Document:

PROMISSORY
NOTE

 

June 3, 2013

 

Horizon Technology
Finance Corporation, a Delaware corporation (the “Borrower”), for value received, hereby promises to pay to
the order of Guggenheim Securities, LLC, a Delaware limited liability company (the “Lender”), the principal
amount of Fifteen Million and 00/100 Dollars ($15,000,000) (the “Original Principal Amount”) (together with
interest thereon calculated from the date hereof in accordance with the provisions of this instrument (this “Note”)).

 

1.Principal Balance.
For purposes of this Note, the term “Principal Balance” shall mean an amount equal to (a) the Original
Principal Amount minus (b) all payments of principal made by the Borrower from time to time pursuant to the terms of
this Note. If not paid in full earlier, the entire Principal Balance and all accrued and unpaid interest shall be due and payable
in full on the earliest to occur of: (x) any sale of secured loans made to life sciences companies and technology companies subject
to the lien and security interest of the Lender hereunder (“Venture Loans”) consented to by Lender pursuant
to Section 8(i), (y) the Borrower or any of its affiliates shall take substantial steps to consummate a financing or refinancing
of its indebtedness existing on the date hereof, but the Borrower or such affiliate shall elect not to consummate such financing
or refinancing, or (z) July 30, 2013 (the “Maturity Date”).

 

2.Payment of Interest.
Except as otherwise expressly provided herein, the Principal Balance of this Note shall bear interest (computed on the basis of
actual days elapsed on a 360-day year basis) at a rate of seven percent (7.00%) per annum. Accrued and unpaid interest shall be
payable monthly on the first day of each month, beginning on June 1, 2013. All accrued and unpaid interest on this Note shall be
paid upon the payment in full of the entire outstanding Principal Balance of this Note (whether on the Maturity Date or as a result
of the acceleration of the maturity thereof), or if a prepayment of this Note is made, on the Principal Balance prepaid, and, if
payment in full is not paid when due, thereafter on demand. During the occurrence and continuance of an Event of Default, the rate
of interest payable pursuant to this Section 2 shall be increased by five percent (5.00%) per annum.

 

3.Payment.
All payments to be made to the Lender under this Note shall be made in lawful money of the United States of America by wire transfer
of immediately available funds to an account directed by the Lender in writing.

 

4.Prepayment.
The Borrower, at its option, may prepay without premium or penalty all or any portion of the Principal Balance of this Note at
any time, plus accrued and unpaid interest through the date of such payment. The Borrower shall promptly make a prepayment under
this Note in an amount equal to the proceeds of any payments of principal or prepayments received by the Borrower or any affiliate
of the Borrower in respect of the Venture Loans.

 

5.Conditions Precedent.
Prior to advancing to the Borrower the principal amount evidenced by this Note:

 

    	

    	 

    

 

 

(a)The
Lender shall have received the following documents, all duly executed, dated as of the date hereof, and in form and substance acceptable
to Lender: (i) this Note; (ii) a certificate of the secretary of the Borrower certifying as to the resolutions of the board of
directors of the Borrower authorizing the execution, delivery and performance by Borrower of this Note and the transactions contemplated
in connection herewith; (iii) a certified copy of the Borrower’s certificate of incorporation and bylaws as in effect on
the date hereof; and (iv) a certificate of good standing for Borrower from the secretary of state of Delaware.

 

(b)The
Lender shall have received, in form and substance reasonably satisfactory to it, a written opinion of special counsel to the Borrower
with respect to such matters as Lender shall request.

 

(c)The
Lender shall have received, in form and substance satisfactory to it, an acknowledgment from Bank of America, N.A. (the “Custodian”)
that the principal documents (the “Underlying Documents”) evidencing the Venture Loans owned by the Borrower
have been deposited with the Custodian pursuant to the Custodial Agreement dated as of October 25, 2010 between the Custodian and
the Borrower (the “Custodial Agreement”).

 

6.Collateral.

 

(a)Grant
of Security Interest. As security for all debts, liabilities and obligations owing by the Borrower to the Lender arising under,
out of, or in connection with this Note or any related agreement or document (the “Related Documents”), whether
direct or indirect, absolute or contingent, due or to become due or now or hereafter arising (the “Obligations”),
the Borrower hereby assigns to the Lender and grants to the Lender a continuing security interest in and lien on all of the Borrower’s
right, title and interest in and to the following, whether now owned or existing or hereafter acquired or arising, regardless of
where located: all now existing and hereafter arising property and rights in property of the Borrower, wherever located, including,
without limitation, all cash, cash equivalents, accounts, general intangibles, instruments, goods, chattel paper, deposit accounts,
investment property, equipment, inventory, fixtures, documents, all letters of credit and letter-of-credit rights, commercial tort
claims, all supporting obligations, books and records, and all products and/or proceeds of any and all of the foregoing, including,
without limitation, each Venture Loan, the Underlying Documents and all insurance proceeds (the “Collateral”).
Terms used in this Section 6(a) shall have their respective meanings under the Uniform Commercial Code, as in effect from time
to time in the State of New York or any other applicable jurisdiction.

 

(b)Further
Assurances. The Borrower shall, at its expense, perform all steps and take any and all action requested by the Lender at any
time to perfect, maintain, protect, and enforce the Lender’s security interest; provided, that, so long as no Event of Default
(as defined below) shall have occurred, except as provided in Section 8(m), the Borrower shall not be required to provide the Lender
with (i) account control agreements for its accounts holding cash, securities, or Venture Loans of the Borrower or (ii) control
of any of the Borrower’s equity interests in its subsidiaries or deliver certificates evidencing the same.

 

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(c)UCC
Filings. Borrower hereby irrevocably authorizes Lender at any time and from time to time to file in any filing office in any
UCC jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral and (ii) contain any
other information required by the UCC for the sufficiency or filing office acceptance of any financing statement or amendment.
The Borrower agrees to furnish any such information to the Lender promptly upon request. The Borrower acknowledges that it is not
authorized to file any financing statement or amendment or termination statement with respect to any financing statement without
the prior written consent of the Lender and agrees that it shall not do so without the prior written consent of the Lender, subject
to the Borrower's rights under Section 9-509(d)(2) of the UCC.

 

7.Representations
and Warranties. To induce the Lender to accept this Note, the Borrower warrants that:

 

(a)Existence
and Foreign Qualification. The Borrower is a corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Borrower is in good standing and is duly qualified to do business in each state where, because of
the nature of its activities or properties, such qualification is required, except where failure to be so qualified could not reasonably
be expected to materially and adversely affect (i) the financial condition or operations of the Borrower, (ii) the ability of the
Borrower to perform its obligations under this Note or (iii) any portion of the Collateral (a “Material Adverse Effect”).

 

(b)Authorization;
Consents. The Borrower is duly authorized to execute and deliver this Note and the Borrower is and will continue to be duly
authorized to perform its obligations under this Note. The execution, delivery and performance by the Borrower of this Note do
not and will not require any consent or approval of any governmental agency or authority that has not been obtained. No consent
of any third party is required to pledge each Venture Loan in favor of the Lender as collateral security hereunder.

 

(c)No
Conflicts. The execution, delivery and performance by the Borrower of this Note do not and will not conflict with (i) any provision
of applicable law, (ii) the charter documents of the Borrower, (iii) any material agreement binding upon the Borrower, or (iv)
any court or administrative order or decree applicable to the Borrower, and do not and will not require, or result in, the creation
or imposition of any Lien on any asset of the Borrower.

 

(d)Validity.
This Note is a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement
of creditors’ rights or by general principles of equity limiting the availability of equitable remedies.

 

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(e)Solvency.
On the date hereof, and immediately prior to and after giving effect to the consummation of the transactions contemplated hereby
(i) each of the Borrower and its subsidiaries, individually, is solvent, has adequate capital and is and will continue to be able
to pay its indebtedness as the same becomes due, and (ii) neither the Borrower nor any of its subsidiaries has incurred any obligation
or liability under this Note or any other agreement to which it is a party or has made any conveyance pursuant to or in connection
therewith, with actual intent to hinder, delay or defraud either present or future creditors of any obligor or any of its affiliates,
as the case may be.

 

(f)Venture
Loans. Each Venture Loan held by the Borrower, as of the date hereof, qualifies as an eligible loan for financing under one
or more of the Borrower’s or its affiliates’ existing credit facilities with third parties other than the Lender.

 

(g)Liens.
None of the Collateral is subject to any mortgage, pledge, lien, claim or other encumbrance or security interest (other than the
Lender’s lien and security interest arising hereunder), except for customary liens arising in the ordinary course of business
for sums not overdue or being diligently contested in good faith by appropriate proceedings and not involving any deposits or advances
or borrowed money or the deferred purchase price of property or services and, in each case, for which the Borrower maintains adequate
reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed (“Permitted Liens”).

 

(h)Security
Interest. This Note creates in favor of the Lender, a legal, valid and enforceable security interest in the Collateral, as
security for the Obligations, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors’ rights generally or by equitable principles relating to enforceability. Upon filing a properly
completed UCC financing statement with the Secretary of State of Delaware, the Lender’s security interest in the Collateral
shall be a first priority and perfected security interest to the extent such perfection is obtainable thereby under the UCC.

 

(i)No
Event of Default or Potential Event of Default. As of the date hereof and before and after giving effect to the transactions
contemplated in connection with this Note, no Event of Default or event that, through the passage of time, service of notice, or
both, would mature into an Event of Default (a “Potential Event of Default”) has occurred and is continuing
or shall result therefrom.

 

8.Covenants.Until
the Principal Balance of the Note, and all accrued and unpaid interest thereon and all other Obligations are indefeasibly paid
in full:

 

(a)Corporate
Existence; Maintenance of Properties. The Borrower shall preserve and maintain its corporate existence. The Borrower shall
maintain, preserve and keep its properties and rights necessary to the proper conduct of its business.

 

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(b)Taxes.
The Borrower shall duly pay and discharge all taxes, rates, assessments, fees and governmental charges upon or against the Borrower
or its properties, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith and by appropriate proceedings and adequate reserves under generally accepted accounting
principles are provided therefor.

 

(c)Access.
The Borrower shall permit the Lender periodically upon reasonable request, or at any time when an Event of Default or Potential
Event of Default exists and is continuing, to access, examine, audit, make extracts from or copies of and inspect any or all of
the Borrower’s records, files, and books of account relating to the Collateral, and discuss the Borrower’s affairs
with the Borrower’s officers and management.

 

(d)Use
of Proceeds. The Borrower shall use the proceeds of this Note to originate secured loans made to life sciences companies and
technology companies and for general working capital purposes. The Borrower shall not use or permit any proceeds of this Note to
be used for the purpose of purchasing or carrying any margin stock.

 

(e)Notices.
Promptly after becoming aware thereof, the Borrower shall furnish to the Lender written notice (including a description in reasonable
detail) of (i) the occurrence of any Event of Default or Potential Event of Default; (ii) the filing or commencement of any action,
suit or proceeding by or before any arbitrator or governmental authority against the Borrower or any affiliate thereof that could
reasonably be expected to result in a Material Adverse Effect; and (iii) the occurrence of any other event that could reasonably
be expected to result in a Material Adverse Effect.

 

(f)Mergers,
etc. The Borrower shall not merge with or into or consolidate with any other person, or liquidate or dissolve, or sell, transfer,
lease or otherwise dispose of all or substantially all of its assets, provided that the Borrower may merge with another person
so long as the Borrower is the survivor and no Event of Default or Potential Event of Default shall exist or result therefrom.

 

(g) Claims
Against Collateral. The Borrower agrees to pay promptly when due all taxes, other taxes, assessments and governmental charges
or levies imposed upon, and all claims against, the Collateral.

 

(h)Liens.
Borrower shall not incur or permit to exist any mortgage, pledge, lien, or other encumbrance or security interest with respect
to any of the Collateral at any time that any principal or interest is outstanding on this Note or any other Obligation at the
time is due and payable, except for Permitted Liens.

 

(i)Sale
or Assignment. Without the express written consent of the Lender, which consent may be given or withheld in the Lender’s
sole discretion in each instance, the Borrower shall not sell or assign (x) all or any portion of any Venture Loan, or (y) except
in the ordinary course of business, any other Collateral.

 

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(j)HCIII
Loan Facilities. The Borrower shall cause Horizon Credit III LLC (“HCIII”) at all times to maintain aggregate
available commitments of not less than $15,000,000 under its existing credit facilities.

 

(k)Servicing
of Venture Loans. The Borrower or Horizon Technology Finance Management LLC (“Horizon Management”) shall
act as servicer for the Venture Loans, shall be responsible for managing the Venture Loans and shall perform all administrative
tasks related thereto and required in connection therewith in accordance with the underlying loan documentation and all customary
and usual servicing practices, in a manner consistent with the servicer's servicing of comparable loan agreements that it owns
or services for itself or others, without regard to: (i) the servicer’s right to receive compensation for its services with
respect to any particular transaction or (ii) the ownership, servicing or management for others by the servicer of any other loans,
debt securities or property by the servicer.

 

(l)Venture
Loans. The Borrower shall maintain at all times (i) Venture Loans in an aggregate outstanding principal balance of not less
than $50,000,000, and (ii) all Underlying Documents with respect thereto on deposit with the Custodian in the “Account”
(as defined in the Control Agreement referred to below) (the “Custodial Account”).

 

(m)Custodial
Account. The Borrower (i) shall deliver, within ten (10) days of the date hereof, to the Lender an account control agreement
(the “Control Agreement”) with the Custodian with respect to the Custodial Account in form and substance satisfactory
to the Lender and (ii) shall not amend, modify, terminate or permit the termination of the Custodial Agreement without the prior
written consent of the Lender.

 

9.Events of Default.
The occurrence or continuance of any of the following shall constitute an “Event of Default”:

 

(a)the
Borrower shall default in the payment of any principal or interest on this Note when the same becomes due and payable; or

 

(b)the
Borrower shall fail to comply with or perform any agreement or covenant of the Borrower described in paragraphs (c), (e), (f),
(h), (i), (j), (l) or (m) of Section 8; or

 

(c)subject
to Section 9(a) or (b), the Borrower shall fail to comply with or perform any agreement or covenant of the Borrower contained herein,
if such failure shall continue for a period of three (3) business days following the earlier of (i) the Borrower’s knowledge
of such failed compliance, or (ii) the Borrower’s notice of such failure; or

 

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(d)an involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or Horizon Management or their respective debts, or of a substantial part of their assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower, Horizon Management or for a
substantial part of their assets, and, in any such case, such proceeding or petition shall continue undismissed for thirty (30)
days or an order or decree approving or ordering any of the foregoing shall be entered; or

 

(e)the
Borrower or Horizon Management shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or Horizon Management or for a substantial part of their assets, (iii) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (iv) make a general assignment for the benefit of creditors or (v) take
any action for the purpose of effecting any of the foregoing; or if a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Borrower or Horizon Management,
or for the winding up or liquidation of their affairs, shall have been entered, and such decree or order shall have remained in
force undischarged and unstayed for a period of thirty (30) days; or

 

(f)The
Borrower, Horizon Management, Horizon Credit II LLC or HCIII shall default in the payment when due, after any applicable grace
period, of any indebtedness for borrowed money having an aggregate principal amount in excess of $500,000; or there shall occur
any default or other event under any indenture, agreement or other instrument under which any such indebtedness is outstanding
and such default or event shall result in the acceleration of the maturity or the required redemption or repurchase of such indebtedness;
or

 

(g)the
commencement of, or any material development in, any litigation or proceeding affecting the Borrower, Horizon Management or any
affiliate thereof that would reasonably be expected to have a Material Adverse Effect or in which the relief sought is an injunction
or other stay of the performance of this Note or any Related Document.

 

10.Remedies.

 

(a)Upon
the occurrence and during the continuance of any Event of Default specified in Section 9, then, and in each such case, the Lender
by notice to the Borrower and at any time and from time to time, may (i) declare all or part of the principal of and interest on
this Note immediately due and payable, and thereupon the same shall become immediately due and payable, and (ii) exercise any other
rights and remedies available to it by law or agreement.

 

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(b)In addition
to all other rights and remedies granted to it under this Note and any Related Document, if an Event of Default shall have occurred
and be continuing, the Lender may exercise all rights and remedies of a secured party under the UCC. Without limiting the generality
of the foregoing, the Borrower expressly agrees that in any such event the Lender, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon
the Borrower or any other person (all and each of which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may forthwith enter upon the premises of the Borrower where any
Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving Borrower
or any other person notice and opportunity for a hearing on the Lender’s claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give
an option or options to purchase, or sell or otherwise dispose of and deliver the Collateral (or contract to do so), or any part
thereof, in one or more parcels at a public or private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit risk. The Lender shall have the right upon any such
public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of the
Lender, the whole or any part of the Collateral so sold, free of any right or equity of redemption, which equity of redemption
the Borrower hereby releases. Such sales may be adjourned and continued from time to time with or without notice. The Lender shall
have the right to conduct such sales on the Borrower’s premises or elsewhere and shall have the right to use the Borrower’s
premises without charge for such time or times as the Lender deems necessary or advisable.

 

(c)The
Borrower irrevocably waives presentment, protest, notice of intent to accelerate, demand, notice of dishonor or default, notice
of acceptance of this Note, extensions granted or other action taken in reliance hereon, and all other demands and notices of any
kind in connection with this Note and any Related Document.

 

(d)The
Borrower further agrees, at the Lender’s request, to assemble the Collateral and make it available to the Lender at a place
or places designated by the Lender which are reasonably convenient to the Lender and the Borrower. Until the Lender is able to
effect a sale, lease, or other disposition of Collateral, Lender shall have the right to hold or use Collateral, or any part thereof,
to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate
by the Lender. The Lender may, if it so elects, seek the appointment of a receiver to take possession of Collateral and to enforce
any of the Lender’s remedies, with respect to such appointment without prior notice or hearing as to such appointment. The
Lender shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale to the Obligations
(in such order as the Lender shall determine at its sole discretion), and only after so paying over such net proceeds, and after
the payment by the Lender of any other amount required by any provision of law, the Lender shall turn over the surplus, if any,
to the Borrower. To the maximum extent permitted by applicable law, the Borrower waives all claims, damages, and demands against
the Lender arising out of the repossession, retention or sale of the Collateral except such as arise solely out of the gross negligence
or willful misconduct of the Lender. The Borrower agrees that five (5) business days prior notice by the Lender of the time and
place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters. Borrower
shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all
Obligations, including any reasonable attorneys’ fees or other out-of-pocket expenses incurred by the Lender to collect such
deficiency.

 

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(e)The
Lender may, in its discretion, pay any amount or do any act required of Borrower hereunder or under any Related Document in order
to preserve, protect, maintain or enforce the Obligations, the Collateral or the Lender’s security interest therein, and
which the Borrower fails to pay or do. All payments that the Lender makes under this Section 10(e) and all out-of-pocket costs
and expenses that the Lender pays or incurs in connection with any action taken by it hereunder shall be charged to the Borrower
and shall constitute Obligations. Any payment made or other action taken by Lender under this Section 10(e) shall be without prejudice
to any right to assert an Event of Default hereunder and to proceed thereafter as herein provided.

 

(f)The
Lender shall use reasonable care with respect to the Collateral in its possession or under its control. The Lender shall not have
any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of Lender,
or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

 

11.Power of Attorney.
The Borrower hereby appoints the Lender and the Lender’s designee as the Borrower’s attorney, with power at any time
during the existence and continuance of any Event of Default: (a) to ask for, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (b) to receive,
endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (a) above; (c) to file
any claims or take any action or institute any proceedings that the Lender may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Lender with respect to any of the Collateral; (d) to take or cause
to be taken all actions necessary to perform or comply or cause performance or compliance with the terms of this Note (including,
without limitation, access to pay or discharge taxes or liens); (e) to endorse the Borrower’s name on any checks, notes,
acceptances, money orders, or other forms of payment or security that come into Lender’s possession; (f) to sign the Borrower’s
name on any invoice, bill of lading, warehouse receipt or other negotiable or non-negotiable document constituting Collateral,
on drafts against customers, on notices of assignment, financing statements and other public records and to file any such financing
statements by electronic means with or without a signature as authorized or required by applicable law or filing procedure; (g)
to notify the post office authorities to change the address for delivery of the Borrower’s mail to an address designated
by the Lender and to receive, open and dispose of all mail addressed to the Borrower; (h) to complete in the Borrower’s name
or the Lender’s name, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof; and (i) to do all other things necessary to carry out this Note. The Borrower ratifies and approves all acts
of such attorney. Neither the Lender nor its attorneys will be liable for any acts or omissions or for any error of judgment or
mistake of fact or law except for their willful misconduct. This power, being coupled with an interest, is irrevocable until the
Obligations have been indefeasibly paid in full.

 

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12.Miscellaneous.

 

(a)The
provisions under this Note shall (i) be binding upon the Borrower and its respective successors and assigns and (ii) inure to the
benefit of the Lender and its respective successor and assigns. The Borrower may not transfer any of
its rights or obligations hereunder without the prior written consent of the Lender (and any attempted assignment or transfer by
the Borrower without such consent shall be null and void).

 

(b)After
all outstanding and unpaid principal and accrued interest on this Note, together with all other outstanding and unpaid Obligations,
have been paid in full in immediately available funds to the Lender, this Note shall be surrendered to the Borrower for cancellation.
The Lender shall, at any time and from time to time, upon the request of the Borrower acknowledge the amount required to pay off
this Note in full as of a date certain.

 

(c)If any
provision hereof shall be held invalid or unenforceable by any court of competent jurisdiction or as a result of future legislative
action, such holding or action shall be strictly construed and shall not affect the validity or effect of any other provision hereof.

 

(d)THIS
NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401
AND 5-1402 OF THE GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD TO ANY OTHER CONFLICT OF LAWS PROVISIONS THEREOF).

 

(e)Any
dispute or claim arising out of or in connection with this Note shall be adjudicated any New York State court or federal court
of the United States of America sitting in the Borough of Manhattan, New York, and any appellate court from any thereof and each
of the Lender (by its acceptance hereof) and each of the parties hereto irrevocably consents to the exclusive jurisdiction and
venue of any such court.

 

(f)No amendment,
modification, or termination or waiver of any provision of this Note shall be effective unless the same shall be in writing and
signed by the Borrower and the Lender. Each amendment, modification, termination or waiver of this Note shall be effective only
in the specific instance and for the specific purpose for which it was given.

 

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(g)All
notices, requests, demands and other communications under this Note shall be in writing and delivered in person or sent by courier
service or certified mail, postage prepaid, and properly addressed as follows:

 

to the Lender:

 

Guggenheim Securities, LLC

330 Madison Avenue

New York, NY 10017

Attn.: Paul Friedman

 

to the Borrower:

 

Horizon Technology Finance Corporation

312 Farmington Avenue

Farmington, CT 06032

Attn.: Robert D. Pomeroy, Jr.,
Chief Executive Officer

 

All notices and other communications
required or permitted under this Note that are addressed as provided in this Section 12(g), if delivered personally or by courier
service, shall be effective upon delivery, and, if delivered by certified mail, shall be effective three (3) days after deposit
in the United States mail, postage prepaid. Any party may from time to time change its address for the purposes of notices to that
party by a similar notice specifying a new address, but no such change shall be deemed to have been given until it is actually
received by the party sought to be charged with the contents thereof.

 

13.Indemnification
by Borrower. The Borrower shall indemnify the Lender and its affiliates and the directors, officers, employees, agents and
advisors of the Lender and its affiliates (each such person being called an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable
fees, charges and disbursements of any counsel for an Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by the Borrower arising out of, in connection with, or as a result of (i) the execution, delivery and performance
of this Note, (ii) the breach by the Borrower of any representation, warranty or covenant hereunder, or (iii) any actual or asserted
claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory,
whether brought by a third party or by the Borrower, and regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related
expenses result from the gross negligence, willful misconduct or bad faith of such Indemnitee.

 

    	11

    	 

    

 

 

14.Costs and Expenses.
The Borrower shall pay all reasonable out of pocket costs and expenses incurred by the Lender (including the reasonable fees, charges
and disbursements of counsel for the Lender), in connection with (i) the negotiation and preparation of the Note and Related Documents,
and (ii) the enforcement or protection of its rights under this Note and any Related Document.

 

15.Rules of Interpretation.
Whenever the context requires, the gender of all words used in this Note includes the masculine, feminine and neuter, and the singular
includes the plural and vice-versa. All references to Sections refer to sections of this Note. The term “including”
means “including, without limitation.” Any reference to a person shall be deemed to include such person’s successors
and permitted assigns.

 

16.Counterparts.
This Note may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one
and the same agreement. This Note may be executed by manual signature, facsimile or electronic means, all of which shall be equally
valid.

 

[signature page follows]

    	12

    	 

    

 

IN WITNESS WHEREOF, the
parties have caused this Note to be executed and delivered by a duly authorized officer as of the date first written above.

 

	 	Horizon Technology Finance
    Corporation
	 	 
	 	By: 	/s/ Robert
    D. Pomeroy, Jr.
	 	Name:

        Title:
	Robert
    D. Pomeroy, Jr.
Chief Executive
    Officer

 

	 	GUGGENHEIM SECURITIES,
    LLC
	 	 
	 	By: 	/s/ Paul Friedman
	 	Name:

        Title:
	Paul
    Friedman
Chief Operating Officer

 

 

 

[Signature Page to Promissory Note]

    	13May 30, 2013

 

STRICTLY CONFIDENTIAL

 

Mr. Steven van der Velden

Chairman and Chief Executive Officer

Elephant Talk Communications Inc.

World Trade Center

Schiphol Boulevart 249

1118 BH Schiphol (Amsterdam Airport)

The Netherlands

 

Dear Mr. van der Velden:

 

This letter agreement (this “Agreement”)
constitutes the agreement between Elephant Talk Communications Inc. (the “Company”) and Dawson James Securities,
Inc. (“Dawson”) that Dawson shall serve as the exclusive placement agent for the Company (“Direct Placement”)
on a reasonable best efforts basis to place up to $7.5 million worth of securities. The Placement shall consist of securities (the
“Securities”) of the Company, which Securities consisting of the following: common stock of the Company and
warrants. Investor or its affiliate shall receive five-year Warrants on the Execution Date for no additional consideration, allowing
it to purchase 4.5 shares of common stock for every ten shares it acquires under the Investment, at a price equal to a 30% premium
to the closing bid price on the day prior to the Execution Date.

 

The terms of such Placement and the Securities
issued in connection therewith shall be mutually agreed upon by the Company and the purchasers (each, a “Purchaser”
and collectively, the “Purchasers”) and nothing herein implies that Dawson would have the power or authority
to bind the Company or any Purchaser, and the Company shall not, and nothing herein implies that the Company shall, have an obligation
to issue any Securities or complete a Direct Placement. This Agreement and the documents executed and delivered by the Company
and the Purchasers in connection with a Placement shall be collectively referred to herein as the “Transaction Documents.”
The date of a closing of a Placement during the Term shall be referred to herein as a “Closing Date.” The Company
expressly acknowledges and agrees that the execution of this Agreement does not constitute a commitment by Dawson or any Purchaser
to purchase the Securities and does not ensure the successful placement of the Securities or any portion thereof or the success
of Dawson with respect to securing any other financing on behalf of the Company.

 

The sale of Securities to any Purchaser
will be evidenced by a purchase agreement (“Purchase Agreement”) between the Company and such Purchaser. Prior
to the signing of any Purchase Agreement, officers of the Company with responsibility for financial affairs will be available to
answer inquiries from prospective Purchasers.

 

Notwithstanding anything
herein to the contrary, in the event that Dawson determines that any of the terms provided for hereunder shall not comply with
a FINRA rule, including but not limited to FINRA Rule 5110, then the Company shall, as may be reasonably requested by Dawson, agree
to amend this Agreement in writing upon the request of Dawson to comply with any such rules; provided that any such amendments
shall not provide for any terms that are less favorable to the Company.

 

925 South Federal Highway • Suite
600 • Boca Raton, FL  33432 • Toll Free 866.928.0928 • Main 561.391.5555 • Fax 561.391.5757
• 

www.dawsonjames.com

Member FINRA/SIPC

 

    	 

    	 

    

 

A.           Fees.
In connection with the services described above, the Company shall pay to Dawson the following compensation:

 

1.          Dawson’s
Fee. The Company shall pay to Dawson a cash placement fee (the “Dawson’s Fee”) on each Closing Date
equal to 5% of the aggregate purchase price paid by each purchaser of Securities in a Placement on such Closing Date during the
Term; provided, however, Dawson’s Fee shall be equal to 2.5% of the aggregate purchase price paid by Crede and any investor
introduced to the Company by Crede (the “Crede Investors”). Dawson’s Fee shall be paid at the closing of the
Placement (the “Closing”) through a third party escrow agent from the gross proceeds of the Securities sold,
but only if the gross offering proceeds are initially paid to an escrow agent; otherwise, the Company shall pay Dawson’s
Fee directly to Dawson at the Closing.

 

2.          Such
number of warrants (the “Dawson Warrants”) to Dawson or its designees at the Closing to purchase shares of Common
Stock equal to 5% of the aggregate number of Shares sold to investors, except Crede, in the Placement. Dawson will not receive
warrants on the part of the placement placed with Crede. The Dawson Warrants shall be cashless but otherwise have the same terms
as the warrants issued to the investors in the Placement except that: (a) the exercise price shall be 125% of the public offering
price per unit.

 

3.          Management
Fee. The Company will pay Dawson a non-accountable management fee equal to $25,000.

 

A.           Term
and Termination of Engagement. The term (the “Term”) of Dawson’s engagement will begin on the date
hereof and end 10 calendar days after the date hereof. Notwithstanding anything to the contrary contained herein, the provisions
concerning confidentiality, indemnification and contribution contained herein and the Company’s obligations contained in
Section H hereof will survive any expiration or termination of this Agreement, and the Company’s obligation to pay fees actually
earned and payable, if any, will survive any expiration or termination of this Agreement, as permitted by FINRA Rule 5110(f)(2)(d).

 

B.           Use
of Information. The Company will furnish Dawson such written information as Dawson reasonably requests in connection with the
performance of its services hereunder. The Company understands, acknowledges and agrees that, in performing its services hereunder,
Dawson will use and rely entirely upon such information as well as publicly available information regarding the Company and other
potential parties to an Placement and that Dawson does not assume responsibility for independent verification of the accuracy or
completeness of any information, whether publicly available or otherwise furnished to it, concerning the Company or otherwise relevant
to an Placement, including, without limitation, any financial information, forecasts or projections considered by Dawson in connection
with the provision of its services. The Company further acknowledges and agrees that Dawson may rely on the Company’s representations
and warranties provided to the Purchasers in the Transaction Documents, to the extent necessary for Dawson to perform its services
hereunder with respect to the Placement.

 

C.           Confidentiality.
In the event of the consummation or public announcement of any Placement, Dawson shall have the right to disclose its participation
in such Placement, including, without limitation, the placement at its cost of “tombstone” advertisements in financial
and other newspapers and journals; provided, however, Dawson must first provide to the Company the content of the proposed disclosure
for the Company’s approval. Neither the Company nor DJS will provide or release any information with respect to this Agreement
or the Placement except as required by law.

 

    	2

    	 

    

 

D.           Securities
Matters. The Company shall be responsible for any and all compliance with the securities laws applicable to it, the Securities
Act of 1933, as amended (the “Securities Act”), and unless otherwise agreed in writing, all state securities
(“blue sky”) laws. Dawson agrees to cooperate with counsel to the Company in that regard.

 

E.           Indemnity.

 

1.          In
connection with the Company’s engagement of Dawson as placement agent, the Company hereby agrees to indemnify and hold harmless
Dawson and its affiliates, and the respective controlling persons, directors, officers, members, shareholders, agents and employees
of any of the foregoing (collectively the “Indemnified Persons”), from and against any and all claims, actions,
suits, proceedings (including those of shareholders), damages, liabilities and expenses incurred by any of them (including the
reasonable fees and expenses of counsel), as incurred, (collectively a “Claim”), that are (A) related to or
arise out of (i) any actions taken or omitted to be taken (including any untrue statements made or any statements omitted to be
made) by the Company, or (ii) any actions taken or omitted to be taken by any Indemnified Person in connection with the Company’s
engagement of Dawson, or (B) otherwise relate to or arise out of Dawson’s activities on the Company’s behalf under
Dawson’s engagement, and the Company shall reimburse any Indemnified Person for all expenses (including the reasonable fees
and expenses of counsel) as incurred by such Indemnified Person in connection with defending any such claim, action, suit or proceeding,
whether or not in connection with pending or threatened litigation in which any Indemnified Person is a party. The Company will
not, however, be responsible for any Claim that is finally judicially determined to have resulted from the gross negligence or
willful misconduct of any person seeking indemnification for such Claim. The Company further agrees that no Indemnified Person
shall have any liability to the Company for or in connection with the Company’s engagement of Dawson except for any Claim
incurred by the Company as a result of such Indemnified Person’s gross negligence or willful misconduct.

 

2.          The
Company further agrees that it will not, without the prior written consent of Dawson (which consent will not be unreasonably withheld,
conditioned or delayed), settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in respect
of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such
Claim), unless such settlement, compromise or consent includes an unconditional, irrevocable release of each Indemnified Person
from any and all liability arising out of such Claim.

 

3.          Promptly
upon receipt by an Indemnified Person of notice of any complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify the Company in writing of such complaint or of
such assertion or institution but failure to so notify the Company shall not relieve the Company from any obligation it may have
hereunder, except and only to the extent such failure results in the forfeiture by the Company of substantial rights and defenses.
If the Company so elects or is requested by such Indemnified Person, the Company will assume the defense of such Claim, including
the employment of counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and expenses of such counsel.
In the event, however, that legal counsel to such Indemnified Person reasonably determines that having common counsel would present
such counsel with a conflict of interest or if the defendant in, or target of, any such Claim, includes an Indemnified Person and
the Company, and legal counsel to such Indemnified Person reasonably concludes that there may be legal defenses available to it
or other Indemnified Persons different from or in addition to those available to the Company, then such Indemnified Person may
employ its own separate counsel to represent or defend him, her or it in any such Claim and the Company shall pay the reasonable
fees and expenses of such counsel. Notwithstanding anything herein to the contrary, if the Company fails timely or diligently to
defend, contest, or otherwise protect against any Claim, the relevant Indemnified Party shall have the right, but not the obligation,
to defend, contest, compromise, settle, assert crossclaims, or counterclaims or otherwise protect against the same, and shall be
fully indemnified by the Company therefor, including without limitation, for the reasonable fees and expenses of its counsel and
all amounts paid as a result of such Claim or the compromise or settlement thereof. In addition, with respect to any Claim in which
the Company assumes the defense, the Indemnified Person shall have the right to participate in such Claim and to retain his, her
or its own counsel therefor at his, her or its own expense.

 

    	3

    	 

    

 

4.          The
Company agrees that if any indemnity sought by an Indemnified Person hereunder is held by a court to be unavailable for any reason
then (whether or not Dawson is the Indemnified Person), the Company and Dawson shall contribute to the Claim for which such indemnity
is held unavailable in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and
Dawson on the other, in connection with Dawson’s engagement referred to above, subject to the limitation that in no event
shall the amount of Dawson’s contribution to such Claim exceed the amount of fees actually received by Dawson from the Company
pursuant to Dawson’s engagement. The Company hereby agrees that the relative benefits to the Company, on the one hand, and
Dawson on the other, with respect to Dawson’s engagement shall be deemed to be in the same proportion as (a) the total value
paid or proposed to be paid or received by the Company pursuant to the Placement (whether or not consummated) for which Dawson
is engaged to render services bears to (b) the fee paid or proposed to be paid to Dawson in connection with such engagement.

 

5.          The
Company’s indemnity, reimbursement and contribution obligations under this Agreement (a) shall be in addition to, and shall
in no way limit or otherwise adversely affect any rights that any Indemnified Party may have at law or at equity and (b) shall
be effective whether or not the Company is at fault in any way.

 

F.           Limitation
of Engagement to the Company. The Company acknowledges that Dawson has been retained only by the Company, that Dawson is providing
services hereunder as an independent contractor (and not in any fiduciary or agency capacity) and that the Company’s engagement
of Dawson is not deemed to be on behalf of, and is not intended to confer rights upon, any shareholder, owner or partner of the
Company or any other person not a party hereto as against Dawson or any of its affiliates, or any of its or their respective officers,
directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)), employees or agents. Unless otherwise expressly agreed in writing
by Dawson, no one other than the Company is authorized to rely upon this Agreement or any other statements or conduct of Dawson,
and no one other than the Company is intended to be a beneficiary of this Agreement. The Company acknowledges that any recommendation
or advice, written or oral, given by Dawson to the Company in connection with Dawson’s engagement is intended solely for
the benefit and use of the Company’s management and directors in considering a possible Placement, and any such recommendation
or advice is not on behalf of, and shall not confer any rights or remedies upon, any other person or be used or relied upon for
any other purpose. Dawson shall not have the authority to make any commitment binding on the Company. The Company, in its sole
discretion, shall have the right to reject any investor introduced to it by Dawson.

 

G.           Limitation
of Dawson’s Liability to the Company. Dawson and the Company further agree that neither Dawson nor any of its affiliates
or any of its their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act), employees or agents shall have any liability to the Company, its security holders or creditors,
or any person asserting claims on behalf of or in the right of the Company (whether direct or indirect, in contract, tort, for
an act of negligence or otherwise) for any losses, fees, damages, liabilities, costs, expenses or equitable relief arising out
of or relating to this Agreement or the Services rendered hereunder, except for losses, fees, damages, liabilities, costs or expenses
that arise out of or are based on any action of or failure to act by Dawson and that are finally judicially determined to have
resulted solely from the gross negligence or willful misconduct of Dawson.

 

    	4

    	 

    

 

H.           Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements
made and to be fully performed therein. Any disputes that arise under this Agreement, even after the expiration or termination
of this Agreement, will be heard only in the state or federal courts located in the City of New York, State of New York. The parties
hereto expressly agree to submit themselves to the jurisdiction of the foregoing courts in the City of New York, State of New York.
The parties hereto expressly waive any rights they may have to contest the jurisdiction, venue or authority of any court sitting
in the City and State of New York. In the event of the bringing of any action, or suit by a party hereto against the other party
hereto, arising out of or relating to this Agreement, the party in whose favor the final judgment or award shall be entered shall
be entitled to have and recover from the other party the costs and expenses incurred in connection therewith, including its reasonable
attorneys’ fees. Any rights to trial by jury with respect to any such action, proceeding or suit are hereby waived by Dawson
and the Company.

 

I.           Notices.
All notices hereunder will be in writing and sent by certified mail, hand delivery, overnight delivery or fax, if sent to Dawson,
to Dawson James Securities, Inc., 925 South Federal Highway, Suite 600, Boca Raton, Florida 33432,
fax number (561) 391-5757, Attention: Chief Executive Officer, and if sent to the Company, to the address set forth on the first
page hereof, fax number 626-304-3401; Attention: Chief Executive Officer. Notices sent by certified mail shall be deemed received
five days thereafter, notices sent by hand delivery or overnight delivery shall be deemed received on the date of the relevant
written record of receipt, and notices delivered by fax shall be deemed received as of the date and time printed thereon by the
fax machine.

 

J.           Entire
Agreement. This Agreement constitutes the complete and entire agreement between the parties pertaining to the subject matter
contained herein and supersedes all prior and contemporaneous discussions, negotiations, understandings, and agreements, representations,
and understandings of the Parties, whether oral or written, expressed or implied. Each of the Parties acknowledge that no other
party, nor any agent or attorney of any other party, has made any promise, representation, or warranty whatsoever, express or implied,
and not contained herein, concerning the subject matter hereof to induce the party to execute or authorize the execution of this
Agreement, and acknowledges that the party has not executed or authorized the execution of this instrument in reliance upon any
such promise, representation, or warranty not contained herein.

 

K.          Miscellaneous.
This Agreement shall not be modified or amended except in writing signed by Dawson and the Company. This Agreement shall be binding
upon and inure to the benefit of both Dawson and the Company and their respective assigns, successors, and legal representatives.
This Agreement constitutes the entire agreement of Dawson and the Company with respect to this Placement and supersedes any prior
agreements with respect to the subject matter hereof. If any provision of this Agreement is determined to be invalid or unenforceable
in any respect, such determination will not affect such provision in any other respect, and the remainder of the Agreement shall
remain in full force and effect. This Agreement may be executed in counterparts (including facsimile counterparts), each of which
shall be deemed an original but all of which together shall constitute one and the same instrument.

 

*********************

 

    	5

    	 

    

 

In acknowledgment that
the foregoing correctly sets forth the understanding reached by Dawson and the Company, please sign in the space provided below,
whereupon this letter shall constitute a binding Agreement as of the date indicated above.

 

	 	Very truly yours,
	 	 
	 	DAWSON JAMES SECURITIES, INC.
	 	 	 
	 	By	 
	 	 	Name: Robert D. Keyser Jr.
	 	 	Title: Chief Executive Officer

 

Accepted and Agreed:

 

ELEPHANT TALK COMMUNICATIONS, INC.

 

	By	 	 
	 	Name:	Mark Nije	 
	 	Title:	Chief Financial Officer	 

 

    	6

    	 

    

 

Annex A

 

SECTION 1. REPRESENTATIONS AND
WARRANTIES

 

Except as set forth
in the Registration Statement or Prospectus Supplement, the Company hereby makes the representations and warranties set forth in
the purchase agreement with the Purchasers to Dawson as of the date of the Placement and as of the Closing Date, as if set forth
in full in this Agreement, and the Company further represents to Dawson that:

 

(A) 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 (other than for Dawson’s placement 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.

 

(B) FINRA
Affiliations. There are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the
knowledge of the Company, any five percent (5%) or greater stockholder of the Company.

 

(C) Registration
Statement. The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement on under the Securities Act of 1933, as amended (the “Securities Act”), which
became effective for the registration under the Securities Act of the Securities. At the time of such filing, the Company met
the requirements of Form S-3 under the Securities Act. Such registration statement meets the requirements set forth in Rule
415(a)(1)(x) under the Securities Act and complies with said Rule. The Company will file with the Commission pursuant to Rule
424(b) under the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the
Commission promulgated thereunder, a supplement to the form of prospectus included in such registration statement relating to
the placement of the Securities and the plan of distribution thereof and has advised Dawson of all further information
(financial and other) with respect to the Company required to be set forth therein. Such registration statement, including
the exhibits thereto, as amended at the date of this Agreement, is hereinafter called the “Registration
Statement”; such prospectus in the form in which it appears in the Registration Statement is hereinafter called the
“Base Prospectus”; and the supplemented form of prospectus, in the form in which it will be filed with the
Commission pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called the
“Prospectus Supplement.” Any reference in this Agreement to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and include the documents incorporated by reference
therein (the “Incorporated Documents”) pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), on or before the date of this Agreement, or the
issue date of the Base Prospectus or the Prospectus Supplement, as the case may be; and any reference in this Agreement to
the terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include the filing of any
document under the Exchange Act after the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus
Supplement, as the case may be, deemed to be incorporated therein by reference. All references in this Agreement to financial
statements and schedules and other information which is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement, the Base Prospectus or the Prospectus Supplement, as the case may be. For purposes
of this Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act and
the “Time of Sale Prospectus” means the preliminary prospectus, if any, together with the free writing
prospectuses, if any, used in connection with the Placement, including any documents incorporated by reference therein. The
Securities are being issued pursuant to the Registration Statement and the issuance of the Securities has been registered by
the Company under the Securities Act. The Registration Statement is effective and available for the issuance of the
Securities thereunder and the Company has not received any notice that the Commission has issued or intends to issue a
stop-order with respect to the Registration Statement or that the Commission otherwise has suspended or withdrawn
the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened in writing
to do so. The "Plan of Distribution" section under the Registration Statement permits the issuance and sale of the
Securities hereunder.

 

    	7

    	 

    

 

(D) The
Registration Statement (and any further documents to be filed with the Commission) contains all exhibits and schedules as required
by the Securities Act. The Registration Statement and any post-effective amendment thereto, at the time it became effective, complied
in all material respects with the Securities Act and the Exchange Act and the applicable Rules and Regulations and did not and,
as amended or supplemented, if applicable, will not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading. The Base Prospectus, the Time of
Sale Prospectus, if any, and the Prospectus Supplement, each as of its respective date, comply in all material respects with the
Securities Act and the Exchange Act and the applicable Rules and Regulations. Each of the Base Prospectus, the Time of Sale Prospectus,
if any, and the Prospectus Supplement, as amended or supplemented, did not and will not contain as of the date thereof any untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Incorporated Documents, when they were filed with the Commission,
conformed in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations, and none of
such documents, when they were filed with the Commission, contained any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated by reference in the
Base Prospectus or Prospectus Supplement), in light of the circumstances under which they were made not misleading; and any further
documents so filed and incorporated by reference in the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus Supplement,
when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act
and the applicable Rules and Regulations, as applicable, and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent,
individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission.
There are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x)
have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. There
are no contracts or other documents required to be described in the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus
Supplement, or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required.

 

(E) The
Company is eligible to use free writing prospectuses in connection with the Placement pursuant to Rules 164 and 433 under the Securities
Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been,
or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations
of the Commission thereunder. Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act or that was prepared by or behalf of or used by the Company complies or will comply in all material
respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. The
Company will not, without the prior consent of Dawson, prepare, use or refer to, any free writing prospectus.

 

    	8

    	 

    

 

(F) The
Company has delivered, or will as promptly as practicable deliver, to Dawson complete conformed copies of the Registration Statement
and of each consent and certificate of experts, as applicable, filed as a part thereof, and conformed copies of the Registration
Statement (without exhibits), the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement, as amended
or supplemented, in such quantities and at such places as Dawson reasonably requests. Neither the Company nor any of its directors
and officers has distributed and none of them will distribute, prior to the Closing Date, any offering material in connection with
the offering and sale of the Securities other than the Base Prospectus, the Time of Sale Prospectus, if any, the Prospectus Supplement,
the Registration Statement, copies of the documents incorporated by reference therein and any other materials permitted by the
Securities Act.

 

SECTION 2.       CLOSING.
The obligations of Dawson and the Purchasers, and the closing of the sale of the Securities under the Transaction Documents are
subject to the accuracy, when made and on the Closing Date, of the representations and warranties on the part of the Company and
its Subsidiaries contained or incorporated herein, to the accuracy of the statements of the Company and its Subsidiaries made in
any certificates pursuant to the provisions hereof, to the performance by the Company and its Subsidiaries of their obligations
hereunder, and to each of the following additional terms and conditions:

 

(A)         No
stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the Commission, and any request for additional information on the part of the Commission
(to be included in the Registration Statement, the Base Prospectus or the Prospectus Supplement or otherwise) shall have been complied
with to the reasonable satisfaction of Dawson.

 

(B)         Dawson
shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Registration Statement, the Base
Prospectus or the Prospectus Supplement or any amendment or supplement thereto contains an untrue statement of a fact which, in
the opinion of counsel for Dawson, is material or omits to state any fact which, in the opinion of such counsel, is material and
is required to be stated therein or is necessary to make the statements therein not misleading.

 

(C)         All
corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each Transaction
Document, and the Securities, and, if the Securities are registered, the Registration Statement, the Base Prospectus and the Prospectus
Supplement, and all other legal matters relating to the Transaction documents and the transactions contemplated thereby shall be
reasonably satisfactory in all material respects to counsel for Dawson, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to pass upon such matters.

 

(D)         Dawson
shall have received from outside counsel to the Company such counsel’s written opinion, addressed to Dawson and the Purchasers
dated as of the Closing Date, in form and substance reasonably satisfactory to Dawson.

 

(E)         Neither
the Company nor any of its Subsidiaries shall have sustained since the date of the latest audited financial statements, any loss
or interference with its business from fire, explosion, flood, terrorist act or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in or contemplated by the
Base Prospectus and (ii) since such date there shall not have been any change in the capital stock or long-term debt of the Company
or any of its Subsidiaries or any change, or any development involving a prospective change, in or affecting the business, general
affairs, management, financial position, stockholders’ equity, results of operations or prospects of the Company and its
Subsidiaries, the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of Dawson, so material
and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and
in the manner contemplated under the Transaction Documents or pursuant to the Prospectus Supplement.

 

    	9

    	 

    

 

(F)         The
Common Stock is registered under the Exchange Act and, as of the Closing Date, the Shares shall be listed and admitted and authorized
for trading on the Trading Market, and satisfactory evidence of such actions shall have been provided to Dawson. The Company shall
have taken no action designed to, or likely to have the effect of terminating the registration of the Common Stock under the Exchange
Act or delisting or suspending from trading the Common Stock from the Trading Market, nor has the Company received any information
suggesting that the Commission or the Trading Market is contemplating terminating such registration or listing.

 

(G)         Subsequent
to the execution and delivery of the Transaction Documents or underwriting agreement, as applicable, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock Exchange, the Nasdaq National Market or the NYSE
Equity or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum or maximum prices or maximum ranges for prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by federal or state authorities or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the United States, (iii) the United States shall have become
engaged in hostilities in which it is not currently engaged, the subject of an act of terrorism, there shall have been an escalation
in hostilities involving the United States, or there shall have been a declaration of a national emergency or war by the United
States, or (iv) there shall have occurred any other calamity or crisis or any change in general economic, political or financial
conditions in the United States or elsewhere, if the effect of any such event in clause (iii) or (iv) makes it, in the sole judgment
of Dawson, impracticable or inadvisable to proceed with the sale or delivery of the Securities.

 

(H)         No
action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance or sale of the Securities or materially and adversely
affect or potentially and adversely affect the business or operations of the Company; and no injunction, restraining order or order
of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance or sale of the Securities or materially and adversely affect or potentially and adversely affect the
business or operations of the Company.

 

(I)         The
Company shall have prepared and filed with the Commission a Current Report on Form 8-K with respect to the Placement, including
as an exhibit thereto this Agreement.

 

(J)         FINRA
shall have raised no objection to the fairness and reasonableness of the terms and arrangements of this Agreement. In addition,
the Company shall, if requested by Dawson, make or authorize Dawson’s counsel to make on the Company’s behalf, an Issuer
Filing with FINRA pursuant to FINRA Rule 5110 with respect to the Registration Statement and pay all filing fees required in connection
therewith.

 

    	10

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