placement Agent identified by each Purchaser; upon receipt of such Shares, the Placement Agent
shall promptly electronically deliver such Shares to the applicable Purchaser, and payment therefor shall be made by the Placement
Agent (or its clearing firm) by wire transfer to the Company).

 

     

     

    

 

2.2       Deliveries.

 

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

 

(i)       this
Agreement duly executed by the Company;

 

(ii)       a
legal opinion of Company Counsel, in form and substance reasonably acceptable to the Placement Agent and the Purchasers;

 

(iii)       a
legal opinion of Company Nevada Counsel, in form and substance reasonably acceptable to the Placement Agent and the Purchasers;

 

(iv)       the
Company shall have provided each Purchaser with the Company’s wire instructions, on Company letterhead and executed by the
Chief Executive Officer or Chief Financial Officer;

 

(v)       a
copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver on an expedited basis via
The Depository Trust Company Deposit or Withdrawal at Custodian system Shares equal to such Purchaser’s Common Unit Subscription
Amount divided by the Common Unit Purchase Price, registered in the name of such Purchaser;

 

(vi)       for
each Purchaser of Pre-Funded Units, a Pre-Funded Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to such Purchaser’s Pre-Funded Unit Subscription Amount divided by the Pre-Funded Unit Purchase
Price, with an exercise price equal to $0.001, subject to adjustment therein (such Pre-Funded Warrant shall be delivered in pdf
form on the Closing Date and such Pre-Funded Warrant certificate shall be delivered no later than three Trading Days following
the Closing Date);

 

     

     

    

 

(vii)       such
number of Purchase Warrants registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal
to 100% of such Purchaser’s Shares and Pre-Funded Warrant Shares initially issuable upon exercise of the Pre-Funded Warrants,
with an exercise price equal to $0.80, subject to adjustment therein (such Purchase Warrant shall be delivered in pdf form on the
Closing Date and such Purchase Warrant certificate shall be delivered no later than three Trading Days following the Closing Date);
and

 

(viii)       the
Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

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

 

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

 

(ii)       such
Purchaser’s Subscription Amount, which shall be made available for “Delivery Versus Payment” settlement with
the Company or its designee.

 

2.3       Closing
Conditions.

 

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

 

(i)       the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as
of a specific date therein in which case they shall be accurate as of such date);

 

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

 

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

 

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

 

(i)       the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);

 

     

     

    

 

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

 

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

 

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

 

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

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

     

     

    

 

(b)       Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization (if a good standing concept
exists in such jurisdiction), with the requisite power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of
its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company
and the Subsidiaries is duly qualified to conduct business and is in good standing (if a good standing concept exists in such jurisdiction)
as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could
not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or
(iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

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

 

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

 

     

     

    

 

(e)       Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement,
(iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing
of the Shares and Warrant Shares for trading thereon in the time and manner required thereby, and (iv) such filings as are required
to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f)       Issuance
of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company. The Warrant Shares, when issued and paid for in accordance with the terms of the Warrants (assuming a cash exercise),
will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the
Warrants. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act,
which became effective on May 21, 2020, including the Prospectus, and such amendments and supplements thereto as may have been
required to the date of this Agreement. The Registration Statement is effective under the Securities Act and no stop order preventing
or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued
by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened
by the Commission. The Company, if required by the rules and regulations of the Commission, shall file the Prospectus with the
Commission pursuant to Rule 424(b). At the time the Registration Statement and any amendments thereto became effective, at the
date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform
in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto
was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act
and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company was at the
time of the filing of the Registration Statement eligible to use Form S-3. The Company is eligible to use Form S-3 under the Securities
Act and it meets the transaction requirements with respect thereto for the sale of the Securities in the Offering as set forth
in General Instruction I.B.1 of Form S-3.

 

     

     

    

 

(g)       Capitalization.
The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g), which Schedule 3.1(g)
shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the
date hereof and indicate any securities of the Company with price-based anti-dilution provisions. Except as set forth on Schedule
3.1(g), the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act,
other than pursuant to the exercise of stock options or vesting of restricted stock units under the Company’s stock option
or equity plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans,
pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic
report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale
of the Securities and as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or the capital stock
of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. Except as set
forth on Schedule 3.1(g), the issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue
shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in any right of any holder
to adjust the exercise, conversion, exchange or reset price under any of such securities. Except as set forth on Schedule 3.1(g),
there are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become
bound to redeem a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities
laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for
the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among
any of the Company’s stockholders.

 

     

     

    

 

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

 

(i)       Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected
to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than
(x) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (y) liabilities
not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option or equity plans. The Company does not have pending before the Commission any request
for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event,
liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial
condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation
is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this representation
is made.

 

     

     

    

 

(j)       Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”).
Neither the Company nor any Subsidiary, nor any director or officer thereof, is the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.

 

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

 

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

 

     

     

    

 

(m)Environmental
Laws.The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to
pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or
subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental
Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or
approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect.

 

(n)       Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.

 

(o)       Title
to Assets. The Company and the Subsidiaries have defensible title in fee simple to all real property owned by them and defensible
title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case
free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the
payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the
payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance in all material respects.

 

     

     

    

 

(p)       Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports
and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2)
years from the date of this Agreement, except for such expirations, terminations or abandonments which could not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received, since the date of the latest audited
financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have
a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except
where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(q)       Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at least equal to $10 million. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in
cost.

 

(r)       Transactions
With Affiliates and Employees. None of the officers or directors of the Company or any Subsidiary and, to the knowledge of
the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or
any Subsidiary (other than for services or separation from service as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property
to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000
other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including stock option agreements, restricted stock award agreements or restricted
stock unit award agreements under any stock option or equity plan of the Company.

 

     

     

    

 

(s)       Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance in all material respects with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date,
subject to the limitations and qualifications expressed by the Company’s auditors. Subject to the same limitations and qualifications
referenced above, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures
to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules
and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of
the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange
Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected,
or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

(t)       Certain
Fees. Except as set forth in the Prospectus Supplement, including compensation paid or payable to the Placement Agent in connection
with the placement of the Securities, no brokerage or finder’s fees or commissions are or will be payable by the Company
or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section
3.1(t) that may be due in connection with the transactions contemplated by the Transaction Documents.

 

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

 

(v)       Registration
Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act
of any securities of the Company or any Subsidiary.

 

     

     

    

 

(w)       Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible
for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current
in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such
electronic transfer.

 

(x)       Application
of Takeover Protections. There are no poison pills in effect or contemplated, and there are no anti-takeover provisions under
applicable state law that restrict ownership of capital stock of the Company under ten percent (10%)..

 

(y)       Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed
in the Prospectus Supplement. The Company understands and confirms that the Purchasers will rely on the foregoing representation
in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the
Disclosure Schedules, is true and correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken
as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which they were made and when made,
not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(z)       No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
none of the Company, any of its Affiliates, or any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated.

 

     

     

    

 

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

 

(bb)Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.

 

     

     

    

 

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

 

(dd)Accountants. The
Company’s independent registered public accounting firm is Eide Bailly LLP. To the knowledge and belief of the Company, such
accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with
respect to the financial statements to be included in the Company’s Annual Report on Form 10-K for the fiscal year ending
December 31, 2020.

 

(ee)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby
and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents
and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company
further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents
has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(ff)Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f) and 4.13 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term; (ii) past (prior to the time at which the Placement Agent first contacted such Purchaser about the Offering)
or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price
of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions
to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common
Stock (established prior to the time at which the Placement Agent first contacted such Purchaser about the Offering), and (iv)
each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative”
transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities
at various times during the period that the Securities are outstanding, including, without limitation, during the periods that
the value of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if
any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute
a breach of any of the Transaction Documents.

 

     

     

    

 

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

 

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

 

(ii)       Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(jj)U.S.
Real Property Holding Corporation. To the best of the Company’s knowledge, the Company is not and has never been a U.S.
real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Purchaser’s request.

 

(kk)Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act
of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
 “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or
more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

     

     

    

 

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

 

3.2       Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they
shall be accurate as of such date):

 

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

 

(b)       Understandings
or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation
and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise
in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary
course of its business.

 

     

     

    

 

(c)       Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants, it will be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act.

 

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

 

(e)       Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. 
Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such
Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired. 
Neither the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities
and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser
agrees need not be provided to it.  In connection with the issuance of the Securities to such Purchaser, neither the Placement
Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.

 

(f)       Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting
forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall
only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives,
including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such
Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction).

 

     

     

    

 

The Company acknowledges
and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right
to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt,
nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing
shares in order to effect Short Sales or similar transactions in the future.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1       Warrant
Shares. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover
the issuance or resale of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant
to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or
any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is not otherwise
available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing
that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration
statement is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the
foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance
with applicable federal and state securities laws). The Company shall use best efforts to keep a registration statement (including
the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the term of the Warrants.

 

 

4.2       Furnishing
of Information. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the
Company covenants to use reasonable best efforts to timely file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act, even if the Company
is not then subject to the reporting requirements of the Exchange Act. As long as any Purchaser owns any Shares or Warrants, if
the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Shares or Warrant
Shares, including without limitation, under Rule 144.

 

4.3       Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such subsequent transaction.

 

     

     

    

 

4.4       Securities
Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material terms
of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents required
to be filed as exhibits thereto, with the Commission within the time required by the Exchange Act (the “Form 8-K”).
From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed
all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents.
In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality
or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate. The Company and each Purchaser shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company (other than the press
release described in the first sentence of this Section 4.4), which consent shall not unreasonably be withheld or delayed, except
if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice
of such public statement or communication, or if such disclosure is consistent with the Form 8-K. Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required
by federal securities law in connection with (i) any registration statement contemplated by this Agreement and (ii) the filing
of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations,
in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

4.5       Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

     

     

    

 

4.6       Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably
believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented to the receipt
of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that
each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent
that the Company delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company
hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries,
or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries
or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public
information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant
to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

4.7       Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade
payables and payments on the Company’s credit facility in the ordinary course of the Company’s business and prior practices),
(b) for the redemption of any Common Stock or Common Stock Equivalents, except for the repurchase of equity awards and underlying
shares of Common Stock from employees and consultants whose service with the Company has terminated, (c) for the settlement of
any outstanding litigation, or (d) in violation of FCPA or OFAC regulations.

 

4.8       Indemnification
of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not
an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is solely based upon a material breach of such Purchaser Party’s representations, warranties or covenants under
the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations
by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which is finally judicially
determined to constitute fraud, gross negligence or willful misconduct). If any action shall be brought against any Purchaser Party
in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company
in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable
to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate
in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the
extent that (x) the employment thereof has been specifically authorized by the Company in writing, (y) the Company has failed after
a reasonable period of time to assume such defense and to employ counsel or (z) in such action there is, in the reasonable opinion
of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party,
in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.
The Company will not be liable to any Purchaser Party under this Agreement (1) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (2) to the extent, but
only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities
the Company may be subject to pursuant to law.

 

     

     

    

 

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

 

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

 

4.11       Reserved.

 

     

     

    

 

4.12       Subsequent
Equity Sales.

 

(a)       From
the date hereof until ninety (90) days after the Closing Date, neither the Company nor any Subsidiary shall (i) issue, enter into
any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents
or (ii) file any registration statement or any amendment or supplement thereto (other than the Prospectus Supplement).

 

(b)       Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall
be an Exempt Issuance.

 

4.13       Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect
to the purchase, disposition or voting of Securities or otherwise.

 

4.14       Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.4.  Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company
pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Disclosure Schedules.  Notwithstanding
the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and
agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions
in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in
Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company
to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.4.  Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only
apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement.

 

     

     

    

 

4.15       Exercise
Procedures. The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the
Purchasers in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required
of the Purchasers to exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required
in order to exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance
with the terms, conditions and time periods set forth in the Transaction Documents.

 

ARTICLE V.

MISCELLANEOUS

 

5.1       Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before the fifth (5th) Trading Day following the date hereof; provided, however, that no such termination
will affect the right of any party to sue for any breach by any other party (or parties).

 

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

 

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

 

5.4       Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto
at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such
notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth
on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices
and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant
to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

 

     

     

    

 

5.5       Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and (i) all of the Purchasers, if prior to the Closing, or (ii) Purchasers which purchased
at least 50.1% in interest of the Shares based on the initial Subscription Amounts hereunder or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately
and adversely impacts a Purchaser (or group of Purchasers) in any material respect, the consent of such disproportionately impacted
Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or
a waiver of any other provision, condition or requirement hereof except to the extent expressly stated in such waiver, nor shall
any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed
amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative
to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected
Purchaser. Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities
and the Company.

 

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

 

5.7       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8       No
Third-Party Beneficiaries. The Placement Agent shall be the third party beneficiary of the representations and warranties of
the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended
for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.

 

     

     

    

 

5.9       Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action
or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding
is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action
or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under
Section 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action
or Proceeding.

 

5.10       Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

 

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

 

5.12       Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

     

     

    

 

5.13       Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon two (2) days’ prior written notice to the Company
of its failure to so timely perform such obligations, during which the Company shall have a right to cure any such failure, any
relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however,
that in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of
Common Stock subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise
price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to
such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

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

 

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

 

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

 

     

     

    

 

5.17       Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with
the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do
so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each
other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively
and not between and among the Purchasers.

 

5.18       Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.

 

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

 

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

 

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

 

 

 

(Signature Pages Follow)

 

     

     

    

 

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

 

 

	
        RING ENERGY, inc.

         

         
	
        Address for Notice:

         

        Ring Energy, Inc.

         

         

        Email:

	
        By:_/s/ Paul D. McKinney                       

        Name: Paul D. McKinney

        Title: Chief Executive Officer and Chairman
        of the Board

         

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

         

         
	 
	
         

         

         

         
	 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

     

     

    

[PURCHASER SIGNATURE PAGES TO RING
ENERGY SECURITIES PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: Hudson
Bay Master Fund Ltd.                       

 

Signature of Authorized Signatory of
Purchaser: /s/ George Antonopoulos                       

 

Name of Authorized Signatory: George
Antonopoulos                        

 

Title of Authorized Signatory: Authorized
Signatory*                                              

 

Email Address of Authorized Signatory:
investments@hudsonbaycapital.com                       

 

Facsimile Number of Authorized Signatory: 212-571-1325                                              

 

Address for Notice to Purchaser: c/o Hudson Bay Capital Management
LP, 777 Third Avenue, 30th Floor, New York, NY 10017

 

Address for Delivery of Securities to Purchaser (if not same
as address for notice): Fidelity Investments Mail Zone KC1N-CM 100 Crosby Parkway Covington, KY 41015-4325

  

Common Unit Subscription Amount: $2,450,000                       

 

Pre-Funded Unit Subscription Amount: $2,306,700                               

 

Common Units: _3,500,000________________

 

Pre-Funded Units: 3,300,000                               

 

Purchase Warrant Shares:    6,800,000                             

 

EIN Number:   98-066 9111                                                        

* Authorized Signatory

Hudson Bay Capital Management LP

not individually, but solely as

Investment Advisor to Hudson Bay Master
Fund

Ltd.

 

[SIGNATURE PAGES CONTINUE]

 

     

     

    

SCHEDULE 3.1(g)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00316-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00316-of-00352.parquet"}]]