Document:

Exhibit

Exhibit 10.4 

THE BANK OF NEW YORK MELLON CORPORATION
The Bank of New York Mellon Corporation Long‐Term Incentive Plan
FORM OF PERFORMANCE SHARE UNIT AGREEMENT

The Bank of New York Mellon Corporation (the “Corporation”) and                                         , a key employee (the “Grantee”) of the Corporation, in consideration of the covenants and agreements herein contained and intending to be legally bound hereby, agree as follows:

SECTION 1:  Performance Share Unit Award

1.1  Award.  Subject to the terms and conditions set forth in this Performance Share Unit Agreement (this “Agreement”) and to the terms of The Bank of New York Mellon Corporation Long‐Term Incentive Plan (the “Plan”), the Corporation hereby awards to the Grantee __________ performance share units (the “Grant Amount” of “PSUs” assuming achievement of 100% earnout), each representing a share of the Corporation’s common stock, par value $.01 (the “Common Stock”), on ______________ (the “Grant Date”), subject to adjustment as provided in Article IX of the Plan.  Each of the PSUs is denominated as a single share of Common Stock with a value equal to one share of Common Stock.  Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan. The purpose of the Award is to incentivize each Grantee to align his or her interests with that of the Corporation and to reward the Grantee’s future contribution to the performance of the Corporation’s business.

1.2  Acceptance.  The payment of the PSUs is contingent upon the Grantee’s acknowledgement of this Agreement in the manner prescribed by the Corporation, which shall constitute the Grantee’s acceptance of the terms and conditions of this Agreement and the Plan, as this Agreement and the Plan may be amended from time to time; provided, however, that no alteration, amendment, revocation or termination of this Agreement or the Plan shall, without the written consent of the Grantee, adversely affect the rights of the Grantee with respect to the award.  If the Grantee does not acknowledge this Agreement in the manner prescribed by the Corporation on or before                    , this award will be forfeited.  In such case, the Grantee will have no rights to this award and it will not be reinstated.

1.3  Dividend Equivalent Rights; No Voting.  During the period prior to vesting, dividend equivalents shall be determined with respect to the PSUs as if reinvested as additional PSUs on the dividend payment date and shall be paid to the Grantee pursuant to Section 4 of this Agreement only if and to the extent that the underlying PSUs become vested as provided in this Agreement, and any remaining dividend equivalents shall be forfeited.  In the event that the Grantee receives any additional PSUs as an adjustment with respect to the Grant Amount, such additional PSUs will be subject to the same restrictions as if granted under this Agreement as of the Grant Date and paid pursuant to Section 4 of this Agreement.  During the period prior to vesting, the Grantee shall not be entitled to vote any shares represented by the PSUs.  “Corporation”, when used herein with reference to employment of the Grantee, shall include any Affiliate of the Corporation.  

SECTION 2:  Restrictions on Transfer

2.1  Nontransferable.  No PSUs awarded hereunder or any interest therein may be sold, transferred, assigned, pledged or otherwise disposed of (any such action being hereinafter referred to as a “Disposition”) by the Grantee until such time as this restriction lapses with respect to such PSUs pursuant to Section 3 hereof, and any attempt to make such a Disposition shall be null and void and result in the immediate forfeiture and return to the Corporation without consideration of any PSUs as to which restrictions on Disposition shall at such time be in effect.

SECTION 3:  Vesting, Risk Adjustment, Performance Period, 
Forfeiture, Termination of Employment, Disability and Covenants

3.1  Vesting, Risk Adjustment, Performance Period and Forfeiture.  

(a)    Vesting and Risk Adjustment.  Subject to Sections 3.5 and 5.6 of this Agreement, if the Performance Threshold set forth on Attachment A is achieved, PSUs (as may be adjusted from the Grant Amount by reference to the performance goals and the risk adjustment process) may be earned as set forth in the performance goals section of Attachment A for the period [Insert Performance Period] (the “Performance Period”) and shall vest and the restrictions on Disposition shall lapse on the ______ anniversary of the Grant Date provided that the Grantee remains continuously employed by the Corporation through the close of business on                      and provided further that unvested PSUs are subject to forfeiture based upon the risk adjustment process each year and following completion of the Performance Period as set forth on Attachment B.  Subject to Section 4.1, the vesting date may be delayed if and to the extent the determination of the earnout achieved as set forth on Attachment A or the risk adjustment process set forth on Attachment B are not completed by such date. 

(b)    Forfeiture upon Termination of Employment.  Subject to Sections 3.2 and 3.3 of this Agreement, upon the effective date of a termination of the Grantee’s employment with the Corporation occurring prior to               , all unvested PSUs shall immediately be forfeited and returned to the Corporation without consideration or further action being required of the Corporation.  The effective date of the Grantee’s termination shall be the date upon which the Grantee ceases to perform services as an employee of the Corporation, without regard to accrued vacation, severance or other benefits or the characterization thereof on the payroll records of the Corporation.

(c)    Forfeiture upon Termination of Employment for Cause.  Notwithstanding anything to the contrary contained in this Agreement, upon the effective date of a termination of the Grantee’s employment with the Corporation for “Cause,” as defined in Section 3.4 below, all unvested PSUs shall immediately be forfeited and returned to the Corporation without consideration or further action being required of the Corporation.

3.2  Specified Terminations of Employment.

(a)    Death.  If Grantee’s employment with the Corporation is terminated by reason of the Grantee’s death (or if Grantee’s death occurs at any time while the PSUs remain subject to restrictions on Disposition), all unvested PSUs may vest as provided in Section 3.1(a) above following 

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completion of the Performance Period and the balance of the PSUs that do not vest with respect to the Performance Period shall be deemed forfeited at the end of the Performance Period.  

(b)    Age & Service Rule, Termination Providing Transition/Separation Pay prior to Age 55.  If the Grantee’s employment with the Corporation terminates by reason of (i) a termination on or after the Grantee’s attainment of age 55 but prior to age 60, and the combination of the Grantee’s age and years of credited employment with the Corporation (including full and partial years of age and service) on the date of Grantee’s termination equals or exceeds 65, or (ii) a termination providing transition/separation pay from the Corporation prior to the Grantee’s attainment of age 55, a pro rata portion of the unvested PSUs may vest as provided in Section 3.1(a) above following completion of the Performance Period, contingent upon the Grantee’s compliance with the covenants provided in Section 3.5 hereof.  If the Grantee fails to comply with such covenants, the PSUs shall immediately be forfeited.  The pro rata portion that vests shall equal (i) the number of days from the first day of the Performance Period through the date upon which the Grantee’s employment is terminated, divided by (ii) 1,096, with the result multiplied by (iii) the number of PSUs, with that result multiplied by (iv) the applicable final earnout percentage  as determined under Attachment A.  The balance of the PSUs awarded shall be deemed forfeited at the end of the Performance Period.  For the purposes of calculating the combination of the Grantee’s age and years of credited employment, partial years shall be determined based upon the number of days since the Grantee’s then prior birthday or the number of days of credited employment since the Grantee’s then prior anniversary, as the case may be.

(c)    Special Age Rule, Termination Providing Transition/Separation Pay after Age 55.  If the Grantee’s employment with the Corporation terminates by reason of (i) a termination on or after the Grantee’s attainment of age 60, or (ii) a termination providing transition/separation pay from the Corporation following the Grantee’s attainment of age 55, all unvested PSUs may vest as provided in Section 3.1(a) above following completion of the Performance Period, contingent upon the Grantee’s compliance with the covenants provided in Section 3.5 hereof.  If the Grantee fails to comply with such covenants, the PSUs shall immediately be forfeited.  The balance of the PSUs that do not vest with respect to the Performance Period shall be deemed forfeited at the end of the Performance Period.

(d)    Sale of Business.  If the Grantee’s employment terminates by reason of a termination by the Corporation due to a sale of a business unit or subsidiary of the Corporation by which the Grantee is employed and the Grantee is not otherwise entitled to transition/separation pay from the Corporation, all unvested PSUs may vest as provided in Section 3.1(a) above following completion of the Performance Period.  The balance of the PSUs that do not vest shall be deemed forfeited at the end of the Performance Period.  

(e)    Change in Control.  If the Grantee’s employment is terminated by the Corporation without “Cause,” as defined in Section 3.4 below, within two years after a Change in Control, as defined in Section 10.1 of the Plan, occurring after the Grant Date, all PSUs may vest as provided in Section 3.1(a) above following completion of the Performance Period.  The earnout achieved shall be determined in good faith by the Committee, and following a Change in Control or other corporate-type event may include, without limitation, determinations with respect to the earnout calculation so as to preserve as nearly as practicable the intended effect of the Performance Threshold and performance goals.  The balance of the PSUs that do not vest shall be deemed forfeited at the end of the Performance Period.  

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3.3  Disability.  If the Grantee receives current benefits under the Corporation’s long‐term disability plan while any portion of this award remains unvested, all PSUs may vest as provided in Section 3.1(a) above following completion of the Performance Period.  The balance of the PSUs that do not vest shall be deemed forfeited at the end of the Performance Period.  

3.4  Cause Definition.  Solely for purposes of this Agreement, “Cause” shall mean when the Corporation or any Affiliate determines, in its sole discretion, that: 

(i) the Grantee has been convicted of, or has entered into a pretrial diversion or entered a plea of guilty or nolo contendere (plea of no contest) to a crime or offense constituting a felony (or its equivalent under applicable laws outside of the United States), or to any other crime or offense involving moral turpitude, dishonesty, fraud, breach of trust, money laundering, or any other offense that may preclude the Grantee from being employed with a financial institution;

(ii) the Grantee is grossly negligent in the performance of his or her duties or has failed to perform in any material respect the duties of his or her employment, including, without limitation, failure to comply with any lawful directive from the Corporation, other than by reason of incapacity due to disability or from any permitted leave of absence required by law; 

(iii) the Grantee has violated the Corporation’s Code of Conduct or any of the policies of the Corporation governing the conduct of the Corporation’s business or his or her employment; 

(iv) the Grantee has engaged in any misconduct which has the effect of being materially injurious to the Corporation, including, but not limited to, its reputation; 

(v) the Grantee has engaged in an act of fraud or dishonesty, including, but not limited to, taking or failing to take actions intending to result in personal gain; or

(vi) if the Grantee is employed outside the United States and there are circumstances other than the above that warrant the immediate termination of his or her employment without any notice or payment in accordance with the terms of his or her employment agreement or Applicable Laws (as defined in Section 5.2).

3.5  Covenants.  Grantee agrees to provide the Corporation with 90 days’ advance written notice of any voluntary termination of Grantee’s employment with the Corporation.  Grantee agrees that for the period commencing on the effective date of Grantee’s termination of employment with the Corporation until the one‐year anniversary thereof or, if earlier, the vesting date, Grantee will not directly or indirectly (a) solicit or attempt to solicit or induce, directly or indirectly, (i) any current or prospective client of the Corporation or an Affiliate known to Grantee, to initiate or continue a client relationship with Grantee other than with the Corporation or Affiliate or to terminate or reduce its client relationship with the Corporation or Affiliate, or (ii) any employee of the Corporation or an Affiliate, to terminate such employee’s employment relationship with the Corporation or Affiliate in order to enter into a similar relationship with Grantee, or any other person or any entity, or (b) compete against the Corporation or an Affiliate in any capacity, whether as principal, agent, independent contractor, employee or otherwise, with any financial services industry company located within 1,000 miles of Grantee’s primary location 

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of employment with the Corporation; provided, however, that the ownership of up to 5% of any class of the outstanding securities of any company the securities of which are listed on a national securities exchange (a “Public Company”) (including, for purposes of calculating such percentage, the voting securities owned by persons acting in concert with such person or otherwise constituting a “group” for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934) shall not be deemed a violation hereof provided that Grantee does not have an active role in the management of such Public Company.  If the Grantee fails to comply with such covenants, the consequence shall be forfeiture of the unvested PSUs.  Grantee agrees to advise any person or entity that seeks to employ Grantee of the terms of these covenants.

3.6  Continuation.  For the avoidance of doubt, the provisions of Section 5.6 continue to apply without limitation in accordance with its terms notwithstanding any termination of employment or services under this Section 3.

SECTION 4:  Settlement

4.1  Time of Settlement.  Vested PSUs shall be settled within two and one-half months following the end of the Performance Period, contingent upon the Committee’s certification that the Performance Threshold was achieved, determination of the earnout achieved and subject to the individual per‐employee limitations included in the Plan; provided, however, if Grantee is a “specified employee” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), upon separation from service and such settlement is conditioned upon a separation from service and not compensation Grantee could receive without separating from service, then settlement shall not be made until the first day following the six‐month anniversary of Grantee’s separation from service (or upon earlier death).   

4.2  Form of Settlement.  The PSUs, including any PSUs resulting from dividend equivalents, shall be settled in the form of Common Stock delivered in book‐entry form.  

SECTION 5:  Miscellaneous

5.1  No Right to Employment.  Neither the award of PSUs nor anything else contained in this Agreement or the Plan shall be deemed to limit or restrict the right of the Corporation to terminate the Grantee’s employment at any time, for any reason, with or without Cause.

5.2  Compliance with Laws.  Notwithstanding any other provision of this Agreement, the Grantee agrees to take any action, and consents to the taking of any action by the Corporation, with respect to the PSUs awarded hereunder necessary to achieve compliance with applicable laws, regulations or relevant regulatory requirements or interpretations in effect from time to time (“Applicable Laws”).  Any determination by the Corporation in this regard shall be final, binding and conclusive.  The Corporation shall in no event be obligated to register any securities pursuant to the U.S. Securities Act of 1933 (as the same shall be in effect from time to time) or to take any other affirmative action in order to cause the delivery of shares in book-entry form or otherwise therefore to comply with any Applicable Laws.  For the avoidance of doubt, the Grantee understands and agrees that if any payment or other obligation under or arising from this Agreement, including without limitation dividend equivalent rights, or the Plan is in conflict with or is restricted by any Applicable Laws, then the Corporation may reduce, 

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revoke, cancel, clawback or impose different terms and conditions to the extent it deems necessary or appropriate, in its sole discretion, to effect such compliance.  If the Corporation determines that it is necessary or appropriate for any payments under this Agreement to be delayed in order to avoid additional tax, interest and/or penalties under Section 409A of the Code, then the payments would not be made before the date which is the first day following the six (6) month anniversary of the date of the Grantee’s termination of employment (or upon earlier death).  

5.3  Plan Governs.  This is the Award Agreement contemplated in Section 2.3(b) of the Plan.  In the event of any conflict between the provisions of this Agreement and the Plan, the Plan shall govern.  A copy of the Plan can be found on the Corporation’s equity award website or may be obtained from the Executive Compensation Division of the Corporation’s Human Resources Department.  No amount of income received by the Grantee pursuant to the PSUs shall be considered compensation for purposes of any pension or retirement plan, insurance plan or any other employee benefit plan of the Corporation.

5.4  Liability for Breach.  The Grantee hereby indemnifies the Corporation and holds it harmless from and against any and all damages or liabilities incurred by the Corporation (including liabilities for attorneys’ fees and disbursements) arising out of any breach by Grantee of this Agreement, including, without limitation, any attempted Disposition in violation of Section 2.1 of this Agreement.

5.5  Tax Withholding.  The Grantee must pay the amount of any federal, state, local or foreign income or employment taxes required to be withheld on the compensation income resulting from the award of, or lapse of restrictions on, the PSUs directly to the Corporation in cash upon request; provided, however, that where the restrictions on Disposition set forth in Section 2.1 of this Agreement have lapsed the Grantee may satisfy such obligation in whole or in part by requesting the Corporation in writing to withhold from the Common Stock otherwise deliverable to the Grantee or by delivering to the Corporation shares of its Common Stock having a Fair Market Value on the date the restrictions lapse equal to the amount of the aggregate minimum statutory withholding tax obligation to be so satisfied, in accordance with such rules as the Committee may prescribe.  If the Grantee does not make such request, the Corporation will automatically net unless it has previously requested payment in cash.  The Corporation may also establish rules, notwithstanding Sections 2.1 and 4.1 hereof, which may differ from those described above in the case of employment taxes if such taxes are deemed to be due before the lapse of restrictions on Disposition.  The Corporation’s obligation to issue or credit shares to the Grantee is contingent upon the Grantee’s satisfaction of an amount sufficient to satisfy any federal, state, local or other withholding tax requirements, notwithstanding the lapse of the restrictions thereon. 

5.6  Forfeiture and Repayment.  If, directly or indirectly:

(a) during the course of the Grantee’s employment with the Corporation, the Grantee engages in conduct or it is discovered that the Grantee engaged in conduct that is materially adverse to the interests of the Corporation, including failures to comply with the Corporation’s rules or regulations, fraud, or conduct contributing to any financial restatements or irregularities; 

(b) during the course of the Grantee’s employment with the Corporation and, unless the Grantee has post‐termination obligations or duties owed to the Corporation or its Affiliates pursuant to an 

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individual agreement set forth in subsection (d) below, for one year thereafter, the Grantee engages in solicitation and/or diversion of customers or employees;  

(c) during the course of the Grantee’s employment with the Corporation, the Grantee engages in competition with the Corporation or its Affiliates; 

(d) following termination of the Grantee’s employment with the Corporation for any reason, with or without Cause, the Grantee violates any post-termination obligations or duties owed to the Corporation or its Affiliates or any agreement with the Corporation or its Affiliates, including without limitation, any employment agreement, confidentiality agreement or other agreement restricting post‐employment conduct; or

(e) any compensation that the Corporation has promised or paid to the Grantee is required to be forfeited and/or repaid to the Corporation pursuant to applicable regulatory requirements;

the Corporation may cancel all or any portion of this award with respect to the PSUs subject to restrictions on Disposition and/or require repayment of any shares (or the value thereof) or amounts which were acquired from the award.  The Corporation shall have sole discretion to determine what constitutes grounds for forfeiture and/or repayment under this Section 5.6, and, in such event, the portion of this award that shall be cancelled and the sums or amounts that shall be repaid.  For purposes of the foregoing, Grantee expressly and explicitly authorizes the Corporation to issue instructions, on Grantee’s behalf, to any brokerage firm and/or third party administrator engaged by the Corporation to hold the shares of Common Stock and other amounts acquired under the Plan to re-convey, transfer or otherwise return such shares and/or other amounts to the Corporation.

5.7  Governing Law and Choice of Forum.  This Agreement shall be construed and enforced in accordance with the laws of the State of New York, other than any choice of law provisions calling for the application of laws of another jurisdiction.  For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of New York and agree that such litigation shall be conducted only in the courts of New York County, New York, or the federal courts for the United States for the Southern District of New York, and no other courts, where this grant is made and/or to be performed and agree to such other choice of forum provisions as are included in the Plan.

5.8  Severability.  The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

5.9  Waiver.  The Grantee acknowledges that a waiver by the Corporation of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach of this Agreement.

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Attachment A
Performance Threshold and Goals

Performance Threshold
		
	•
	[Definition of applicable metrics] 

		
	•
	No PSUs may be earned if the Performance Threshold is not achieved.  

		
	•
	The Human Resources and Compensation Committee (“HRCC”) certifies Performance Threshold following the end of calendar year         .  

Performance Goals

[Complete as appropriate]

The HRCC has the discretion to adjust the payout ranges to reflect the impact of any significant, unusual items on [the performance metrics] and share count, including market conditions and interest rate changes.  

Attachment B
Risk Adjustment/Forfeiture Decision Process

For any performance year in which the Grantee remains a covered employee, the Grantee’s risk performance will be assessed via a Risk Culture Summary Scorecard (“RCSS”) Score or a Performance Management Platform (“PMP”) Risk Goal Rating. If, in any year, the Grantee receives an RCSS Score of 4 or worse, or a PMP Risk Goal Rating of “Below Expectations” or “Unsatisfactory,” the Grantee’s unvested PSUs will be subject to review by the Incentive Compensation Review Committee (“ICRC”) for consideration of forfeiture.  If the Grantee is no longer a covered employee or has left the Corporation, any unvested portion of the PSUs will also be subject to a risk review by the ICRC.  The ICRC is generally comprised of senior managers and senior control managers.

In that event, as part of its review, ICRC will ask –
		
	•
	Did the Grantee’s score/rating reflect poor risk behavior by the Grantee in a prior year?

		
	•
	Did the Grantee receive an award in that year?

 
If the answer to both questions is yes, ICRC asks the following questions with respect to each of the designated prior years:
 
		
	•
	Financial Impact:  How much did/will the issue cost the Company? 

		
	•
	Reputational Impact:  How much of a regulatory impact did/will it have on the Company?

 
ICRC selects the impact answer that falls into the highest category below to determine the impact forfeiture percentage.

	
						
	Criteria
	Metric
	None
	Low
	Medium
	High

	Financial Impact
	 
	 
	 
	 
	 

	Reputational Impact
	 
	 
	 
	 
	 

As used in this Attachment B, the term “Company” shall mean the Corporation and its Affiliates.  

Then the ICRC asks how much, if any, control/responsibility the Grantee had regarding the situation.  The answer to the last question determines the modifier to be applied to the impact forfeiture percentage.

	
				
	Criteria
	   None 
	Indirect
	Direct

	The Grantee’s role 
& responsibility
	 
	 
	 

Example [Insert Example]: 

The ICRC will submit its recommendations to the Human Resources and Compensation Committee of the Corporation’s Board of Directors for final action and approval.SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of August __, 2016, between, MGT Capital Investments,
Inc., a Delaware 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 Section 4(2) of the Securities Act of 1933, as
amended (the “Securities Act”), and Rule 506 promulgated thereunder, 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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Closing
Date” means the Business Day when 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 have been satisfied or waived.

 

“Closing
Statement” means the Closing Statement in the form Annex A attached hereto.

 

    	 

    	 

    

 

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

 

“Common
Stock” means the common stock of the Company, par value $.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed into.

 

“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.

 

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

 

“Liens”
means a lien, charge, 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(a).

 

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

 

“Notes”
means the 12% Senior Unsecured Promissory Notes, due, subject to the terms therein, September 30, 2019, issued by the Company
to the Purchasers hereunder, in the form of Exhibit A attached hereto.

 

“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.

 

“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.

 

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

 

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

 

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

 

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

 

“SRFF”
means Sichenzia Ross Friedman Ference LLP, 61 Broadway, New York, New York 10006.

 

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

 

    	2

    	 

    

 

“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, include any direct or
indirect subsidiary of the Company formed or acquired after the date hereof.

 

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

 

“Underlying
Shares” means the shares of Common Stock issued and issuable upon exercise of the Warrants.

 

“Warrant”
means the Common Stock purchase warrant, having an exercise price equal to the closing bid price of the Company’s Common
Stock on the day immediately preceding the Closing, and an exercise term of [__] years, in the form of Exhibit B attached
hereto.

 

ARTICLE
II.

PURCHASE
AND SALE

 

2.1Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, up to an aggregate of $3,000,000 in principal amount of the Notes. In addition, for each one thousand dollars
($1,000.00) invested by a Purchaser, the Purchaser shall receive two detachable Warrants each of which are exercisable for one
hundred (100) shares of Common Stock. Each Purchaser shall deliver to the Company via wire transfer, immediately available funds
equal to its Subscription Amount and the Company shall deliver to each Purchaser its respective Note and Warrants, 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
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of SRFF or such other location as the parties
shall mutually agree.

 

2.2Deliveries.

 

(a)On
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
Note with a principal amount equal to such Purchaser’s Subscription Amount, registered in the name of such Purchaser; and

 

(iii)for
each one thousand dollars ($1,000) invested, two (2) Warrants each of which are exercisable for one hundred (100) shares of the
Company’s Common Stock.

 

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

 

    	3

    	 

    

 

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

 

(ii)such
Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company.

 

2.3Closing
Conditions.

 

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

 

(i)the
accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein;

 

(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 when made and on the Closing Date of the representations and warranties of the Company contained
herein;

 

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

 

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

 

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

 

ARTICLE
III.

REPRESENTATIONS
AND WARRANTIES

 

3.1Representations
and Warranties of the Company.

 

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

 

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

 

    	4

    	 

    

 

(b)Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of each of the 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 therewith other than in connection with
the Required Approvals. Each 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.

 

(c)No
Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the consummation by it
to which it is a party of the other 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, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would
become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary
is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary
is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or
a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.

 

    	5

    	 

    

 

(d)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 4.7, (ii) such consents, waivers, or authorizations as have been obtained before the
Closing, and (iii) if required, the notice and/or application(s) to each applicable Trading Market for the issuance and sale of
the Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby (collectively,
the “Required Approvals”).

 

(e)Issuance
of the Securities. 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 other
than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with
the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares.

 

(f)Capitalization.
The capitalization of the Company immediately prior to Closing is, in all material respects, as set forth on Schedule 3.1(f).
Other than as set forth in Schedule 3.1(f), 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 for such, if any, as
will have been validly waived before the Closing. The issuance and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding
shares of capital stock of the Company are 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.

 

(g)Litigation.
Other than as set forth in Schedule 3.1(g), there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director
or officer thereof, is or has been 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.

 

    	6

    	 

    

 

(h)Labor
Relations. No material 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. No executive officer, to the knowledge of the Company, 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. To the Company’s knowledge, 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.

 

(i)Compliance.
To the Company’s knowledge, 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 material 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 order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment, except in each of the foregoing cases as could not have or reasonably be expected
to result in a Material Adverse Effect.

 

(j)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, 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.

 

(k)Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title in all personal property owned by it that, in each case, is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for 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 Liens for the payment
of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties in any material respect.
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.

 

    	7

    	 

    

 

(l)Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company 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 that may be due in connection with the transactions
contemplated by the Transaction Documents.

 

(m)Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby.

 

(n)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 each Subsidiary has filed all necessary federal, state and foreign income and franchise
tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

 

(o)No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under Regulation D promulgated under the Securities
Act.

 

(p)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.

 

3.2Representations
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:

 

    	8

    	 

    

 

(a)Organization;
Authority. The Purchaser, (i) if a natural person, represents that the Purchaser has reached the age of 21 and has full power
and authority to execute and deliver this Securities Purchase Agreement and all other related agreements or certificates and to
carry out the provisions hereof and thereof; (ii) if a corporation, partnership, or limited liability company, or association,
joint stock company, trust, unincorporated organization or other entity, it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right, corporate or partnership 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 or similar action 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)Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law 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) in violation of the Securities Act or any applicable state securities law. 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” within the meaning of Regulation D, Rule 501(a),
promulgated by the Commission under the Securities Act and will submit to the Company such further assurances of such status as
may be reasonably requested by the Company.

 

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

 

    	9

    	 

    

 

(e)Non
Reliance. In evaluating the suitability of an investment in the Company, the Purchaser has not relied upon any representation
or information (oral or written) other than as stated in this Agreement;

 

(f)Risk.
The Purchaser understands and agrees that purchase of the Securities is a high risk investment and the Purchaser is able to afford
an investment in a speculative venture having the risks and objectives of the Company. The Purchaser must bear the substantial
economic risks of the investment in the Securities indefinitely because none of the Securities may be sold, hypothecated or otherwise
disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from
such registration is available. Legends will be placed on the certificates representing the Common Stock, the Warrants and the
Underlying Shares to the effect that such securities have not been registered under the Securities Act or applicable state securities
laws and appropriate notations thereof will be made in the Company’s books;

 

(g)Public
Filings. The Purchaser is aware that an investment in the Securities involves a number of very significant risks and has carefully
read and considered the disclosure in the Company’s Form 10-K for the year ended December 31, 2015, its Form 10-Q for the
quarter ended March 31, 2016, and all other disclosure filings made by the Company which are available on the Edgar System at
SEC.gov and understands that certain risks may materially adversely affect the Company’s operations and future prospects

 

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

 

(i)Acknowledgment
of Restricted Securities. The Purchaser has read and understands the following:

 

THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED
AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN RECOMMENDED, APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM OR THIS SECURITIES PURCHASE
AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL

 

    	10

    	 

    

 

ARTICLE
IV.

OTHER
AGREEMENTS OF THE PARTIES

 

4.1Transfer
Restrictions.

 

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

 

(b)The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:

 

[NEITHER
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISEABLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees in writing with the Company to be bound by the
provisions of this Agreement and, if required under the terms of such arrangement and subject to compliance with applicable federal
and state securities laws, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Absent
special circumstances, such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required
of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation
as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.

 

    	11

    	 

    

 

(c)Certificates
evidencing the Underlying Shares (or, if Underlying Shares are issued in uncertificated form, comparable share notices) shall
not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement covering
the resale of such security is effective under the Securities Act, or (ii) following any sale of such Underlying Shares pursuant
to Rule 144, or (iii) if such Underlying Shares are eligible for sale under Rule 144, without the requirement for the Company
to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume
or manner-of-sale restrictions or (iv) if such legend is not otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff of the Commission), as reasonably determined by
the Company. Upon the Purchaser’s request in connection with a proposed sale of Underlying Shares pursuant to Rule 144 and
if the Company reasonably determines it is so required, upon receipt of customary documentation from Purchaser’s broker
(if the Underlying Shares are sold in brokers transactions), the Company shall, at its own cost and effort, retain legal counsel
to provide an opinion letter to the Company’s transfer agent opining that the Underlying Shares may be resold without registration
under the Securities Act, pursuant to Rule 144, promulgated thereunder, so long as the requirements of Rule 144 are met for any
Underlying Shares to be resold thereunder.

 

(d)Each
Purchaser, severally and not jointly with the other Purchasers, agrees that such Purchaser will sell any Securities only pursuant
to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an
exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with
the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

 

4.2Integration.
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 to the Purchasers in a manner
that would require the registration under the Securities Act of the sale of the Securities to the Purchasers.

 

4.3Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for general working capital
purposes.

 

4.4Reservation
of Securities. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant
to the Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.

 

4.5Equal
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 any of the Transaction Documents unless the
same consideration is also offered to all of the parties to the Transaction Documents. Further, the Company shall not make any
payment of principal or interest on the Notes in amounts which are disproportionate to the respective principal amounts outstanding
on the Notes at any applicable time. 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.

 

    	12

    	 

    

 

4.6Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.

 

ARTICLE
V.

MISCELLANEOUS

 

5.1Termination.
This Agreement may be terminated by any party hereto 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 [___]; provided,
however, that such termination will not affect the right of any party to sue for any breach by the other party (or parties).

 

5.2Fees
and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent
fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and 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.

 

5.4Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) one Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a Business Day, with written confirmation of successful transmission, (b) the next Business Day after
the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the
signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business
Day, (c) the second Business 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.

 

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5.5Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers holding at least [__]% in interest of the Securities then outstanding
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

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

 

5.7Successors
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 transfer complies with all applicable federal and
state securities laws and that such transferee agrees in writing with the Company to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

5.9Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
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, 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 suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an
action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

 

    	14

    	 

    

 

5.10Survival.
The representations and warranties shall survive the Closing and the delivery of the Notes until, with respect to each Purchaser,
the Note held by such Purchaser has been paid in full at which time they shall expire such respect to Purchaser and shall no longer
be of any force or effect.

 

5.11Execution.
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 the other party, it being
understood that both 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.

 

5.12Severability.
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.

 

5.13Replacement
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.

 

5.14Remedies.
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 agrees 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.

 

    	15

    	 

    

 

5.15Independent
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 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 their 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 the Purchasers.

 

5.16Liquidated
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.

 

5.17Saturdays,
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.

 

5.18Construction.
The parties agree that each of them and/or their respective counsel has 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 hereto.

 

5.19WAIVER
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)

 

    	16

    	 

    

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

 

	MGT
Capital Investments, Inc.,
	Address
        for Notice:

        500
        Mamaroneck Avenue,

        Suite
        320

        Harrison,
        NY 10528

        

 

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

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

    	17

    	 

    

 

[PURCHASER
SIGNATURE PAGES TO 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: ________________________________________________________

 

Signature
of Authorized Signatory of Purchaser: __________________________________

 

Name
of Authorized Signatory: ____________________________________________________

 

Title
of Authorized Signatory: _____________________________________________________

 

Email
Address of Authorized Signatory: _____________________________________________

 

Facsimile
Number of Authorized Signatory: __________________________________________

 

Address
for Notice of Purchaser:

 

 

Address
for Delivery of Securities for Purchaser (if not same as address for notice):

 

 

Subscription
Amount: _____________

 

 

EIN
Number: [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE
PAGES CONTINUE]

 

    	18

    	 

    

 

Annex
A

 

CLOSING
STATEMENT

 

Pursuant
to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers shall purchase $[                                  ] of Notes from MGT
Capital Investments, Inc., a Delaware corporation (the “Company”). All funds will be wired into an account
maintained by the Company. All funds will be disbursed in accordance with this Closing Statement.

 

Disbursement
Date:                 , 2016

 

 

	I.
        PURCHASE PRICE

        
	 
	 	 
	Gross
    Proceeds to be Received 	$
	 	 
	II.	DISBURSEMENTS
	 	 
	 	$
	 	$
	 	$
	 	$
	 	$
	 	 
	Total
    Amount Disbursed:	$

 

WIRE
INSTRUCTIONS:

 

To:
_____________________________________

 

To:
_____________________________________

 

 

    	19

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